    [Senate Hearing 105-340]
    [From the U.S. Government Publishing Office]

                                               S. Hrg. 105-340

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

    =======================================================================

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                           ONE HUNDRED FIFTH CONGRESS

                                 FIRST SESSION

                                       ON

                               H.R. 2266/S. 1005

      AN ACT MAKING APPROPRIATIONS FOR THE DEPARTMENT OF DEFENSE FOR THE
         FISCAL YEAR ENDING SEPTEMBER 30, 1998, AND FOR OTHER PURPOSES

                                   __________

                            Department of Defense
                           General Accounting Office
                           Nondepartmental witnesses

                                   __________

             Printed for the use of the Committee on Appropriations

     Available via the World Wide Web: http://www.access.gpo.gov/congress/senate

                         U.S. GOVERNMENT PRINTING OFFICE

                                WASHINGTON : 1998

    39-834 cc

    _______________________________________________________________________
                For sale by the U.S. Government Printing Office
    Superintendent of Documents, Congressional Sales Office, Washington, DC
                                     20402
                               ISBN 0-16-056136-1

                          COMMITTEE ON APPROPRIATIONS

                         TED STEVENS, Alaska, Chairman
    THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
    ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
    PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
    CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
    SLADE GORTON, Washington             DALE BUMPERS, Arkansas
    MITCH McCONNELL, Kentucky            FRANK R. LAUTENBERG, New Jersey
    CONRAD BURNS, Montana                TOM HARKIN, Iowa
    RICHARD C. SHELBY, Alabama           BARBARA A. MIKULSKI, Maryland
    JUDD GREGG, New Hampshire            HARRY REID, Nevada
    ROBERT F. BENNETT, Utah              HERB KOHL, Wisconsin
    BEN NIGHTHORSE CAMPBELL, Colorado    PATTY MURRAY, Washington
    LARRY CRAIG, Idaho                   BYRON DORGAN, North Dakota
    LAUCH FAIRCLOTH, North Carolina      BARBARA BOXER, California
    KAY BAILEY HUTCHISON, Texas
                       Steven J. Cortese, Staff Director
                     Lisa Sutherland, Deputy Staff Director
                   James H. English, Minority Staff Director
                                     ------

                            Subcommittee on Defense

                         TED STEVENS, Alaska, Chairman
    THAD COCHRAN, Mississippi            DANIEL K. INOUYE, Hawaii
    ARLEN SPECTER, Pennsylvania          ERNEST F. HOLLINGS, South Carolina
    PETE V. DOMENICI, New Mexico         ROBERT C. BYRD, West Virginia
    CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
    MITCH McCONNELL, Kentucky            DALE BUMPERS, Arkansas
    RICHARD C. SHELBY, Alabama           FRANK R. LAUTENBERG, New Jersey
    JUDD GREGG, New Hampshire            TOM HARKIN, Iowa
    KAY BAILEY HUTCHISON, Texas          BYRON DORGAN, North Dakota

                                     Staff

    Steven J. Cortese, Sid Ashworth, Susan Hogan, Gary Reese, Jay Kimmitt,
                      Mary C. Marshall, and John J. Young

                             Administrative Support

                       Mazie R. Mattson and Justin Weddle

                                 Minority Staff

              Charles J. Houy, C. Richard D'Amato, and Emelie East

                                C O N T E N T S

                                  ----------

                          Thursday, February 27, 1997

                                                                       Page

    Department of Defense: Comptroller...............................     1

                            Wednesday, March 5, 1997

    Department of Defense: Joint Chiefs of Staff.....................    73

                           Wednesday, March 12, 1997

    Department of Defense: Ballistic Missile Defense Organization....   137

                             Monday, March 31, 1997

    Department of Defense: U.S. Pacific Command......................   187

                            Wednesday, April 9, 1997

    Department of Defense: Department of the Navy: Office of the
      Secretary......................................................   215

                           Wednesday, April 16, 1997

    Department of Defense: Department of the Army....................   325

                           Wednesday, April 30, 1997

    Department of Defense:
        National Guard Bureau........................................   389
        Adjutant Generals............................................   441

                             Wednesday, May 7, 1997

    General Accounting Office: National Security and International
      Affairs Division...............................................   467
    Department of Defense: Depot operations..........................   509

                             Tuesday, May 13, 1997

    Department of Defense: Environmental Program.....................   535

                            Wednesday, May 21, 1997

    Department of Defense: Department of the Air Force...............   607

                            Wednesday, June 4, 1997

    Nondepartmental witnesses........................................   705

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                          THURSDAY, FEBRUARY 27, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:04 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Domenici, Shelby, Gregg,
    Hutchison, Inouye, Bumpers, Lautenberg, and Dorgan.

                             DEPARTMENT OF DEFENSE

                                  Comptroller

    STATEMENT OF JOHN J. HAMRE, Ph.D., UNDER SECRETARY OF
                DEFENSE (COMPTROLLER)
    ACCOMPANIED BY JOHN VAN ALSTYNE, GENERAL, U.S. ARMY

                  OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning, ladies and gentlemen.
        We are happy to have the Comptroller of the Department of
    Defense, the Under Secretary of Defense. I understand, Dr.
    Hamre, you have a presentation that is of very substantial
    length. As you know, there is a competing event, but we have
    decided to go ahead with this, because we had postponed it once
    before. We appreciate your courtesy.

                      PREPARED STATEMENT OF SENATOR DORGAN

        I have an opening statement from Senator Dorgan that I
    would like to place in the record at this point.
        [The statement follows:]

                   Prepared Statement of Senator Byron Dorgan

        Mr. Chairman, this is my first hearing as a member of the
    Senate Appropriations Committee, and I want you to know how
    pleased I am to have been named to serve on this prestigious
    committee. I am particularly pleased to be a member of the
    Defense Appropriations Subcommittee, which you and Senator
    Inouye have so ably chaired over the past several years.
        Although I have served in the House and Senate for over 18
    years, I have never been on a committee with jurisdiction over
    defense issues, and I am looking forward to learning as much as
    I can as quickly as I can. I have able mentors in the Chairman
    and Ranking Member. I also look forward to learning from the
    various experts within the Department of Defense about our
    national defense strategies and funding needs.
        As you know, Mr. Chairman, we have two very important Air
    Force bases in North Dakota--at Minot and Grand Forks--both of
    which are, in my view, crucial elements of our national
    defense. We are very proud of our bases and all that they
    contribute to the State of North Dakota and the nation.
    Supporting these bases and the B-52 bomber fleet housed at the
    Minot Air Force Base will be my highest priority as a member of
    the Subcommittee. And with regard to our armed forces around
    the world, I will be pleased to join in the subcommittee's
    efforts to improve the quality of life for our military
    personnel.
        Defense hawks will argue that the defense budget is
    woefully under funded and does not begin to meet our national
    defense needs. Others will argue that defense must take its
    fair share of cuts as we downsize the government and as the pot
    of money available for domestic discretionary spending
    continues to shrink. I want to state clearly and unequivocally
    that I am committed to doing whatever is necessary to ensure
    that the United States has the best national defense, bar none,
    in the world. That is our responsibility as members of this
    subcommittee. What I am interested in learning from Dr. Hamre
    and other Pentagon experts in the weeks ahead is what our
    defense needs are, what our priorities are or should be, what
    kind of force structure and weapons systems do we need to meet
    the challenges and threats of the 21st century, and what
    constitutes adequate funding in both the near and long term.
        I understand from reviewing last year's testimony that all
    the services face a procurement funding crunch and that we risk
    combat readiness if we do not adequately fund weapons
    modernization. General Shalikashvili's stated goal was to have
    a procurement funding level of $60 billion a year beginning
    with the budget before us. But the budget before us falls far
    short of that goal. In fact, the request of $42.6 billion is
    almost $3 billion below last year's funding level, and is
    nowhere near the $60 billion goal set by General Shalikashvili.
    I would like to know what the rationale is behind the $60
    billion procurement level as well as the level proposed in the
    budget we are reviewing here today. Last year, the
    Appropriations Committees added $5.7 billion above the request
    level to the procurement account. If the committee chooses to
    increase that account by a similar amount again this year, I
    would like to know where the DOD would prefer to spend that
    extra money.
        Mr. Chairman, I will have lots of questions as these
    hearings proceed. I regret that I am unable to stay for the
    full hearing today due to numerous other conflicts. I hope that
    will not be the case with future hearings. I would ask the
    Chairman if he would submit for the record the questions I
    intended to ask today.
        Again, I want to thank the Chairman and Ranking Member for
    their patience and willingness to work with me as I familiarize
    myself with the broad range of important defense issues that
    fall under the jurisdiction of this subcommittee.

        Senator Stevens. If there is no objection from members, it
    would be my desire that you just proceed uninterrupted through
    your presentation and we will hold questions until you are
    done. Is that acceptable, gentlemen?
        Senator Inouye. Certainly.
        Dr. Hamre. Thank you, sir. And I will go quickly. It does
    not have to be a long presentation. I will try to move through
    it very quickly.
        Senator Stevens. Do not skimp, John. [Laughter.]
        We have what you are going to say, but I would take umbrage
    at what you leave out.
        Dr. Hamre. I am not going to leave anything out.

        ----------------------------------------------------------------

                                Briefing Outline
    Fiscal year 1998 Budget in context
    Highlights of fiscal year 1998 Budget
    Supplemental Request for Bosnia/Other Contingencies

        ----------------------------------------------------------------

                           OVERVIEW OF DEFENSE BUDGET

        Sir, I thought what I would do is just take a minute to
    talk about our budget, and put it in context with the overall
    budget that the administration has submitted. I think that
    there are some very important and somewhat controversial
    elements to that, that I need to say, about this context. I
    will talk very briefly about the budget, and then I know that a
    particular concern is the Bosnia request, the supplemental to
    help pay for Bosnia.
        I would also like to introduce General Van Alstyne who is
    here with me from the Joint Staff. He is our expert. He has
    been working Bosnia issues on a day-to-day basis. And any
    substantive questions, he is perfectly able to answer. So I did
    at least bring an expert here with me.

        Sir, I am just showing you a chart of the four major
    categories that are in the Federal budget. Of course this large
    black section is the mandatory. That is things like Social
    Security payments, Medicare, and Medicaid. It also includes
    things like crop payments and crop insurance, VA benefits, et
    cetera.
        This patched area is interest payments. The upper gray
    section, in each case, is the DOD budget. And the lower gray
    section is discretionary spending.
        Now, there are a couple of major things to draw out of this
    which I think are of significance. Note, first of all, how the
    debt servicing actually drops during this period of time. At
    least we are forecasting that it is going to drop during this
    time.
        Senator Stevens. How can you drop the debt servicing when
    the debt continues to expand?
        Dr. Hamre. Sir, it is, I think, probably some very heroic
    assumptions that are in here.
        Senator Stevens. Yes.
        Dr. Hamre. But it is saying that interest rates are going
    to be lower.
        Senator Stevens. I know. They are heroic, and you cannot
    spend the heroes. [Laughter.]
        Dr. Hamre. Sir, I am pointing it out to say I think that if
    that does not happen, of course it is likely to be coming at
    the expense of those pieces. And that is what I think we have
    to watch out for.
        I do not have a reason to question it, but we have very
    optimistic assumptions about inflation. Virtually, the economy
    is doing very well. There are some risks about this being
    achieved.
        Senator Stevens. What is the rate of assumption of interest
    through the 1998 to 2000 period?
        Dr. Hamre. Sir, I will get that. But I think the nominal
    interest rate is about 3.5 percent. But we will get that.
        [The information follows:]

        As shown in the Economic Assumptions chapter of the
    President's fiscal year 1998 budget, the following are the
    assumed interest rate percentages:

    ------------------------------------------------------------------------
                                                      Fiscal year--
                                            --------------------------------
                                                1998       1999       2000
    ------------------------------------------------------------------------
    91-day Treasury bills..................        4.7        4.4        4.2
    10-year Treasury notes.................        5.9        5.5        5.3
    ------------------------------------------------------------------------

        Senator Stevens. I said I would not interrupt. Pardon me.
        Senator Lautenberg. That is the chairman's prerogative.
    [Laughter.]
        Dr. Hamre. The other thing that I would just note, look how
    the mandatories go from about 53 percent up to 57 percent
    during this period when we are getting the balanced budget. And
    that is with some fairly significant cuts in Medicare and
    Medicaid this year as you know. So this is going to be a tough
    budget for us to pull off.
        I would point out that the President has protected the
    Department of Defense in putting this budget together. And let
    me show you that on the next chart.

        ----------------------------------------------------------------

                  Fiscal Year 1997 Rescission and Supplemental
    Two components:
        $2 billion rescission and supplemental for Bosnia
        $2.8 billion rescission only for outlay relief in fiscal year 1998

    ------------------------------------------------------------------------
                                                 Fiscal year--
                                 -------------------------------------------
                                     1997       1998       1999       2000
    ------------------------------------------------------------------------
    Bosnia BA:
        Rescission..............       -2.0  .........  .........  .........
        Supplemental............       +2.0  .........  .........  .........
    Outlay Rescission:
        Budget Authority........       -2.8  .........  .........  .........
        Outlays.................       -1.3       -0.8       -0.5       -0.2
    ------------------------------------------------------------------------

        ----------------------------------------------------------------

                  fiscal year 1997 Rescission and supplemental

        But before I get to that, let me out this chart. We are
    submitting with our budget--and I know this is going to make
    you all hopping mad--a proposal to rescind $4.8 billion. Now,
    there are two elements to that rescission. There is a $2
    billion piece----
        Senator Stevens. In authority or outlays?
        Dr. Hamre. This is all in budget authority, sir.
        Now, the first piece is to pay for Bosnia. And it is to
    take $2 billion out of slower spending accounts and put it in
    to pay for Bosnia. So our proposal is to pay it. Now, we are
    not giving you individual rescission items. We proposed a
    cancellation.
        Now, we have done that 2 years running. And 2 years
    running, you said no. So I am not sure, but I still need to get
    funds for Bosnia. So I need to have a basis to work with, then
    we can work together and we can get some resources so we can
    get Bosnia paid for.
        The other part, which is I think very controversial as
    well, is this $2.8 billion rescission. And we do that for one
    reason. We need it to generate this stream of outlays. Now, let
    me explain why we had to do that.
        We had a big outlay problem in fiscal year 1998. It was
    caused by three things. It was caused by, first of all, we had
    some compositional shifts inside our program. We had some holes
    in our operating accounts that we needed to plug. And we moved
    about $4 billion from procurement into O&M to plug those holes.
    That had about a $3 billion outlay tail that came with it. So
    we had an outlay tail that came from that plugging some holes.
        The second thing we had was we had to pay for Bosnia. We
    had about 2 billion dollars' worth of outlays that were not in
    our 1998 column because of Bosnia.
        Third is we got the congressional increase last year that
    the President signed, of $10 billion; $3 billion of those
    outlays showed up in 1998. So altogether we had about an $8
    billion problem in fiscal year 1998.
        The White House gave us relief. We got some funds from the
    White House from it. We also realigned our own program. But we
    were still about $8 billion short in building our program. So
    when we got down to it, we said we either cut our 1998 budget
    request or we propose a rescission of 1997.
        Now, sir, if I may, the politics here is very different in
    this sense. If you choose not to cancel 2 billion dollars'
    worth of funds for Bosnia, I have a problem. Because I still
    have to work with you to try to get funds for the supplemental.
    If you choose not to rescind $2.8 billion to generate the
    outlays, it is not my problem. It is going to be your problem
    in building the budget resolution for 1998. Because it means
    that stream of outlays which were embedded in our assumptions
    are not going to happen. And I also know that outlay estimates
    are a controversial item right now. And I would be happy to
    talk with you about what I know about them.
        So this is our problem. This is very much your problem. I
    know you resent that, but I just wanted to be up-front that
    that is what happened this year.

                               Budget comparisons

        Sir, I am showing this chart, and I am trying to compare
    this year's DOD budget with last year's. This lower line is
    last year's budget extended over 5 years. The upper line is our
    budget request for this year.
        As you can see, it is higher in every one of these years.
    The President gave us about $7 billion more budget authority
    for the fiscal year. We have about $5 billion of it in 1998 and
    1999 and smaller amounts in the out-years.
        We were also allowed to keep about 4 billion dollars' worth
    of inflation savings. The inflation rate actually dropped one-
    tenth of 1 percent. And rather than take that from us, the
    White House let us keep that. And so our spending power is
    about $11 billion higher than it was last year.
        Senator Stevens. Only if we cancel $5 billion from last
    year, John. Now, let us be honest here.
        Dr. Hamre. Sir, depending on the outlay situation that we
    are in controversy with at OMB.
        Now, may I point out, sir. This star on my chart is where
    you ended up with the appropriation last year, about $252
    billion. All of this, by the way, is 051. It is just DOD. About
    $252 billion. And we are requesting about $250 billion. So we
    are down about $2 billion compared to where we were last year.
    So this budget still goes down, if your point of comparison is
    last year's appropriated level. And it is down about $2
    billion.
        It is up from where we wanted to be last year, where we
    said we were going to be this year, by about $2.6 billion.
        Senator Stevens. Actually $8 billion below where you were
    last year, because we have to cancel that other in order to get
    to where you started. You are really carrying it forward into
    1998. The 1997 money is going into 1998 now. So you are not
    spending it in 1997. You are taking it from 1998 and you are
    actually giving us less than you had to start with last year.
        Now, this is a funny-money chart. I respect you, but that
    is a funny-money chart. And it is hard for us to work from
    that.
        Dr. Hamre. Well, sir, what we are proposing is that this
    number comes down $2.8 billion.
        Senator Stevens. Plus another $2 billion.
        Dr. Hamre. Well, the $2 billion is just moving around
    inside the accounts. We are still planning to spend it for
    Bosnia. The content is different.
        Senator Stevens. You already spent it.
        Dr. Hamre. Well, we are spending it right now, yes, sir.
    Because the operation is underway. And that is what we need, to
    be able to work with you, to find a financing mechanism. We are
    financing it now, borrowing money from quarter to quarter. But
    there is the $2.8 billion that this number would come down. But
    it is only here. And these numbers are still higher. But,
    again, I realize, because of the outlay problem that exists now
    with CBO, that this number is in some risk if it is
    recalculated.
        So I am not disputing what you are saying, sir.
        Senator Stevens. Let me just put it this way. If you deduct
    the $4.8 billion, almost $5 billion, your star is down $5
    billion to start with.
        Dr. Hamre. This would be down, sir, but $2 billion is going
    back.
        Senator Stevens. Right, right.
        Dr. Hamre. So only $2.8 billion comes down in net terms.
        See, this piece here, sir, is what--I take out $2 billion,
    but I put in $2 billion for the supplemental. So that is just a
    wash.
        Senator Stevens. No; but it is not a wash, because you
    spent it on something we did not budget last year. It is
    already spent for something that was not in the budget.
        Dr. Hamre. Being spent for something that was not in the
    budget, yes, sir.
        Senator Stevens. Yes; so you are asking us to rescind other
    things because you spent it for something we did not budget for
    or you did not budget for.
        Dr. Hamre. Yes, sir.
        Senator Stevens. But that has got to be money outside of
    our 1997 fund, and, therefore, it is down $5 billion.
        Dr. Hamre. The program content would be $5 billion lower,
    yes, sir.
        Senator Stevens. Thank you.

                        comparison to Budget resolution

        Dr. Hamre. Sir, on this chart I am trying to compare where
    we are against the budget resolution from last year. And,
    again, we are looking here at fiscal year 1998. The lines are
    marked as the President's budget request and the congressional
    budget resolution.
        Now, in 1998, we are $3 billion below the congressional
    budget resolution. That is a product of two things. There was
    about a $2.6 billion increase in the Department of Defense
    budget request compared to last year, and there was about a $3
    billion increase for the Department of Energy budget request
    compared to last year. So the only difference, whereas 1 year
    ago there was a $9.4 billion difference between the President's
    budget request in 1998 and the congressional budget resolution
    in 1998. This year it is only $3 billion.
        And as you can see, the area under the curve is now narrow.
    So we have $17 billion where the President's budget request is
    higher in the out-years, and the congressional budget
    resolution is about $8 billion higher in the near term.
        Senator Stevens. Go ahead. I am just trying to figure out
    where I disagree. Thank you.
        Dr. Hamre. We can come back to any of these, sir.

        ----------------------------------------------------------------

                   Highlights of Fiscal Year 1998 DOD Budget
    Funding increased every year of the FYDP
    Readiness remains highest priority
    Ongoing military operations are fully funded
    Quality of life improved
    Modernization real growth protected but ramp delayed

        ----------------------------------------------------------------

                   highlights of fiscal year 1998 DOD budget

        Sir, I am just going to speak very briefly to each of these
    as the highlights of our budget request. As I pointed out, the
    budget is higher every year of the FYDP, because the President
    gave us some additional funds and let us keep the inflation
    money. I will talk about readiness and how we reflected
    readiness. I will spend some time talking about military
    operations--how they are funded in this budget. And I also have
    some charts on the supplemental that we can talk about briefly.
    Very brief on quality of life. And then modernization, where
    there is a lot of criticism of our budget and where there is
    some disappointment in how we ended up the year. We will go
    through all of that, sir.

        This chart is designed to show you the broad outlines of
    our budget request. And let me just take a second. These are
    the four major categories. The left-most bar is for military
    personnel. And as you can see, this bar is very static, with a
    minor increase in the out-years. And that is basically putting
    in the pay raises. So our personnel--and I will show you in a
    subsequent chart--is largely flat, and a minor increase in pay,
    just simply to pay for the legal maximum pay raises in the
    budget.
        The tallest bar is O&M, operations and maintenance. As you
    can see, it is basically flat. It goes down here from 1998 to
    1999. And that is because this has $1.6 billion of Bosnia
    operations in it that is not in 1998. We have 1999, because our
    budgeted bill will be out by August 1998. And so, therefore, it
    is down. But that is not a real cut in underlying readiness,
    that is simply reflecting that we do not have to pay for
    Bosnia.
        The right-most light gray bar is for R&D. And as you can
    see, it goes down modestly over this period of time. And that
    is largely a product of the major systems, like the F-18E/F,
    the new attack submarine, the F-22--those big programs that are
    no longer consuming big R&D dollars as they transition over to
    procurement.
        And then, finally, the darkest gray bar is the only area of
    growth in the budget: for modernization or procurement. This is
    about a 40-percent increase in real growth. But there is also a
    lot of contention about that, and I have a separate section of
    the charts to cover it later. And if I might defer those
    questions until later, because I think I might anticipate your
    criticism at that time.

        ----------------------------------------------------------------

                                                     FORCE STRUCTURE
    ----------------------------------------------------------------------------------------------------------------
                                                                     Cold War
                                                                     Base 1990   Base Force      1998      BUR Goal
    ----------------------------------------------------------------------------------------------------------------
    Land Forces:
        Army active divisions.....................................          18          12            10          10
        Reserve Component Brigades................................          57          34        \1\ 42      \1\ 42
        Marine Corps (3 Active/1 Reserve).........................           4           4             4           4
    Navy:
        Battle force ships........................................         546         430           346         346
        Aircraft carriers:
            Active................................................          15          13            11          11
            Reserve...............................................           1  ............           1           1
        Navy carrier wings:
            Active................................................          13          11            10          10
            Reserve...............................................           2           2             1           1
    Air Force:
        Active fighter wings......................................          24          15.3          13          13
        Reserve fighter wings.....................................          12          11.3           7           7
    ----------------------------------------------------------------------------------------------------------------
    \1\ Includes 15 enhanced brigades (equivalent to 5+ divisions). Also includes 8 National Guard Divisions (24
      Brigades).

        ----------------------------------------------------------------

                         Force structure and personnel

        Sir, very briefly, there is no change in this year's budget
    request in our force structure. The ``Bottom-Up Review'' goal,
    which we reached 2 years ago, is the same. There is no change
    to that program.
        I have got to tell you that this is under deliberation
    right now in the ``Quadrennial Defense Review,'' but there are
    no decisions that have been made about that. But, clearly, this
    budget--basically, we got to our force structure, and we are
    staying there for the time being.

        Personnel: As you can see, we continue to have reductions
    in personnel. In this case, there are cuts. And so I am showing
    you that the cuts are tapering off and getting smaller. The
    black bars are the military reductions; the lighter bars are
    for civilians. We thought that we were going to be done with
    military reductions last year. This year's budget we are
    proposing another 21,000 cuts--about 11,000 out of the Navy,
    10,000 out of the Air Force--below where we thought we were
    going to be.
        And this was a product of reviewing the program, cutting
    out some overhead. These are noncombat billets that were
    eliminated. This is going to be controversial. Because last
    year, the authorization committee put a floor in the law and
    said we could not go below that. We treat personnel not as an
    independent variable. We do not program a level of personnel.
    We program missions and say, what do we need to have by way of
    dollars and equipment and facilities and people to do that? And
    we honestly thought we could do it with 21,000 fewer people,
    all in the Navy and in the Air Force. There is no cut in the
    personnel levels in the Army or in the Marine Corps.
        There is about a 10,000 reduction in the Reserve
    components. In the case of the Navy Reserve, it is down about
    2,000 below what the ``Bottom-Up Review'' level numbers were,
    and the active Navy was down about 10,000.
        You see that the civilians are still on the glide path to
    be cut. And we are still cutting about 4 percent a year of our
    civilians. Now, we do not have any programmed RIF's in this
    year. We think we still can accommodate it through voluntary
    separations. But we still are going to be separating 28,000
    civilians in fiscal year 1998.

        ----------------------------------------------------------------

                       HIGH LEVELS OF READINESS SUSTAINED
    ------------------------------------------------------------------------
                                                  Fiscal year--
                                   -----------------------------------------
                                        1996          1997          1998
    ------------------------------------------------------------------------
    Army:
        Tank miles per year.......         618           800           800
        Tactical hours per crew/
         month....................          13.9          14.5          14.0
    Navy:
        Tactical hours per crew/
         month....................          22.8          23.8          23.7
        Steaming days per quarter:
            Deployed fleet........          50.5          50.5          50.5
            Nondeployed fleet.....          29.6          28.0          28.0
    Air Force: Tactical hours per
     crew/month...................          20.0          19.3          18.7
    ------------------------------------------------------------------------

        ----------------------------------------------------------------

                                   Readiness

        For readiness--and this is only the most superficial look
    at readiness--and clearly, when we go through the hearings, you
    will be asking all of the services to be more explicit to you.
    I just wanted to show you, as a measure of input. But
    basically, we have resourced readiness the same way we did
    these last 2 years.
        Now, the Army is always down a little bit. They always
    budget for 800 miles, and they tend to execute less than 800
    miles. So that is the phenomenon we saw there. We anticipate no
    reduction in readiness that comes from the way we input the
    resources.
        Senator Lautenberg. What does the 800 miles represent?
        Dr. Hamre. Sir, it is a very crude measure that tries to
    reflect the composite base of activity for a battalion.
        Senator Lautenberg. Is that per tank?
        Dr. Hamre. Per tank, yes, sir--per vehicle, where we count
    them. And we only count tank vehicles in combat units. And then
    we normalize everything to that one measure. It is not a
    particularly--it is a very highly aggregate measure that only
    is useful in telling you rough trend lines over time.
        I should say, sir, that this is the first time that we have
    actually budgeted simulator miles into the readiness program.
    These were all real miles, on the ground, driving vehicles. The
    Army, this year, has proposed about 70 miles are actually done
    on simulators for the first time. It was their proposal.
        Senator Lautenberg. Forgive me a moment, Mr. Chairman.
        Sir, are you saying that 800 miles is the minimum level per
    unit that is required to keep this vehicle in a state of
    readiness?
        Dr. Hamre. Yes, sir; it is what we budget for the Army as
    an aggregate. Some units will be higher, some units will be
    lower. But, on the average, we budget 800 miles per combat
    vehicle as a rough measure of how much dollars we put into the
    fleet for the readiness. We expect no readiness problems in the
    Army as long as we get the supplemental. And I have to go
    through that in just a moment.
        You will see a minor reduction in flying hours for Army
    helicopters. Those are all out of noncombat administrative
    helicopters--the helicopters that are flying people around in
    the rear areas.
        There is also a minor reduction here in the Air Force. And
    that was because they went through a review of the training
    syllabus and actually felt that they could squeeze out one-half
    a flying hour per month with no change in their readiness
    profile.
        So we honestly think our readiness program is solid. It
    will be just like it was last year and the year before.
        Senator Stevens. Does the time in combat zones count toward
    that?
        Dr. Hamre. Sir, what is embedded in here--for example, in
    1997, those units which are in Bosnia today, their readiness
    program was built into those numbers. In addition, the
    supplemental is for only the marginal cost in addition to what
    we budgeted for them.
        So, yes, those units that are in Bosnia right now, their
    readiness program is assumed by their activity in Bosnia. But
    we are adding a supplement of additional dollars, because we do
    not have enough to pay for wartime conditions.

        ----------------------------------------------------------------

                          Quality of Life Initiatives
    Pay Raise
        Provides full legal pay raise through the FYDP
    Housing
        Expands use of Family Housing Improvement Fund
      --Navy has quadrupled housing units provided at Corpus Christi at
            lower cost using FHIP
      --Currently evaluating a number of projects with a goal of providing
            over 12,000 units more economically
    Health Care
        Maintains health care benefits at lower cost (95 percent of
    eligible beneficiaries under TRICARE)
        Average out-of-pocket savings of $170 to $240 for enlisted
    personnel
    Commissary
        Sustains commissary benefit through Performance Based Organization
    initiative

        ----------------------------------------------------------------

                                Quality of life

        And very briefly, on quality of life. Secretary Perry, as
    you know, who built this budget, put a high priority on it. And
    we have tried to do that. We have a full legal pay raise
    throughout the FYDP. It is 2.8 percent in 1998 and 3 percent
    per year in the out-years. That is one-half of 1 percent below
    the ECI. That is the legal maximum. For civilians, it is 1.5
    percent below the legal maximum.
        We have expanded use of the housing fund that Congress
    authorized us to enter into. This is using private sector
    initiatives to leverage our Milcon dollars. We honestly believe
    that the private sector gets 30 percent more output for the
    same dollar input because they are more efficient in using
    private sector techniques. They do not go through the kind of
    cumbersome contracting techniques that we do in Milcon. And so
    we are trying to use that to get bigger oomph out of this
    program.
        There is not a lot more housing being built by this program
    this year. We held at roughly last year's level. We would like
    to get more than we have. This was a balance that we had to
    strike.
        Our health care program--I know one of the questions you
    may be asking is: Have we properly funded our health care
    program? And I believe we have, although there may be a budget
    amendment coming, and I would be delighted to talk to you about
    that. We are converting over to TRICARE; 95 percent of our
    people will be under TRICARE by the end of fiscal year 1998.
    And this is definite savings for people who are right now
    paying out-of-pocket expenses. And they will be saving on the
    average from $170 to $240 per person.
        Our commissary program is not changing, even though we are
    changing the organizational concepts to more of a business-like
    process. Let me give you an example of what this is to do. When
    DECA started, when they brought all of the commissary
    operations together, they inherited a real hodgepodge. And one
    of the things they wanted to put in was bar scanners, you know,
    at the checkout counters that was integrated into the inventory
    control systems.
        It has taken us 3 years to go through the normal Government
    contracting procedures--something that Giant Foods could have
    done in 3 months. So we are trying to get freed up from those
    kinds of cumbersome regulations so we can make DECA function
    much more like a commercial entity.

                             Modernization funding

        This is where I think there is some controversy and
    disappointment with our program from your perspective. I know
    that Secretary Cohen feels that if there is a weakness in this
    budget, it is in this area. It is in modernization. This is
    history. This left line here. This is all history. This is down
    about 58 percent in real terms, from 1990 down to 1997. This is
    where we ended up. That star is where we ended up last year,
    where you added about $5 billion to our budget, more than we
    requested. So it went up.
        This dashed line is where we had planned to be 1 year ago.
    And this right solid line is where we are now. Let me just
    discuss briefly the relationship of the numbers here. We are
    down compared to--well, we are up compared to where we were 1
    year ago in our program. We are up about $3.9 billion. But we
    are down about $1.7 billion from where you appropriated last
    year. So if you compare us to where you ended up last year, we
    are down about $1.7 billion in our proposal to you.
        Probably more importantly is, last year, we had proposed to
    be at this level--roughly $45 billion--and we are only at $42.6
    billion.
        Senator Stevens. None of your proposed rescissions or
    reprogramming affects the level of that star?
        Dr. Hamre. Sir, the cancellation that we have proposed--the
    $4.8 billion cancellation--we had to go through a process with
    OMB to estimate the outlays that come with it. And it does
    assume that about one-third of that $4.8 billion would be
    procurement.
        Senator Stevens. Well, that star is----
        Dr. Hamre. This star is where we ended up. It would be
    slightly lower, by about another $1.5 billion to $2 billion if
    we were to go that route. Again, as I said, I am not sure you
    are going to agree with that.
        Senator Stevens. Does that right line reflect the changes?
        Dr. Hamre. Sir, this right line simply reflects what we
    have in the FYDP, including budget year 1998, for procurement.
    And this line would not be changed based on what happens with
    the rescission or the supplemental. That number is the number
    that we have put in front of you, and it is about $2.8 billion
    or $2.9 billion lower than what we wanted it to be last year.
    We want it to be on this curve, and we clearly had to trade
    dollars away from procurement to put it into O&M. And it was
    largely because of some holes in the Air Force and the Navy
    budget that we had to plug.
        I can come back to any of this, because I do know that this
    is where there is a lot of dispute.
        Senator Stevens. Yes; do that.
        Dr. Hamre. Yes, sir.

                          average ages of DOD weapons

        Sir, I showed this to you 1 year ago, and it is not
    dramatically different from where we were 1 year ago. But that
    is showing you the problem we had on why we have got to get our
    modernization program up. I am showing you ships, tactical
    aircraft, helicopters, and combat vehicles. And I am showing
    you the average age of these fleets.
        Obviously I want to be in this gray band in every case,
    because that represents roughly one-half of my fleet size is
    younger than that, roughly one-half of it is older than that.
    And that is roughly a planning factor. It might be an artifice,
    but a planning factor we can use.
        There are several things to conclude from this. First, note
    that the trend lines are all in the wrong direction. Nothing is
    coming down in average age in our program; everything is going
    up. You would like to have these things pointing down, but they
    are not. So it is getting worse. Our average age--and I use
    that simply as a surrogate for modernity of our combat--you
    know, the fighting tools. The trend lines are adverse. They
    ought to be going the other way, and they are not.
        The second thing to note is that, invariably, by the time
    we end out the period, with the exception of surface combat
    vehicles--surface combatants I should say--they go above the
    average age in the out-years. So this is a big problem to
    reverse. Because not only are the lines heading in the wrong
    direction, but when they are above the half-life point, you are
    running fast, but the escalator is moving faster than you are.
        So we have to do something about this.
        That is part of the reason why--just to go back to the
    previous chart--we have got to get up to the $60 billion range,
    to start reversing that. And we cannot really tolerate the
    slippage that has been occurring every year, where we said yes,
    we are going to get up that curve, and every year we get into
    the budget year and we tradeoff procurement dollars to buy
    something else, to buy Bosnia, to buy back holes that exist in
    the O&M account, or something else.
        So we have got to do something about it. And that is really
    the core of the QDR problem. That is what we have to do in the
    ``Quadrennial Defense Review.''
        Senator Domenici. Mr. Chairman.
        Senator Stevens. We are going to get back to it. We said we
    would let him do it.
        Senator Domenici. I just wanted to make one quick
    observation. That last ``we,'' you include you, do you not?
        Dr. Hamre. Oh, yes, sir. As a matter of fact, I was really
    talking about ``we'' in DOD. We have to do that. We are not
    assuming our top line is going to go up to fix this problem. We
    have got to do that inside our own top line.
        Senator Domenici. Thank you.

        ----------------------------------------------------------------

                          Highlights of Modernization
    First priority to leap-ahead systems
      Continues Comanche, V-22, NSSN, F-22, Joint Strike Fighter, F-18 E/F
    Sustain Cost Effective Upgrades
      Funds CH-47 engine, Longbow Apache, Abrams Tank, Bradley sustainment,
            Medium Truck SLEP, AV-8B remanufacture, B-1B conventional
            upgrades
    Expand battlefield situational awareness
      Increased funding for Army digitization, UAV's, Global Broadcast
            System, SBIRS, MILSTAR, Cooperative Engagement
    ACTD's/Dual Use
      Accelerates introduction of state-of-the-art technology into the
            operating forces
    Stronger BMD program
      Significant increases in Airborne Laser program, BMDO's Theater High
            Altitude Area Defense (THAAD), and Navy Theater-wide Ballistic
            Missile Defense (NTW BMD) programs

        ----------------------------------------------------------------

                      highlights of Modernization program

        Dr. Hamre. May I very briefly discuss the modernization
    program we have submitted to you.
        We did put our highest priority on these programs--kind of
    the new leap-ahead technology systems. And these are things
    that are not going to be with us for years in some cases. The
    E/F is now coming on board. But the F-22, that first squadron
    does not stand up until 2004--I think it is 2002--something
    like that. A very long period of time. So we have to think in
    long-term ways about our modernization, which is why we
    continue to put primary emphasis on major new combat systems.
        We do have upgrades going on. And that is where the bulk of
    the things for the day to day is underway. It is not
    particularly bigger than it was 1 year ago. We did continue a
    lot of emphasis on the battlefield awareness initiative, really
    started by Admiral Owens when he was the vice chairman. We
    continued it. And these are very important, very high-leverage
    programs.
        We are putting some continued emphasis on the ACTD's and on
    the dual-use. It is not dramatic funding--about $300 million.
    And in BMD, we have a stronger program. I do know that this is
    going to be why they debated during the year, how much stronger
    is it, et cetera. But we have put about $2.5 billion more into
    BMD.

        ----------------------------------------------------------------

                       Ballistic Missile Defense Program
    Accelerates first unit equipped THAAD (from 2006 to 2004)
    Reduces risk in Navy Theater Wide
    Accelerates SMTS first launch (from 2006 to 2004)
    3+3 NMD program stays on course

        ----------------------------------------------------------------

                       Ballistic Missile Defense Program

        Let me show you that program very quickly. So we have
    accelerated it. We have added about, as I said, $2.5 billion.
    We put in $730 million into THAAD, the theater high altitude
    air defense system. This is the Army-managed system, high-rate,
    outside of the atmosphere interceptor. We have brought forward
    its deployment from 2006 to 2004.
        Paul Kaminski, who is the Acquisition Under Secretary,
    believes that this is paced only by technology--this date. We
    have had some failures--six failures in six shots at that. And
    so, the seventh one is coming up here within 1 month. So we
    have to make that one work or I think we have to go back and
    look at this program. And I am simply quoting Paul Kaminski on
    that.
        This is Navy theater wide. It used to be called Navy upper
    tier. We put in about $250 million more into this program. This
    is a very tough technical problem. And again, I am not the
    expert here, so I am only parroting the things that I have
    heard from Paul and others. We are taking here--this is to
    intercept outside of the atmosphere--and you want to intercept
    outside of the atmosphere against attacking RV's with
    penetration aids.
        So you need to have very sophisticated electronics that can
    pick out which one is the RV and which one is the decoy when
    you are outside the atmosphere. That dictates very
    sophisticated electronics, and we are trying to pack it in a
    very small vehicle. This is a very risky technical project.
    And, therefore, we feel this is paced by technical risks, not
    by budgeting.
        This is the old brilliant eyes. We have to move that over
    from 2006 to 2004, just like we did for THAAD, in order to get
    the leverage out of the program. So the first launch moves up
    to 2004. We do not think that is a risk. Our three plus three
    NMD program is staying on track where we were. It is really a
    two plus three program now, so that we can make a deployment
    decision by the year 2002.
        One of the questions you will say and the criticism we
    received last year was, you have got a three, but you do not
    have the second three. You have not put in your budget the
    procurement dollars to buy the second three. You have only put
    in the development dollars for the first three. And we will
    have to deal with that this summer, when we go through the
    program with you--are we going to put those dollars in or not?
        Now, the administration's position is we will put the
    dollars in when a threat emerges that says we have to do it.
    And we feel we are well ahead of the threat, but none of us--
    that is one of the debates that we are going to have this
    summer. And I know that Secretary Cohen has promised a full,
    open discussion about that both with you and inside the
    building.

        ----------------------------------------------------------------

                           Quadrennial Defense Review
    Process Underway
      Steering Group conducting a comprehensive review
      Military Departments, and OSD and CJCS working collaboratively
      CJCS and Chairman of National Defense Panel to provide an independent
            assessment of preliminary findings to Secretary
      Secretary submits the QDR results to Congress
      Secretary, after consultation with CJCS, submits final NDP report to
            Congress
    Everything is on the table
      Strategy
      Modernization
      Force Structure
      Infrastructure
      Readiness
    Results to be included in fiscal year 1999 budget

        ----------------------------------------------------------------

                         ``Quadrennial Defense Review''

        Finally, sir, let me just say the last part about our
    overall budget. And this is, I mentioned, the ``Quadrennial
    Defense Review'' which is underway right now. I think you have
    got 10,000 people at the Pentagon who are working on it. It
    seems everybody is doing it. We have got a steering group that
    is outlining the various categories that we ought to be looking
    at. Everybody is working on the process together.
        The Secretary has said everything is on the table. We are
    looking at our strategy. We are looking at our modernization
    program. We may not get to the $60 billion as fast, for
    example. We are looking at our force structure. We may cut the
    force structure below the level that I have shown you on the
    chart. Everything is on the table. And I cannot tell you--there
    is no formula right now on how we are going to do it.
        But what we do know we need to do is we have got to
    eliminate these claimants that come against the modernization
    program every year when we build the budget--$4 billion
    migrating out of procurement into O&M. That is what happened to
    us this year. We have got to get at the underlying problems.
        Senator Stevens. What is the time line on that process?
        Dr. Hamre. Sir, we are required by statute to provide a
    report to the Congress by May 15. Now, I cannot tell you--it is
    not going to be engineered in the FYDP by May 15. We will go
    through the program review and the budget review during the
    summer and the fall to do that. But the major outlines are due
    by May 15. And the Secretary is committed to do that. And he
    has also said that he is anxious to consult in advance, before
    that happens, with all of you.
        Now, sir, if I may, I would like to very briefly talk about
    Bosnia and our unfunded program in Bosnia.

        ----------------------------------------------------------------

                   ESTIMATED FISCAL YEAR 1997 OPERATIONS COSTS
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                             Total      Funded     Unfunded
    ------------------------------------------------------------------------
    Bosnia..............................       2,524         677       1,847
    Southwest Asia......................         714         590         124
    Drawdown Recovery...................          35  ..........          35
                                         -----------------------------------
          Totals........................       3,273       1,267       2,006
    ------------------------------------------------------------------------

        ----------------------------------------------------------------

                       fiscal year 1997 Operations Costs

        This is our biggest risk to readiness this year. Our total
    bill for contingency operations in fiscal year 1997 is $3.3
    billion. And I must say, it would not have happened without
    your leadership, Mr. Chairman, and this committee's leadership.
    You gave us $1.3 billion this last year. And I know those were
    hard dollars to come up with in the middle of last year's
    conference. And thank you for doing it. Really, it made all the
    difference in the world for us.
        But we are short $2 billion. And it is largely because of
    Bosnia. We did not have it in our budget, because we did not
    have the decision made we were going to stay in Bosnia through
    SFOR (stabilization force) until December 20. So this program
    is not funded.
        There are some minor cats and dogs in these other numbers,
    but basically we have a request before you for a supplemental
    for $2 billion in offsetting rescissions. Although we have not
    proposed specific lines for rescission. And that is something
    that I need to be able to work with all of you on.

        ----------------------------------------------------------------

                          Bosnia Costs Lessons Learned
    Problem:
        Significant cost growth in Bosnia budget estimates submitted to
    Congress
    Direct Factors
        Incomplete knowledge of mission specifics
        Environmental factors not understood
        Operation changes
        Revision of program/pricing assumptions
    Contributing Factors
        Contingency operations estimating process not standardized
        Reliance on ad hoc cost estimating processes

        ----------------------------------------------------------------

                          Bosnia costs lessons learned

        I know that my personal credibility with all of you is
    lower than a snake's belly in a wagon rut when it comes to
    Bosnia cost estimates. Because when I came up here last year, I
    said $2 billion. And we were off. We were off significantly. I
    have backup charts that go through this.
        Why were we off? We are going to spend, when the whole
    thing is said and done, about $6.5 billion. Why were we off?
        Well, we did not have a good understanding of what the
    nature of this mission was going to be. We thought we did. And
    we made our initial forecast. But we had to make changes once
    we got on the ground.
        And General Van Alstyne is here, and he can talk to you
    much more about that and the content of that.
        It turned out to be a very different program by the time we
    got there. The environment--we had the famous 100-year flood on
    the Sava River. We took every bit of bridging the United States
    Army had in Europe and took it to that one place and had to use
    it. Very severe environmental conditions that we had not
    anticipated.
        We did change the nature of the operation. We had fewer
    base camps in the original concept. And we have more base camps
    now, as part of the programs--that we were more out with the
    community, in terms of policing the warring factions. And,
    frankly, we just blew it on the cost estimating. I have got to
    be honest about that. A big part of it was we just blew it.
        So, now, why do I think our estimate is any good this year?
    It was not any good last year; why is it any good this year?

        It is based on actuals. When we put our budget together
    last year, we based it upon a forecast using a model. The model
    we used is the one we used to forecast our costs for Somalia
    and for Haiti. And it was relatively accurate for those two
    operations. It was way off for this operation.
        So this year's budget request is actually built on fiscal
    data. We know exactly what it has cost during the last 12
    months. And that is the basis for our forecast of this year's
    budget. We know our quality of life situation. We know what
    OPTEMPO is like. So I think this year's budget forecast is--you
    know I am not going to have a shock to you. I think I have got
    the upper bands--that it is expensive. And I said, the hole
    bill for Bosnia from the beginning through getting out in July-
    August 1998 is about $6.5 billion.

        ----------------------------------------------------------------

                          Supplemental Request--Recap
    When do we need more money in fiscal year 1997?
        Approval of funds needed by early April
    Why so soon?
        If supplemental is not approved by early April, the Services must
    begin adjusting to reduced funding levels
      --Training schedules will be revised and training support contracts
            canceled
      --Training opportunities will be irreparably lost this year
      --Readiness will be seriously degraded even if full supplemental is
            approved at a later date

        ----------------------------------------------------------------

                 timely passage of Supplemental appropriations

        One last plea. I hope, if it is at all possible, that we
    can ask for your help in getting the supplemental before the
    Easter recess. We are, right now, using our fourth quarter O&M
    for training to pay for Bosnia. And if we do not get
    replacement soon, the Army and the Air Force--they are the
    primary players here that are affected--are going to have to
    start canceling training programs and rotations at the National
    Training Center and red flag and green flag and things of this
    nature, in order to pay for it. So we really do need your help.
        And if it is at all possible to be able to do that here by
    about the middle of April, that would be great to really do
    that. If we know that you will be active and that markup is
    coming, then we can hold off and we do not have to take any
    extraordinary measures.
        Sir, we are prepared to go over anything further in either
    the overall budget or on Bosnia. That concludes the formal
    tract. I do have more information. I will be glad to answer any
    questions that you pose to me.
        Senator Stevens. I hope the Senators will agree that we
    will limit our questions to 10 minutes the first time around.
        I was negligent in not calling on my good friend to see if
    he had any opening statement. I put mine in the record. This is
    our first hearing, but I hope everyone agrees, again, this
    year, we will follow an early bird rule. That is, unless there
    is an objection, that will be the case. You all understand the
    early bird rule, I assume?
        [No response.]

                            funding for Peacekeeping

        Senator Stevens. Let me start off, then, if I may.
        How much is in your budget for 1998 for peacekeeping?
        Dr. Hamre. Sir, I know there is a formal definition for
    peacekeeping. So may I come back and give you----
        Senator Stevens. Well, for what we saw in Kuwait and Saudi
    Arabia and Bosnia, what we see in the Pacific, which is related
    to peacekeeping.
        Dr. Hamre. Yes, sir.
        Senator Stevens. Not normal training, not normal
    deployment.
        Dr. Hamre. Yes, sir; we have, for Bosnia, in our 1998
    budget request, approximately $1.6 billion. We have, for
    Southwest Asia--that would be for intrinsic action for Southern
    Watch and Northern Watch--we have--I will give you the precise
    number--we have got, altogether in 1998, we have got $2.2
    billion; $1.5 billion is for Bosnia and $700 million of it is
    for Southwest Asia.
        Now, the Southwest Asia bills are higher than that, but we
    have received payment in kind and other support from Kuwait and
    Saudi Arabia. So that those costs are higher, but those are the
    costs that are in our budget, and that is all we would need.

                              tempo of Operations

        Senator Stevens. Well, I have already expressed to the
    Secretary my point of view that the tempo of operations in
    Kuwait and Saudi Arabia and Bosnia and Italy are at a higher
    level than we have had during the time when there was intensive
    combat in the area. I do not know what we are going to do about
    that. Because the estimates that we used for our appropriations
    last year were as bad as yours, but, when we got there, we
    found out why.
        Who controls now the level of operations? Do you have
    anything to do with that, in terms of the money that is
    available? Does the money we put up have anything to do with
    the amount of money they are going to spend?
        Dr. Hamre. Sir, the money that you provide us has an awful
    lot to shape what we choose to do. But there is an
    institutional disconnect--and I do not mean this in a negative
    sense--but there is an institutional disconnect sometimes in
    this area, because the people who call for operations are
    CINC's, they do not control the dollars. Those are controlled
    by subordinates. And it is very hard for a subordinate,
    sometimes, to tell their superior officers that they are not
    going to do something.
        And so there probably is occasion a pace of activity that
    is higher than we budgeted for, and the budget is not what is
    pacing it. So we work very hard with that. We have an effort
    underway right now, through JCS, that is trying to give us a
    better handle on that, so that CINC's do know what the cost of
    an operation is going to be.
        Senator Stevens. I hate to tell you this, but we presume
    that you are sitting there by the Secretary and when the
    President says, let us send more people to Kuwait, someone,
    such as you, says, well, Mr. President, we do not have the
    money to do that.
        Dr. Hamre. Sir, I do do that. But I also have to tell you,
    my job is to support my Secretary when I--when he has made a
    decision and I give him the information, he says, well, we are
    going to do this and you are going to have to find a way to
    take care of it--yes, sir, that is my order and I will do that.
        I am not going to tell him, sir, you cannot go to Bosnia
    because I do not have it in the budget. Well, last year, we
    were severely criticized for taking the money from where we did
    to put $1.2 billion into the budget. It was less than 50
    percent what is actually being spent during this year. As a
    matter of fact, the spending rate at the time we finally ended
    up the bill was in excess of what--we should have put more in,
    because we saw what was being spent. I do not understand how we
    can get any control over it.
        Senator Stevens. Let me ask this. Does anyone consult you
    about the expenditures that are going to be made in
    deployments?

                      controlling Operational expenditures

        Dr. Hamre. Sir, General Shali has put a very important new
    requirement on every one of the CINC's and his own
    organization, when any deployment is to be made, there now
    needs to be a cost estimate associated with it. So that we do
    know that information and people are thinking about it.
        I got to tell you, it was not done before this year.
        Senator Stevens. Well, when we were in Kuwait--and as I
    recall, that deployment was not one requested by the host
    country, it was not one that was consulted with the Congress at
    all, and we were told that that was a deployment for 20 to 50
    years. Were you told that before they made that deployment?
        Dr. Hamre. No, sir; and I honestly do not think that my
    Secretary thinks that that is a 50-year commitment right now.
        Senator Stevens. Well, the Secretary is not spending money;
    the CINC is. How do we get some control over the CINC's? That
    is what I feel, after this last trip. The CINC's are spending
    money without regard to how much we have appropriated. They put
    in a request to you for money. You cut them back. We cut them
    back--or we put some money somewhere else. We are not cutting
    the overall budget. But they go ahead and spend based on what
    they have requested.
        Now, how do we get some control over the CINC's
    financially? Is there a financial officer for the CINC?
        Dr. Hamre. No; there is not. The CINC's do not have
    resource management organizations under them. They rely on
    their subordinate organizations to do that.
        But, sir, I have got to tell you, philosophically, I need a
    CINC to worry about the military threat, not worry about
    funding sources. That is really for me to do for him. I do
    believe he needs to be aware of what it costs.
        Senator Stevens. Well, true combat, I would agree with you.
    But when I see a CINC planning for a 20- to 50-year deployment
    without any consultation with Congress, then I start to worry
    about the system that we operate. How can we fund the
    Department now for another year? Look what has happened to us.
    We put up--we rearranged the money last year, gave you money
    for Bosnia, and now we are looking at reshaping the 1997 budget
    to the tune of almost $5 billion before we even get to 1998.
    And we are going to have extreme difficulty to do that in this
    committee.
        Incidentally, I want to thank you and Mr. Raines for
    acceding to our request. And that is, we are not getting too
    specific about where the money is coming from.
        Dr. Hamre. Yes, sir.

                           accuracy of Cost estimates

        Senator Stevens. Because, obviously, it looked like you
    were going to come up and just cut out all of the congressional
    priorities and leave the ones there that the administration
    wanted. There has got to be some balance in this reshuffle of
    money. But we know we have to do it. All of your chiefs have
    come to us and said they have to have this money by April. We
    respect that.
        But someone is not putting the arm on the CINC's and
    telling them to slow down in the rate they are spending money.
    If there were people in harm's way, we would agree with you, I
    think--at least I would--about no restraints on CINC's. But
    this is not harm's way. This is planning for future deployment.
        And I was just aghast when I saw what was going on, in
    terms of planning, by the expansion of Aviano, expansion of the
    Kuwait deployment, the expansion of the deployment in Saudi
    Arabia, without any consultation with us or the Armed Services
    Committee, to the best of my knowledge, in terms of the rate of
    deployment and the tempo of the activities under that
    deployment.
        We cannot trust your numbers right now compared to what I
    saw, in terms of the rate of flying, the rate of deployment,
    the kind of activities taking places, in terms of rotation out
    there. And maybe I am speaking too much for the committee. This
    is my feeling.
        Dr. Hamre. Yes, sir.
        Senator Stevens. I do not know how we can recommend to the
    Senate that this budget really reflects what is going to be
    spent in 1998, in view of what has happened in 1997.
        Dr. Hamre. Sir, we have built our budget estimates for
    intrinsic action--Southern Watch and Northern Watch--off of the
    last 4 years of actuals. I actually do not think we are off in
    our estimate to you. You are raising a bigger question, though.
    And you are raising a question about what are the ways in which
    resource decisions are brought to bear by CINC's when they are
    making operational decisions.
        I am not trying to duck this, but I think this is a thing
    you should raise with General Shali next week. General Shali
    has actually put in place some constraints for the first time,
    where we have to think about and consider those costs up front.
        Senator Stevens. Well, we deal with other departments in
    this committee. And if we have a portion of the Fish and
    Wildlife Service or the Park Service in Hawaii, they do not go
    out and start building buildings and hiring people without some
    clearance with their central fiscal officer. What I am hearing
    is the CINC's do not have a financial officer; you do not have
    any control over them. They are going out and spending money,
    and they give you the bill. And now you are giving us the bill.
    All in the same fiscal year, now, Doctor.
        We are not talking about 1998 now. We are talking about
    this fiscal year. We have to reshuffle fiscal year 1997 to the
    tune of almost $5 billion. And we have only got, what, one-half
    of the year left by the time we do it. As a matter of fact,
    just barely, if we get it done by April 1.
        The effect of that is staggering in terms of what we wanted
    to do in terms of priorities for defense. And I think we have
    more than erased what we did last year, in terms of giving an
    increase of $8 billion over what the President wanted. You have
    gone ahead and spent the money on what you wanted to spend it
    on anyway, without any control at all.
        Now, I am going to try to find some way to put some
    controls into effect so someone is responsible, when we see the
    excesses of Haiti, Somalia, Bosnia, and now Kuwait and Saudi
    Arabia--all of them are far in excess of the estimates. Somehow
    or other, how can we tell these people in the Senate that this
    is--we can once again predict that we are going to have
    rising--you have a rising line there. It is not true.
        Because you are starting from a much lower level, in terms
    of what has actually been spent on the program. You have spent
    money for things that were not on the program. And that really
    disturbs me. I do not know if it disturbs the others. But I do
    believe--I have got 1 minute left--I believe we have got to
    have some meeting of minds with the Department, because we
    cannot have an impact.
        We are going to lose the momentum we have put behind the
    national missile defense, despite what you said. We are going
    to lose the momentum in terms of research and development. And
    we are going to lose the development in terms of modernization,
    because the money has been spent in peacekeeping efforts, which
    we were told we were going to be at a very low ebb. We were
    supposed to be out of there by last December.
        Now we find that we have another deployment started in
    Kuwait and another one started in Saudi Arabia, and I think we
    are going to see the same thing from those unless we put some
    constraints on the Department. Someone is going to be
    responsible, and I think someone ought to go to jail if you
    spend more money than we give you in a particular function.
        Now, there has to be some control over this Department if
    we are going to have the mutual respect that we should have.
        Dr. Hamre. Sir, I am the one that gets to go to jail if
    that happens. [Laughter.]
        Senator Stevens. No; you are not the one spending the
    money; you are just telling us that it has been spent.
        Senator Lautenberg. We will put you on parole.
        Senator Stevens. Senator Inouye.
        Dr. Hamre. I am glad the time ran out, sir. [Laughter.]
        Senator Bumpers. And that is one of his tamer
    presentations, Dr. Hamre.
        Senator Inouye. Mr. Chairman, I have a whole set of
    prepared questions, and I ask that they be submitted.
        I am going to be submitting a whole set of questions.
        Dr. Hamre. Yes, sir, and we will be responsive.

                     Budgeting for major regional conflicts

        Senator Inouye. I have just one question.
        Senator Stevens. I did not get to my questions. [Laughter.]
        Senator Inouye. Four years ago, the most commonly used term
    was ``major regional conflict.'' It was used in almost every
    other paragraph, major regional conflict.
        Dr. Hamre. Yes, sir.
        Senator Inouye. And that the budget was sufficient to have
    our Nation be involved in two major regional conflicts. In this
    budget presentation, there is not a single time when you used
    the term ``major regional conflict.''
        Under this new budget, how many major regional conflicts
    can we be involved in at the same time?
        Dr. Hamre. Sir, this budget this year is no different in
    terms of the planning assumptions from the previous years. It
    is based on the assumption that we will be able to fight two
    nearly simultaneous major regional conflicts. We have never
    said they were at the same time. We have always said they were
    nearly simultaneous. And we do not have sufficient resources to
    do two at the same time. We have never advertised that we could
    do that.
        What we do have enough to do is to fight one at the same
    time and deter a second one at the same time that that is
    underway, with sufficient force that we can come and bring to
    bear to stop them from achieving their objectives during that
    period.
        Senator Inouye. Even with the reduction in surface vessels
    in the Navy and carrier forces?
        Dr. Hamre. Sir, there is no reduction in the surface
    vessels in the Navy in this budget compared to last year.
        Senator Inouye. What about carriers?
        Dr. Hamre. Sir, there are 12 carriers.
        Senator Inouye. And the air wings; are they reduced?
        Dr. Hamre. Pardon me, sir?
        Senator Inouye. The air wings, are they reduced?
        Dr. Hamre. No, sir; there is no change in any force
    structure with the fiscal year 1998 budget compared to 1997. I
    will doublecheck to make sure that is the case. But if it was,
    it was just part of the regular programmed reduction that went
    into the ``Bottom-Up Review.'' But I will make sure that is
    right and get back to you, sir.
        Senator Inouye. Do you think we can sufficiently carry out
    our mission?
        Dr. Hamre. Sir, I can only quote what my Secretary has said
    and what the Chairman of the Joint Chiefs has said, that we can
    carry out our national strategy. There is risk associated with
    our ability to be able to do that, and we think that risk is
    acceptable, but we believe we can do that, yes, sir.
        Senator Inouye. Thank you, Mr. Chairman. I have another
    committee to attend, so I yield back the balance.
        Senator Stevens. We are glad to have your balancing
    influence, Senator. Thank you very much.
        Senator Lautenberg.

                              Host nation support

        Senator Lautenberg. Thank you, Mr. Chairman.
        Dr. Hamre, do we have any recovery, changes in percentages,
    et cetera, for the infrastructure requirements, or whatever
    costs we try to pass on to host countries, such as Kuwait,
    Saudi Arabia, et cetera? Are we maintaining a particular
    percentage that they are responsible for? We do not ask them to
    pay our salaries or things of that nature, but we do try to get
    them to cover some part of the costs for being there.
        Dr. Hamre. Yes, sir.
        Senator Lautenberg. Shared by the host country.
        Dr. Hamre. Yes, sir; of course, the precise cost
    relationship between us and our host countries varies based on
    status of forces agreements, and they will vary from location
    to location, but let me give examples.
        Senator Lautenberg. Let us talk about Saudi Arabia and
    Kuwait.
        Dr. Hamre. Saudi Arabia: Of course, we have Southern Watch
    underway in Saudi Arabia. They provide assistance in kind to
    support the Saudi Arabia operation. That means fuel, water,
    things of that nature. In addition, as we made our relocation
    for force protection in Saudi Arabia there was a very explicit
    cost-sharing arrangement with them. The informal notion is that
    if it is inside of the boundaries of the camp and it is not
    permanent, it is our bill. If it is a permanent facility or
    outside of the borders, it is their bill. And they are paying
    it. We estimate that that will be about $200 million this year,
    sir.
        Senator Lautenberg. So if it is outside of the encampment
    area, whether that is a permanent facility or not----
        Dr. Hamre. If it is outside, it is their responsibility. If
    it is inside and permanent, it is their responsibility. If it
    is inside and temporary, it is ours.
        Senator Lautenberg. Saudi Arabia, are they paying that?
        Dr. Hamre. Yes, sir.
        Senator Lautenberg. In full, 100 percent.
        Dr. Hamre. Sir, we have just concluded the negotiations or
    are concluding the negotiations on the final details. We are
    very confident that they will be paying that.
        Senator Lautenberg. Negotiating from what base, Dr. Hamre?
        Dr. Hamre. When Secretary Perry went over last July, he sat
    down with the senior leadership in Saudi Arabia and worked out
    an arrangement with them. But as is always the case, the fine
    details have to be worked out, and they have been doing that. I
    would like to give you a more formal response, sir, than what I
    can do off the top of my head.
        Senator Lautenberg. I would like to have it.
        [The information follows:]

        The agreement that Secretary Perry and HRH Prince Sultan
    entered into on July 30, 1996 required the U.S. to fund the
    immediate relocation expenses to move our troops to safer
    locations and the Kingdom of Saudi Arabia (KSA) to fund
    permanent facilities to include: infrastructure (water, fuel,
    electricity, and sewage), force protection enhancements,
    external security for all facilities, and housing. In January
    1997, USCENTCOM formally requested the KSA to fund a number of
    permanent facility requirements. As a result of several
    executive level discussions related to the U.S. request, the
    KSA has committed $200 million for these permanent facilities.
    While detailed U.S./KSA negotiations continue, we expect the
    $200 million will fund the following efforts: force protection
    at Eskan Village; housing and force protection at Prince Sultan
    Air Base; relocation of troop housing to more secure location
    in Taif; consolidation of housing at Dhahran; strategic,
    tactical and local communications facilities; most operations,
    administrative, and maintenance facilities for air-based
    operations; and a medical facility at Prince Sultan Air Base.

        Senator Lautenberg. How about Kuwait?
        Dr. Hamre. Yes, sir.
        Senator Lautenberg. Is that the same?
        Dr. Hamre. Please let me just give you a formal response
    that is correct. I can give you in general terms yes, we are
    receiving support. It turns out about one-third of our costs
    for being in Kuwait is borne by the Kuwaities, and we pay about
    the other two-thirds.
        [The information follows:]

        Beginning in 1996, Kuwait expanded the extensive support
    they provide U.S. security forces in-country. They now provide
    enhanced U.S. force protection following the Khobar towers
    bombing in Saudi Arabia, additional support for the more
    extensive exercises scheduled by U.S. forces, and storage for
    the additional military assets temporarily deployed to Kuwait
    following the latest Iraqi military actions. The U.S. military
    does not pay rent for any facilities in Kuwait, nor does it pay
    airport or port fees. All operational and residential
    facilities are maintained by Kuwait, and all food and
    transportation requirements are covered. Kuwait pays all costs
    of conducting Army battalion level training exercises
    (Operation Intrinsic Action) to include troop transportation
    costs, maintenance of propositioned brigade equipment, storage
    buildings, barracks, supply points and purchase of spare parts.
    In addition Kuwait's Udairi range, one of the most significant
    training areas available to U.S. forces outside CONUS, is made
    available free of charge. Finally, Kuwait has agreed to pay the
    full costs associated with the in-country deployment of the F-
    117 aircraft and a Patriot unit associated with Operation
    Desert Strike.

                            cooperation of Countries

        Senator Lautenberg. I will make an observation. I have been
    concerned about the cooperation of the countries and I have
    been disturbed by some of the impediments that we have run into
    in getting information from them. But if there is one thing
    that ought not to be a problem, it is to get them to carry the
    financial burden. That should be easy for them, and that is the
    financial side. I do not want to put our forces out there as a
    mercenary force. That is not America's objective. Our objective
    goes far beyond just being there at their convenience. But I
    would appreciate it if we can get that data furnished to the
    whole of the committee ASAP.
        Dr. Hamre. Sir, let me assure you, you will have no
    constraint getting information from me. I will get you whatever
    you need.
        Senator Lautenberg. OK. And if you would, be selective.
    Those countries--you know, Bosnia, they are not going to be
    able to contribute at all.
        Dr. Hamre. Yes, sir.
        Senator Lautenberg. But if there are things that any of
    these countries could do, and those countries that can
    contribute, I would like to see what percentage they are giving
    us, and whether or not they are delinquent in the flow of
    funds.
        Dr. Hamre. We feel very good about it, sir, and let me
    say--and I sure do not want to pick a fight--we are not there
    to save their necks. We are there because we have national
    interests where we feel it is very important for us to be
    present. And we share this interest with them. But we are there
    because of our needs.
        Senator Lautenberg. Well, we are there because of our
    needs. But I will tell you, if you were protecting my house
    because you wanted to protect yours next door, I'd sure be
    grateful, and I'd make sure that we made it very comfortable
    for you to do that.
        Dr. Hamre. And they are being very responsive, but I will
    provide that information, sir.

                                R&D expenditures

        Senator Lautenberg. There was a figure among your charts
    that I had a little trouble with, having to do with R&D. Can
    you just, any of you, pick out the page that had a reference to
    R&D expenditures?
        Dr. Hamre. I showed you this chart, sir, which shows that
    it is going down modestly over this period.
        Senator Lautenberg. I would like to ask you this: Do any of
    the R&D projects get further shifted to the outside? We have
    partners in most of our major R&D projects. Thank goodness we
    have. The private sector is ingenious, more often than not, in
    looking for ways to develop things. Has that share changed at
    all, so that we can get a little better definition of what our
    expenditures mean in terms of the product that we gain?
        Dr. Hamre. Sir, I will get for you for the record the way
    in which the dollar split between Government and private sector
    evolves over this period of time. You will primarily see that
    it is coming out of the private sector because the major dollar
    expenditures are when you are developing new weapons systems,
    and as you phase out of those, which is why the line goes down
    modestly. It is going to be cut.
        Senator Lautenberg. I just wanted to have some feel for
    whether or not we are doing less R&D than we used to. And
    considering that this chart shows about an even funding level,
    maybe there is more on the outside.
        Dr. Hamre. Sir, I think there are two ways, if I could be
    fair in describing it. I think there are two ways to
    characterize that. If you look at are we doing more or less in
    R&D, you can compare in nominal terms or real terms what did we
    do 20 years ago. We are doing less. If you were to look at it
    as a percent of our overall defense budget, we are doing far
    more. We have historically spent about 10 percent of our budget
    on R&D, and this budget has about 14.5 percent on R&D. So in
    depending on how you choose to look at the problem, I think we
    are doing well in R&D, given the overall constraints that we
    have as a Department.
        Senator Lautenberg. Perhaps the general ought to answer
    this, but is there a balance between personnel requirements and
    advancing technology in some way? If we cut back on the numbers
    of people we have in training in the field, et cetera, do we
    still gain a military advantage based on technology, or are we
    in some way impairing our ability to do the job that we would
    like done?
        General Van Alstyne. I would propose that I do two things:
    First, that I take your question and provide a more detailed
    response. But initially, I would say definitely all of our
    systems, and I am sure as the chiefs of services or the Joint
    Chiefs come over and testify, they will make the connection
    between increased technology and the ability to perform, to
    accomplish their mission with a lesser force. So they
    definitely make the connection between an increase in
    technology and modernization and the ability to accomplish with
    current or a lesser force.
        But, sir, I am a little bit out of my field. I would be
    pleased to provide a response for the record.
        [The information follows:]

        There is a connection between an increase in technology and
    modernization and the ability to accomplish the mission with a
    lesser force; however, any connection is both mission and
    situation dependent. There are well known examples of fielded
    systems which, using technological enhancements, have resulted
    in fewer people ``in the field'': stealth aircraft using
    precision weaponry can destroy in one pass the type of targets
    which, in the past, required multiple aircraft flying multiple
    missions. However, this system may not be the appropriate
    weapons system for all missions and all situations.
        Each of the services has better systems which demand fewer
    people for operation and maintenance; however, the
    unpredictability of future U.S. military operations will
    require the ability to mix and match forces and equipment. The
    mix will be affected by the traditional factors which play a
    part in any military operation: political objectives and
    restrictions, rules of engagement, geography, weather, etc. We
    cannot, therefore, say with any certainty that new technology
    and any resulting decrease in numbers of people we have
    training in the field will guarantee a military advantage for
    U.S. forces in all situations.

                 international comparability of Defense efforts

        Senator Lautenberg. I would be very interested in
    maintaining our capability. I was struck by the reduction in
    the number of divisions in the Army--since I think 1990, was
    the year.
        General Van Alstyne. Yes, sir.
        Senator Lautenberg. We were up at 18.
        Dr. Hamre. Yes, sir; we were up at 18, and we are down to
    10.
        Senator Lautenberg. And the requirements do not seem to
    reduce substantially.
        I would ask you one more thing in the time that I have
    allotted here. What the charts do not show is how much we spend
    on defense relative to other--let us say members of the
    advanced societies world, the other countries who have
    obligations, feel the need to help participate in international
    affairs and maintain their own defense, as well, and some of
    them are restricted by philosophies that emerge as a result of
    World War II. But is our spending on a comparable level? Do we
    spend more on defense on a relative basis than the Frances,
    Germanies, United Kingdom, and I know that Germany has a
    particular structure. Do we spend more on defense than these
    countries, or do we spend less?
        Dr. Hamre. Sir, we provide to the Congress a report every
    year on relative expenditures from each of the countries. And I
    will have to get that and refresh my memory. I do not recall.
        As I recall, we were one of the higher as a percent of GNP
    spending on defense, but there were other countries that spend
    a higher percent of GNP. I would need to share--I need to go
    back through that, sir, and I will have that to you before the
    day is out. I am not trying to duck your question, I just do
    not know it.
        [The information follows:]

        According to the privately published Military Balance, for
    fiscal year 1994 the following were the percents of Gross
    Domestic Product spent on defense:

    France............................................................   3.3
    Germany...........................................................   2.0
    United Kingdom....................................................   3.4
    Canada............................................................   1.7
    United States.....................................................   4.3
    Japan.............................................................   1.0

        Senator Lautenberg. I would not think that you did.
        Thank you very much, Mr. Chairman. We will get that.
        Senator Stevens. Thank you, Senator. That is a good
    request. We will look forward to the answer to your question.
        Senator Domenici.

                       Cost of maintaining older systems

        Senator Domenici. Thank you very much, Mr. Chairman.
        I just want to make two observations before I ask
    questions. Mr. Chairman, one of the charts that the Comptroller
    presented----
        Senator Stevens. Page 13?
        Senator Domenici [continuing]. Yes--had to do with the
    average age of selected DOD weapons. Maybe you could just put
    that up there very quickly. Let me, while he is putting it up,
    if you just look at the two on the right-hand side, one of the
    reasons we are having problems with reference to our budgets
    and O&M is that if you look up there on tactical aircraft and
    just look at 2002, the average age of the Air Force's planes
    will be then at 20 years--almost 20, am I correct?
        Dr. Hamre. Yes, sir.
        Senator Domenici. And then down below, if you look at the
    helicopters you will see that the U.S. Marine helicopters in
    2002 are averaging over 25, almost 30 years. And Army utility
    is there around 20, 22 years. I think what is happening, Mr.
    Chairman, is that these aircraft, and I assume the same is on
    ships, but I do not know that much about them, the cost of
    maintaining them is getting to be very, very high when they get
    that old. And there is a tradeoff when you have to spend that
    much money to maintain, replace engines, and the like. That is
    a tradeoff against procurement in the future, the way we are
    budgeting now, because to the extent that we have to do that it
    has to remain in O&M and clearly you cannot then reduce O&M and
    spend it for the weapons of the future. And I actually believe
    that it might be good exercise to tell us what might be a mixed
    scenario of replenishing more of existing kinds of aircraft and
    helicopters and maybe delaying some at the tail end, the entry
    of brand new weapons systems. I think in the meantime that the
    differential in costs may very well work out on our favor and
    the risks that are imposed because of delays on the other end
    may not be very serious. I just make that as an observation.
        First, let me make my second one. Mr. Chairman, in my State
    I have now visited many of the military personnel on bases, and
    I have decided, with your help, that I would dedicate a bit of
    my time this year to the quality of life as it pertains to pay
    for the military men and women, especially at the bottom
    levels, and also the quality of life as it impacts upon family
    life on military bases. And I believe we have some serious
    problems with reference to child abuse, spousal abuse, divorce
    rates that are creeping up in the military. I think the
    military has to look at things to do on these bases to give
    families a better chance of surviving under these difficult
    times. I intend to ask the committee to perhaps even have a
    hearing on this issue of the family situation on our military
    bases: Are we doing enough to help them maintain a decent
    family life?

                                  Bosnia costs

        Now, having said that, let me suggest that everybody has
    asked questions about Bosnia and the $6.5 billion, but I would
    suggest, and I would ask you, is it not entirely possible that
    that $6.5 billion is not enough, as far as our commitment? Is
    there not some planning going on as to what we will do there
    with reference to a large aid package to help keep the peace?
        Dr. Hamre. Sir, the $6.5 billion that I referred to is only
    the Department of Defense's bill.
        Senator Domenici. Yes.
        Dr. Hamre. I will have to find out what the Department of
    State and others are doing. They are working on that.
        Senator Domenici. Can we get that, Mr. Chairman? Are there
    other plans to spend more in Bosnia in addition to the $6.5
    billion?
        Dr. Hamre. There are costs associated, for example, with
    equipment and training; there are costs associated with
    economic reconstruction; that are not in our budget. I will get
    it for you.
        [The information follows:]

        In addition to the $6.5 billion required by the Department
    of Defense to support operations in Bosnia for fiscal year 1996
    through fiscal year 1998, there is $1.5 billion in U.S. support
    being sponsored by the Department of State and other domestic
    agencies for program requirements advocated by the Dayton
    Accords. Included are programs associated with economic
    reconstruction, humanitarian aid and assistance, and other
    support related to such programs as the civilian police force,
    U.N. peacekeeping, the War Crimes Tribunal, demining efforts,
    etc.

                             civil works in Bosnia

        Senator Stevens. Senator, if you will yield, we found
    evidence when we were over there that there is a substantial
    amount of civil works being done by reserve strength, spending
    Department money but doing civil works. Now, I think his
    question is a very good one.
        Dr. Hamre. Yes, sir.
        Senator Stevens. Are we hiding the reconstruction of Bosnia
    in the defense budget?
        Dr. Hamre. No, sir, but may I speak? I do know of some of
    this because I have had several conversations with General Nash
    about it. General Nash is indeed pushing some projects that
    look like civil works projects, but he uses that as a way to
    get into a dialog and working with the local warlords, as it
    were, with them so that he can get cooperation. So he is very
    explicit. The projects that he is doing that may look like
    civil works are actually very important from his standpoint in
    peacekeeping.
        Maybe General Van Alstyne can speak to that, too.
        General Van Alstyne. I would just add one point, sir. In
    speaking with General Meigs, General Nash's replacement, the
    civil actions support that he is providing, in his mind,
    provide substantial training for the units concerned. So he
    sees that as a good deal.
        Senator Stevens. He can train those people in Alaska or
    Hawaii or in Arkansas.
        General Van Alstyne. Sir, I certainly would not argue with
    that.
        Senator Stevens. The question is training in Bosnia. If you
    are going to start the reconstruction of Bosnia with a military
    account, we have a right to know.

               congressional control over Defense appropriations

        Senator Domenici. Mr. Chairman, I want to proceed. I do not
    want to linger on this too much longer. I want to make another
    observation for you, and I really do appreciate your comments
    on inaccurate estimating of what we have to pay for out of
    defense. You and I and others have been saying we do not want
    more entitlement programs for this Government. We have been
    saying we want annually controlled appropriations. And when we
    have appropriations that are as uncontrolled as you have just
    described in terms of moving money around within a budget and
    then putting us in a position where we have no alternative but
    to appropriate, then we lose some of the vigor behind annual
    appropriations as a way to control spending in the Government.
    I believe the military has to help us in that regard, as you
    have suggested here.
        I want to make sure, Mr. Hamre, that you have indicated
    here on the record that you were mistaken and inaccurate when
    you spoke, heretofore, about how much new money was available
    to the Department of Defense under the President's budget,
    because after you stated that there was $6.8 billion available.
    It was called to your attention that you were using savings in
    other agencies that are funded out of the 050 national defense
    budget function, such as DOE, that you should not have, and
    that the new money is not $6.8 billion, but rather $2.9
    billion, is that correct?
        Dr. Hamre. Sir, what I indicated at the time earlier was
    that there was--I was miscomparing the budget resolution, which
    is 050 against the Department of Defense, which was 051.
        Senator Domenici. Right.
        Dr. Hamre. The differential between the 050 number and the
    051 number is $6.8 billion. The math is right. Maybe the
    politics was wrong. So I certainly am guilty for that.
        Senator Domenici. Well, the math actually is not right, but
    the main point is that the assumption is irrelevant. Because to
    just do that subtraction is to assume that the Department of
    Energy's nuclear activities can get along with less than they
    have asked for and even less than they got in 1997 in their
    budget, and the other six agencies, the Coast Guard and others,
    that are funded under that.
        Dr. Hamre. Sir, I do not want to get into a fight over it.
    What happened, there was a change in the way we budgeted this
    year, and there would be no change in the actual activity in
    those accounts this year because they fully funded them where
    they had historically not funded them. But I was certainly not
    trying to mislead anybody.
        Senator Domenici. The only point I am making is DOD
    officials could be looking at your earlier presentations and
    their salivary glands could be wetted a bit because they could
    think they have really $6.8 billion to spend when they do not.
        Dr. Hamre. Well, sir, we do not have anything to spend. It
    is you that has the money. It is your decision how you choose
    to go this year.
        Senator Stevens. The chairman of the Budget Committee is
    making his point to me.
        Dr. Hamre. I am hearing it too, sir.
        Senator Domenici. Well, I have a little bit of interest
    that you would continue to treat the DOD nuclear activities as
    defense activities. We do not want any shortchanging of that.
        Dr. Hamre. I hope that I have reassured you in the way I
    presented it today.
        Senator Domenici. You have. You have done it correct today,
    accurate today.

                              proposed Rescissions

        One last one. Could you explain one more time, you are
    seeking $4.8 billion in rescissions, supplemental rescissions.
    Now, am I correct that $2 billion of that is to pay for the
    unanticipated costs of Bosnia and Southwest Asia, and $2.8
    billion of those rescissions are there to address an $800
    million outlay shortage in 1998 in your brand new budget?
        Dr. Hamre. Yes, sir.
        Senator Domenici. So what has happened is you cannot,
    according to OMB, fund the programs you have got in your new
    budget unless there is a rescission of $2.8 billion because
    your program costs $800 million more than you expected.
        Dr. Hamre. Our outlays would otherwise be $800 million
    higher than I am allowed to submit as a budget, and, therefore,
    to accommodate that, we either could cut it out of 1998 or we
    could propose a rescission in 1997, and we chose to do the
    latter.
        Senator Domenici. Or Congress could conclude that we ought
    to fund your budget and give you $800 million more.
        Dr. Hamre. I am not asking for that.
        Senator Domenici. Well, I mean, that could be done,
    obviously. You are not asking for it, but Congress might do
    that.
        Thank you very much, Mr. Chairman.
        Dr. Hamre. I just want to be on record, sir, that I did not
    ask for that. [Laughter.]
        Senator Domenici. We understand.
        Senator Stevens. Senator Gregg.

                  Current defense strategy and force structure

        Senator Gregg. Thank you, Mr. Chairman.
        I was wondering about this issue which Senator Inouye
    raised, which is the question of fighting two regional
    conflicts. I think he said two and one-half regional conflicts.
    Which is it, two, or two and one-half?
        Dr. Hamre. The ``Bottom-Up Review'' strategy talks about
    two simultaneous--nearly simultaneous major regional
    contingencies. But we also talk about the ability to conduct
    other ongoing operations that are less than a major regional
    contingency at the same time. We have never formalized that
    into a two and one-half versus two. But our program is to do
    two nearly simultaneous major regional contingencies at the
    same time that we are undertaking ongoing operations of a
    smaller nature.
        Senator Gregg. And you believe that under your present
    force structure that you are still able to genuinely take the
    position that you can accomplish that?
        Dr. Hamre. Sir, we have never advertised that there was no
    risk associated with it or that there were simultaneously two
    wars at the same time. We have never advertised that. We have
    said that we needed to have enough to unequivocally work and
    win a major regional contingency, still having enough resources
    to be able to deter a second theater conflict, denying
    potential aggressors any chance of achieving their objectives
    until we can clean up one contingency and move over and take
    care of it. This is just exactly what happened in World War II.
        Senator Gregg. I understand that. But I was just, with the
    restructuring of the defense establishment that has gone on
    over the last 5 years, I am wondering if you still maintain
    that you can do that. Is that your position?
        Dr. Hamre. Yes, sir. I heard both my Secretary and the
    chairman say they believe we can accomplish that. It is not
    without risk. There is risk associated with it.

                           excess DOD infrastructure

        Senator Gregg. Now, to what extent--we have gone through
    the base closure process, but to what extent do you still
    consider that you have excess infrastructure?
        Dr. Hamre. Sir, we do believe we do have excess
    infrastructure. Our force structure has been cut about 30 to 35
    percent. Our infrastructure has been cut about 15 to 20
    percent. Do we have to cut infrastructure further? That is part
    of what is being reviewed right now in this ``Quadrennial
    Defense Review.'' The Secretary has been very clear: We do not
    know at this time if we will recommend an additional round of
    base closures. It is definitely something we are looking at,
    but it is not a foregone conclusion.
        Senator Gregg. Well, if, under this review process, you
    determine that you either have to reduce force structure or
    reduce modernization, which would be the priority?
        Dr. Hamre. Sir, I cannot answer that. The Secretary has to
    answer that. It is ultimately his choice. I can tell you where
    Secretary Perry was when he was here, which was he felt that
    our force structure was about right. He did not feel we could
    get much smaller, and we clearly had a 3-year history of
    deferring modernization in order to sustain our force
    structure. But I am not sure that that is where Secretary Cohen
    is, and I am not empowered--I can only put my own job at risk
    today.
        Senator Gregg. Well, do you put force structure and
    overhead in the same category?
        Dr. Hamre. No, sir. Oh, no, sir. No; we are definitely
    drilling in on overhead. Now, overhead is not the same as
    infrastructure, because there are other ways we are bringing
    down overhead every day.
        Senator Gregg. What is your present estimate of
    infrastructure surplus?
        Dr. Hamre. Sir, all I can do is give you the basic
    impression of how much it has come down. I cannot tell you how
    much of that is surplus because in part we do want to keep
    surplus because if we ever have to mobilize again we are going
    to need training ranges, we are going to need excess capacity
    in various locations. And we do not think that--it is excess to
    current peacetime needs, but maybe not for wartime mobilization
    requirements. It is a more complicated answer, and I would
    certainly need to give a more thoughtful response.
        Senator Gregg. Well, let me try something else.
        Dr. Hamre. I will respond to you in any way, sir.
        Senator Gregg. No; I would rather have you respond the way
    you feel is appropriate.

                              University research

        What is the situation with the university research?
        Dr. Hamre. University research largely resides inside our
    6.1 and 6.2 accounts. Those are primary elemental basic
    research technology, science and technology research. The
    funding for that for this fiscal year is up 5.6 percent.
        Senator Gregg. I notice in your R&D that you are coming
    down and you were saying that you were coming down as a result
    of----
        Dr. Hamre. Major weapons systems.
        Senator Gregg [continuing]. Major weapons systems not being
    completed or not being pursued. Do you anticipate that as you
    go into that 5-year category that you are going to maintain
    university research at its present levels, or continue to
    increase slightly?
        Dr. Hamre. Sir, the formal guidance to the departments is
    zero real growth; in other words, we will protect them for
    inflation at today's levels for 61 and 62--61. That is our
    formal guidance. It is actually a 5.6-percent increase this
    year. And that is what our instructions are to the services in
    building the budget.

                         Saudia Arabia personnel levels

        Senator Gregg. Now, in Saudi Arabia, you have increased the
    personnel there by about 240 people from 1995 to 1996, is that
    correct?
        Dr. Hamre. Would you like to add further, General Van
    Alstyne?
        General Van Alstyne. Sir, I need to take your question and
    provide a response. I am going to say that the figure is
    generally correct, but I need to provide you a precise
    response.
        [The information follows:]

        The number of U.S. Military personnel deployed in Saudi
    Arabia increased by 730 during the period 1995-1996. This
    increase represents the deployment of additional security
    forces and base support personnel in response to the Khobar
    Tower Bombing on 25 June 1996. These forces include Air Force
    security flights, military working dog teams, two infantry
    companies, counter intelligence teams, and an explosive
    ordnance company that provide increased protection for the U.S.
    military facilities at Eskan Village, Taif, and Prince Sultan
    Air Base, Saudi Arabia.

                United States costs and troops for Saudi Arabia

        Senator Gregg. And you have increased operation accounts in
    Saudi Arabia by how much? How much more are we spending this
    year?
        Dr. Hamre. Compared to what was appropriated for 1997, we
    need another $124 million for operations in Southeast Asia.
        Senator Gregg. And what percentage of that are the Saudis
    paying?
        Dr. Hamre. Sir, that is only our share of the costs. I
    think--and again, I know I sound like I am ducking every
    question here, but I think it is like $200 million is what we
    expect their cost to be associated with the force protection
    initiative. But I would like to prepare that and send it to
    you, sir. I owe that to Senator Lautenberg, and I will see that
    you get it, as well, sir.
        Senator Gregg. In increasing these personnel and these
    dollars to Saudi Arabia, I recognize we have been doing it. I
    recognize your argument that we are doing it for our own
    personal protection and it is not an act of generosity to the
    Saudis. But very obviously, it benefits Saudi Arabia to be
    secure, does it not?
        Dr. Hamre. And us, too, that they are secure.
        Senator Gregg. To what extent are we conditioning the
    commitment of these additional troops and dollars on their
    being forthcoming on who blew up our people?
        Dr. Hamre. Sir, you have asked a very sensitive question,
    because there has been a lot of dispute about this. The
    Department of Defense has proposed a force protection
    initiative for our people, and we would have done that whether
    they were very cooperative or they were not as cooperative. The
    Justice Department is working with them on the investigation.
        Senator Gregg. Oh, no. The Justice Department is not
    working with them on the investigation, because they are not
    working with the Justice Department. That is the problem.
        Dr. Hamre. Sir, all I can tell you is what we are hearing,
    that they feel they are being more responsive, and please do
    not get me into that kind of a problem here because I do not
    know enough about the details of what Justice is doing with
    them. But it would not change how we would approach what we are
    doing to protect our people.
        Senator Gregg. Well, it should change it. It should change
    it. If the Saudis are not going to tell us what they know about
    who blew up our people, then I have a very serious concern
    about increasing the commitment to the Saudis, even though we
    may be doing it under representations that we are assisting
    ourselves.
        General Van Alstyne. Sir, when I provide the figures on the
    increase from 1995 to 1996, almost every additional soldier or
    airman that has gone into Saudi Arabia in the last 6 months has
    been a security policeman or someone associated with our own
    force protection, not to extend the mission in Saudi Arabia.
        Senator Gregg. So the additional 240 people are police
    officers to protect our people?
        General Van Alstyne. Sir, I am going to say many of them
    are security police, and those with other specialties
    associated with force protection, almost to a man.
        Senator Gregg. How much less would we need if we knew why
    and who blew our people up?
        General Van Alstyne. Sir, that would call for a great deal
    of speculation on my part. I would prefer not to speculate.
        Senator Gregg. Well, it is an answer we should have.
        Dr. Hamre. But, sir, knowing who did it the last time I do
    not think lowers the risk we may face for the next time.
        Senator Gregg. But it might lower the number of people and
    the amount of money we had to spend on protection.
        Dr. Hamre. I think that would rest with are we doing----
        Senator Gregg. But we will not know the answer to that
    question unless we get some forthcoming attitude from the
    country that we are protecting. And I would simply state that
    my view is going to be that I will ask for some sort of
    language to make sure that we get some more forthcoming
    attitude from the Saudis on this issue.
        Dr. Hamre. And may I take back your proposal that I get you
    better information so that you can support your thinking on
    this, because I currently cannot do that. But I would like to
    make sure people do talk to you if they can.
        Senator Gregg. Well, I do have pretty good information
    because I chair the committee that has jurisdiction over the
    Justice Department.
        Dr. Hamre. Yes, sir.
        Senator Gregg. And this full committee's jurisdiction. And
    I can tell you, they are not being forthcoming.
        Thank you.
        Senator Stevens. Thank you very much, Senator.
        Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.
        I want to extend the remarks that were made by Senator
    Gregg just a few minutes ago and say that what he did not add
    is that the term nearly put before simultaneous significantly
    lowered the bar for what we were supposed to be ready to face
    in this country with our military. We now do not have the
    standard that we have had in the past of two simultaneous major
    regional conflicts, but two nearly simultaneous major regional
    conflicts. That is a great concern to many of us, and certainly
    to myself.
        I know you are not the policymaker, Dr. Hamre, but I am
    just telling you that to lower the bar to nearly simultaneous
    puts us at great risk for someone who is wanting to make
    trouble for the United States seeing us engaged in a major
    regional conflict in another part of the world, knowing that
    they can begin then another onslaught that would be a security
    risk.
        Second, I just have to say once again you are not the
    policymaker, but this administration is continuing to cut the
    defense budget and then increase the use of military in
    operations other than war is another great concern to many of
    us, and something that we do not understand how you can
    continue to come up and cut the budget that we believe is
    necessary for this lower standard of nearly simultaneous major
    regional conflict, plus the other fields where we are, the
    theaters. It is a very great concern.

                         release of Appropriated funds

        And now I will get to the point that I think is appropriate
    for you, and that is to say that I think Senator Stevens said
    it very clearly, you cannot come in with this new standard,
    with a lower defense budget, using our military for operations
    other than war, and start asking for more cuts in the defense
    budget, and only cutting what are clear congressional
    priorities. Now, you have held up money that was asked for by
    the military, was passed by Congress, and you have not released
    the money for many of those programs and projects, and we are 6
    months into this year. Now, this is an appropriate question for
    you: When are you going to adhere to the wishes of Congress in
    the bill that was passed by Congress and signed by the
    President and release the money for the programs that have been
    stymied for 6 months?
        Dr. Hamre. Ma'am, there is no systematic--we do not have a
    systematic policy to hold up congressional adds, and I do not
    do that. I need to explain just the process that the Department
    uses, and has always used, and that is it takes an allotment
    from OMB to release the funds, and so the services ask me to
    prepare that and submit it to OMB. For individual programs,
    projects, and activities, the services will ask me to release
    the funds.
        I know it is not something that you like, but I really do
    have other bills such as Bosnia that I do not have covered, and
    I have to find a way to pay for those, and I have to make a
    decision. I probably do five of these a day: is this one that I
    think there is any chance of being able to use to pay for the
    bill, or not? And 99 times out of 100, I release the money
    because I know there is no chance.
        There are some where frankly I was instructed by my
    Secretary I have to have enough money to put serious
    rescissions on the table if I cannot make it work in coming up
    with informal ways to take care of Bosnia. And so there are a
    couple of items, and I do know that one of them is a major
    concern of yours, ma'am, and I apologize for that. It is
    certainly not--I am not trying to flaunt your position or to
    fly in the face of congressional prerogatives. I am just simply
    trying to reconcile a very difficult situation that I have and
    every previous comptroller has always had, and I certainly am
    not going to let anything get broken in the process.
        Senator Hutchison. Well, I think that you should try to
    be--I do understand your problem.
        Dr. Hamre. I know you do, ma'am.
        Senator Hutchison. I will say that your outright admission
    that you blew it on the estimates for the cost of Bosnia were
    appreciated, but I would say that the Armed Services Committee
    said, and if you will look at their hearings way back, that
    your estimates of $2 to $3 billion were not realistic. Many of
    us had been to Bosnia and we could have told you it was not
    realistic. We did tell you it was not realistic. And we were
    talking about $5 billion back then.
        So to now come in and say that you have gotten all these
    bills that were not expected, and you are taking it from
    priorities that were set by Congress, I would just ask you if
    you would not be a little more equitable in the way you are
    holding money back for projects that were congressional
    priorities, perhaps due to some of the priorities for Congress,
    at least.
        Dr. Hamre. Yes, ma'am. Yes, ma'am. I realize, since I am
    coming to you to ask for you to help me in paying for Bosnia
    that the last thing I could do is to really tick you off by
    holding up things that are important to you.
        Senator Hutchison. Then why are you doing it?
        Dr. Hamre. Well, you are ticked, too.
        Senator Hutchison. Well, you have set a great standard.
    Now, just tell me why you are violating it.
        Dr. Hamre. One of them just--well, the AHIP program, I just
    released $22 million last week to make sure we did not have a
    break in the production line. I do not know if that word has
    gotten to you, but I really am trying not to let anything get
    broken as I am trying to find the other solutions.
        Senator Hutchison. Well, that is very important. It is also
    very important, as we are looking at keeping lines open with
    foreign sales, that you show the U.S. priority for these
    programs, and in some cases these are Presidentially submitted.
    It is military, it is Presidential, it is congressional, and it
    is still being held up. So it does become an issue for foreign
    sales that are very precarious at this point. They need to see
    a commitment from the United States to some of these programs
    which then may allow us to have a little more leeway, because
    the last thing you want to do is lose some of your bread and
    butter programs and have to retool and do a startup.
        Dr. Hamre. Ma'am, you are absolutely right. That is the
    last thing I want to have happen. And I look at every one of
    these to say if there is a compelling case it is going to
    disrupt the underlying program, it is going to undermine us in
    some way, I am not holding those things up. I am trying to find
    ways that I can resource the Bosnia commitment without flying
    in the face of the very people who have been most helpful to us
    and that I continue to need to have cordial relations with. And
    I promise you, I will not let something get broken, and I will
    come back to you to find out specifically other items you are
    concerned about.
        Senator Hutchison. I will be happy to accommodate you.
        Dr. Hamre. Yes, ma'am.

                   greater privatization of Depot maintenance

        Senator Hutchison. Two other issues, until my time runs
    out. One of the areas that is beginning to be cut, and the
    notices are already going out, is maintenance of our equipment,
    including equipment that we are using in Bosnia. I am concerned
    that the privatization issue has become so politicized that we
    are not going to be able to achieve the savings that are being
    counted on to go into other readiness areas. I want to know how
    you feel about the artificial constraints of the 60-40 rule,
    and if you agree with the CBO estimates that as much as $1
    billion a year could be saved if we eliminate that rule.
        Dr. Hamre. Senator Hutchison, I am not familiar with the
    CBO study, and so I will look into that, and I will give you a
    response to my reactions to the CBO study.
        The 60-40 rule is an artifice. I think we ought to find--I
    think the criteria ought to be what is the most efficient way
    to get a job done. I do understand that there is great fear
    that people will sacrifice the depots in this kind of an
    environment for work that the private sector will choose to
    abandon later on when they get interested in something else,
    though that is a balancing act that we have to go through. The
    60-40 came in as a way to kind of force an ongoing attention to
    it.
        My personal view is that 60-40 is inefficient.
        Senator Hutchison. Well, the Department of Defense has said
    that it will define the core workload so that there will not be
    a readiness issue on the core, and does that not suffice for
    making sure that readiness is not a factor?
        Dr. Hamre. Yes; very much, in my view. Yes, ma'am.
        Senator Hutchison. What kinds of savings would you estimate
    that we could get? I mean, we have had testimony from Vice
    Chairman Owens as he left that it would be in this range of
    savings, that it was absolutely essential in the ``Bottom-Up
    Review'' numbers, so what is your estimate?
        Dr. Hamre. Ma'am, this is all underway right now in the
    QDR. I would like to give you a response that is thoughtful, a
    response that reflects what we really think, and I do not have
    that at the top of my head, and if I gave you one right now I
    could mislead you. Will you let me come back to you as soon as
    I can in the same context that I will come back in the other
    matters and talk with you about that?
        Senator Hutchison. Yes; I would appreciate that.
        If I still have another couple of minutes----
        Senator Stevens. One minute.

                             Military medical care

        Senator Hutchison. One minute. The quality of life
    initiatives on health care for our men and women in the
    services. I am getting so many complaints, and legitimate
    complaints, that I have gone and actually had hearings and
    gotten providers, doctors, together with the TRICARE system and
    the recipients of TRICARE. I am not hearing anything good about
    TRICARE, and I am alarmed at many of the problems that I hear
    about TRICARE. I want to ask you if you are hearing these
    things, and if you think that we have got to re-look at this
    TRICARE issue, because many of our military personnel are not
    even being served because we have not paid the doctors. I am
    very concerned.
        Dr. Hamre. Well, I have not ever heard anybody say that we
    have not been responsive in paying the doctors, and I will find
    out about that. That, we cannot have.
        I think historically----
        Senator Hutchison. Well, let me just say, if you have not
    heard this, that the doctors are not only not being paid, but
    they are totally cutting off the military personnel because
    they cannot afford it to keep their practice.
        Dr. Hamre. I will absolutely find out what is going on in
    that area, because I had not heard that, and I will get on top
    of that.
        Senator Stevens. Senator Hutchison, we welcome you to the
    committee, our new member on our side. We have another new
    member on the Democratic side, we look forward to Senator
    Dorgan joining us, too.
        Senator Hutchison. Thank you, Mr. Chairman.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Thank you, Mr. Chairman.
        Dr. Hamre, can you assure the committee that this will be
    the last time--the last time--that this administration will ask
    for supplemental funding for Bosnia? [Laughter.]
        Senator Bumpers. If you answer that question, you are not
    as smart as you look. [Laughter.]
        Dr. Hamre. Well, before I became a virgin----
        Senator Shelby. I have known you a long time, and I did not
    think you were a virgin. [Laughter.]

                    possible future supplementals for Bosnia

        Dr. Hamre. Sir, our program right now is that we will be
    out of Bosnia in June, July, August 1998. That is the program
    that we have built. I have put in our budget request absolutely
    what it takes for us to execute that program. If factors occur
    or if something develops that causes an extension, and there is
    nobody in the Department talking about that, and I know that my
    Secretary believes we will be out by that time, then I will not
    have to come back and ask for aid to do that. I could make
    myself a liar if something came up that I have absolutely no
    control about and its force is totally unforeseen at this
    stage. So I cannot give you an absolute assurance.
        Senator Shelby. Well, as it has been pointed out, it just
    seems that the numbers have been low-balled, and then you come
    back on the supplemental basically believing, and it is true,
    that we want to back our troops.
        Dr. Hamre. Of course.
        Senator Shelby. We are not going to leave them over there
    unfed and unarmed, as you well know.
        Dr. Hamre. Sir, having worked up here for 10 years, I know
    exactly how you feel. You feel like you have been painted into
    a corner on a policy decision that you did not have a chance to
    participate in, and now you are being asked to ratify it.
        Senator Shelby. And low-ball--not you necessarily, but
    others--low-ball it, and then come up with a supplemental over
    and over and over.
        Dr. Hamre. Sir, we certainly blew it in the early cost
    estimates.
        Senator Shelby. Well, are you going to continue to blow it?
        Dr. Hamre. I am not going to blow it any further. We have
    launched a fairly elaborate effort to try to make sure two
    things, that the basis for our forecasting costs is as good as
    possible, and we missed it on Bosnia. We used the same model we
    used to predict our costs for Somalia. They were right there,
    they were way off on Bosnia, and we are trying to figure out
    why were we way off. We now think we know. We did not have any
    intention--it was never an intentional effort to try to give
    you a misleading number.
        Senator Shelby. You say you think you know now. If you know
    now where you went wrong, you should not go wrong in the
    future. And if you should not go wrong in the future, you would
    not need to come up here on a supplemental, would you?
        Dr. Hamre. Except for those events that occur totally
    outside of any planning horizon and they really are an
    emergency that occurs.
        Senator Shelby. Well, we understand that. We are talking
    about big events, though.
        Dr. Hamre. Yes, sir; big events where we are programming
    them, we know it is underway, we should not ever come back to
    you and ask for a supplemental.

                             BMDO technology budget

        Senator Shelby. In another area, I think a lot of us would
    agree that modernizing our weapons is critical for the success
    of our military forces, especially at times as we cut down. For
    example, I am concerned about the BMDO support technology
    budget request, which is reduced by 29 percent from last year,
    it is my understanding. Are you aware of why this account is
    being reduced in this manner, if you were aware, and why? Is
    this a trend that will continue? I mean, this is on the cutting
    edge of technology.
        Dr. Hamre. Sir, I am not aware that there was a reduction.
        Senator Shelby. Would you look into that?
        Dr. Hamre. I certainly shall.
        Senator Shelby. Would you get back with me to meet?
        Dr. Hamre. I would be delighted to talk to you.

                        Funding projections and the QDR

        Senator Shelby. You alluded to the ``Quadrennial Defense
    Review'' just a few minutes ago. A lot of us are concerned that
    the ``Bottom-Up Review'' has had only minimal impact on the
    defense budgets. The ``Bottom-Up Review'' force has not been
    fully funded. I raise this issue here because of the
    ``Quadrennial Defense Review,'' which is assessing, as I
    understand, the Nation's future defense requirements and
    strategy. This budget request, as I understand it, contains
    funding projections until 2002.
        Dr. Hamre. Yes, sir.
        Senator Shelby. Which is the same period which the QDR is
    supposed to set defense policy. I am concerned that this could
    bias the findings of the QDR. Have you thought about that?
    Either the QDR panel members could ignore the out-year
    projections and risk embarrassing the administration when
    funding does not meet their policy guidance, or on the other
    hand, they could merely conduct a budget exercise where the QDR
    policy guidance justifies the out-year numbers, not threats in
    defense needs. Have you thought about all of that?
        Dr. Hamre. Sir, we have, and I know that Secretary Cohen
    has spent a lot of time----
        Senator Shelby. This is important.
        Dr. Hamre. It is, very important. And Secretary Cohen has
    been very explicit about this. He does not consider this a
    budget exercise. He thinks this needs to be led by----
        Senator Shelby. It has got to be real, has it not?
        Dr. Hamre. It has to be real, and it has to be a strategy
    review. And he has been quite adamant that we have got to lead
    by looking at our strategy and our requirements. And it is not
    a budget drill.
        Senator Shelby. Dr. Hamre, would you basically agree that
    the out-year projections in this budget request should not--
    should not--prejudice the findings and guidance of the QDR?
        Dr. Hamre. They should not, and I do not think they are.
    Although I have also got to tell you----
        Senator Shelby. But they could, could they not?
        Dr. Hamre. None of us really thinks there is lots more
    money available in the environment that we are in. And so I
    think the Secretary would also----
        Senator Shelby. But the environment could change, could it
    not?
        Dr. Hamre. Sir, it could. But I do not think any of us
    feels that we can count on a magic new source of funds to avoid
    making some hard choices here. But we should not be led by
    that. We are going to be led by what our strategy calls for,
    and that is what Secretary Cohen has given very explicit
    direction to the Joint Staffs and to the Chiefs and to others.
        Senator Shelby. Doctor, would you basically agree that the
    defense policy of this Nation should drive the defense budget,
    and not the other way around?
        Dr. Hamre. Yes, sir.
        Senator Shelby. It does not always do that.
        Dr. Hamre. It does not always do that, and it has not done
    that.
        Senator Shelby. But we should set policy based on security.
        Dr. Hamre. Yes, sir.
        Senator Shelby. And the budget should drive that.
        Dr. Hamre. Yes, sir.
        Senator Shelby. Rather than we piece this together and beg
    for that, and so forth, and hope against hope.
        Dr. Hamre. And hope against hope. But the trend over the
    last 10 years, frankly, has been where so much of the budget
    pressure has fallen on discretionary accounts, and we are one-
    half of the discretionary accounts, and for that reason we have
    taken very heavy reductions, I think, in the context of budget
    pressure. That has not been--we just have not done it by just
    simply looking at requirements alone.

                             following QDR guidance

        Senator Shelby. Dr. Hamre, as the comptroller over defense,
    would your office be willing to recalculate your projections,
    bringing them in line with the QDR guidance, if that was
    requested?
        Do you want me to say it again?
        Dr. Hamre. Yes; would you say it again, sir?
        Senator Shelby. As a signal of good faith here, would your
    office be willing to recalculate the out-year projections
    bringing them in line with the QDR guidance, if that was
    requested?
        Dr. Hamre. Well, I will be doing that no matter what. I
    mean, whatever the QDR decides, and wherever we are heading----
        Senator Shelby. That is going to be the guiding force, is
    it not?
        Dr. Hamre. That is going to be how I will build the FYDP.
    The QDR is the blueprint. The FYDP is the engineering drawings.
    And I am going to have to put that into the FYDP, and, of
    course, I will do that.
        Senator Shelby. Thank you, Mr. Chairman.
        Senator Stevens. Senator Bumpers.
        Senator Bumpers. Thank you, Mr. Chairman.
        Dr. Hamre, in looking over your Federal budget outlays, and
    this really is just a question that I thought I ought to ask,
    in the budget resolution that we passed last year, which was
    supposed to take us to zero deficit by the year 2002, as I
    recall the projections in that budget, defense will be getting
    around $279 billion in the year 2002; nondefense discretionary
    spending will be down to $222 billion, and yet in this chart
    here you show defense being 14.6 percent of the budget in 2002,
    and nondefense discretionary spending at 15.6 percent. Am I
    wrong about the budget? I would not mind the Budget Committee
    chairman getting into this. Do you recall those figures, Pete?
        Senator Domenici. No; we did not implement the balanced
    budget, however. It passed, and we did not do it.
        Senator Bumpers. Well, that is true, but I am using the
    projections from the fiscal year 1997 budget resolution. In
    that, the projection for the year 2002 was $57 billion more for
    defense than for nondefense.
        Well, I do not want to belabor the point, Dr. Hamre. What I
    want to talk to you about is the F-22. This is my favorite
    subject in the whole world.

                     F-22 cost estimates and justification

        Dr. Hamre. Yes, sir.
        Senator Bumpers. Now, we have a new estimate as of February
    13 that the F-22's cost has gone up $15 billion. You are
    familiar with that.
        Dr. Hamre. Yes, sir.
        Senator Bumpers. And when you take the R&D and the $15
    billion increase, we are looking at an $80 billion program.
    That is $180 million for each of the 440 planes we propose to
    buy. Now, I am mightily concerned about that because we are
    also planning to buy F-18E/F's for the Navy and Marines. We are
    going to buy 1,000 of those, and the cost of those is
    calculated to be, I think, $91 million each. But now
    apparently, we are not going to buy 1,000 because the Marine
    Corps says they do not want the 300 that is being allocated to
    them. Is that going to push the cost of the AF up?
        Dr. Hamre. Any time you take a major quantity reduction
    like that, it will drive up unit cost. I do not have that off
    the top of my head.
        Senator Bumpers. You do not have an exact figure or
    projection on that?
        Dr. Hamre. I will sure get it to you, sir.
        [The information follows:]

        Even though the Marine Corps does not intend to procure the
    F/A-18E/F, the Navy has a requirement for and still plans to
    procure 1,000 F/A-18E/F aircraft. The fiscal year 1998
    recurring flyaway unit cost is $92.9 million. The average
    recurring flyaway unit cost for 1,000 aircraft is $41.4 million
    (fiscal year 1997 dollars).

        Senator Bumpers. Now, following the F-22 and the F-18E/F we
    are going to buy 3,000 joint strike fighters, at a cost of----
        Dr. Hamre. About $35 million a piece, I think.
        Senator Bumpers. How much?
        Dr. Hamre. About $35 million apiece, something like that.
        Senator Bumpers. Yes; is that in then-year dollars?
        Dr. Hamre. No; I do not think it is.
        Senator Bumpers. You think that is today's dollars?
        Dr. Hamre. I think that is today's dollars projected to
    that time period, but I will have to check.
        Senator Bumpers. Now, those are supposed to be in
    production by the year 2010. And by some of the statements that
    were made by Navy officials in this committee last year, there
    is not a fighter plane in the world, that will threaten us
    until the Russian fifth generation fighter is fielded in about
    2015. I mean, they were going to have it on line 2005, and then
    it was 2010, and now it is 2015, and, of course, as you know,
    they cannot even come up with their money on the space station,
    let alone build this fifth generation fighter [FGF], which they
    have been postponing now for over 10 to 15 years.
        My question is why are we going to build an airplane that
    is going to cost $180 million when there is not going to be
    anything to even compare with the F-18E/F until the year 2015,
    the point at which we are supposed to be well into fielding the
    beginning of 3,000 joint strike fighters? And incidentally, if
    we scrub the F-22, we could start on the JSF much faster. Do
    you agree with that?
        Dr. Hamre. Well, sir, one cannot just compare the fighter
    against its opposite number to talk about the threat it faces.
    It is also facing a very dense air defense environment that is
    from the ground. This requires a very sophisticated, capable
    airplane. The ground environments are very intense, and the
    proliferation of very capable air defense systems that are
    ground based is going on all around us right now, even though
    the production of a fighter equivalent to the F-22 is not going
    on right now in any quantity.
        Senator Bumpers. Let me interrupt you at that point, Dr.
    Hamre, to ask you, are you suggesting that the joint strike
    fighter will not be--that it will be much more vulnerable to
    the ground environment?
        Dr. Hamre. No, sir; it is being designed--we will design it
    to have to confront the threat environment it will face, as
    well. The joint strike fighter was not designed to be able to
    do supercruise and other things which we need for air defense.
    So it is a very capable, very sophisticated airplane. It is not
    comparable to the joint strike fighter, although it is going to
    confront a threat environment that will be just as intense. But
    we are not going to design something we know that cannot do the
    job in a joint strike fighter.

                 F-22 sales abroad and other sources of savings

        Senator Bumpers. Are we planning to sell the F-22 abroad?
        Dr. Hamre. It seems to me that we are. I do not know what
    our formal position is. I am sure we are willing to do it, but
    it depends on the customer. This is very advanced technology,
    and we are not just going to sell it to anybody. But I cannot
    tell you what our formal position is, sir, and I apologize.
        Senator Bumpers. I understand that. But is that not also
    calculated--I mean, are not the manufacturers of this airplane
    suggesting that the cost will come down because of foreign
    military sales?
        Dr. Hamre. I believe that they are suggesting that some of
    the costs will be down because there will be a greater
    production, a higher production rate, and spreading some of
    those costs. I think we feel that about one-half of the $15
    billion we have got a good basis to say that we will be able to
    handle that one-half, and I am not as confident about the
    second one-half yet.
        Senator Bumpers. Now, the Air Force, I noticed, has come up
    with a $15 billion offset on tier 1 and tier 2 savings to avoid
    overruns on the F-22. Is that correct?
        Dr. Hamre. Yes, sir, they have. And as I said, I think that
    we feel that about one-half of that is pretty solid. The other
    one-half, we still need to take a look at how realistic is it.

                               affording the F-22

        Senator Bumpers. Why did they have to have a cost overrun
    of $15 billion before they could find $15 billion in savings?
        Dr. Hamre. Sir, I do not think they were looking for the
    cost overrun, but I think that it was a product of the
    extension of the higher costs associated with the development
    that usually carries over into the development. This is a
    sophisticated aircraft, very capable, we need it to make sure
    that we have that overwhelming advantage in the air, and it is
    producing, it is going to come at somewhat higher cost. I think
    we have very conservative estimates on the $15 billion, and
    frankly, some of it is a product of slippage of the program
    that occurred because of cuts. When I was up here working on
    the Hill, I frankly made a mark against it when I worked for
    the Senate Armed Services Committee, and I know that we have
    made some cuts when I have been in the Comptroller's Office,
    and some of that shows up as higher cost in the program.
        Senator Bumpers. Somebody, I think, has testified, perhaps
    you testified earlier in this hearing, about procurement. I
    know that General Shalikashvili has said that we must get
    procurement up to $60 to $65 billion. Now, there is something
    over $40 billion in your projection to be requested for 1998.
    And my question is this: When you add a $15 billion cost
    overrun on the F-22, if you assume that you are not going to be
    able to accomplish all of these savings under tier 1 and tier
    2, does that not squeeze the chances of being able to buy all
    the weapons you want still further?
        Dr. Hamre. It does, or it may also affect the timing of
    when we get the last 100 of the aircraft. We may procure at a
    slower pace than it would otherwise. I mean, I just cannot
    predict how exactly we would accommodate the cost if we cannot
    realize it through the efficiencies and the programming changes
    we are seeking. But it would affect the last part of a
    production run, not the front of the production run.
        I think we still know we want to have this airplane, and
    that it is an important aircraft for our overall air defense
    environment in an integrated theater when we go to war, and so
    the fact that we are not exactly sure how we will get the
    savings in the back end may affect actually how you produce the
    quantities for the tail end of the production run. But I cannot
    predict right now what I think the outcome would be, sir. It
    clearly could squeeze it, but there might be other ways, and it
    may have to be accommodated.
        Senator Bumpers. Dr. Hamre, I have asked GAO to do a study
    of the F-22 for me.
        Dr. Hamre. OK.
        Senator Bumpers. Certainly, that will be shared with
    everybody. But I have been in the Senate 22 years, and I
    consider this the most monumental mistake I have ever seen the
    Defense Department make, just from a cost-benefit standpoint.
    The F-22 should not be built. It is an extremely expensive
    plane. It is going to cost a minimum of $180 million each, and
    we are going to follow it on with the joint strike fighter,
    which we ought to start developing right now. And let me say I
    am one who does not care whether the defense budget is $300
    billion or $100 billion, as long as it is strong enough to meet
    our foreign policy obligations and keep this Nation secure.
        I disagree strongly, occasionally, with how we ought to do
    that, and, of course, that is normal. That is part of my job
    here, to try to reach those conclusions on my own and try to
    convince others to join me. Of course, I am concerned about the
    money because we are under such terrible budget constraints
    here.
        And let me just close by saying this: There are no real,
    visible enemies to this country. We spend twice as much money
    on defense as our eight most likely adversaries, including
    China and Russia. At the same time, less than 15 percent of our
    budget goes to nondefense discretionary spending. That is law
    enforcement, that is medical research, that is the environment,
    that is education, that is some kinds of health care, that
    includes women and infant children [WIC]--I mean, the things
    that really go to make this country a great Nation, so far as
    our people are concerned.
        Consider the fact that the entitlement programs are taking
    about 75 percent of the budget, and we cannot touch them--
    certainly we cannot touch interest payments, and we cannot save
    much from Medicare. That leaves us roughly--about 25 percent
    for all discretionary spending, including defense. And I know
    this place like the back of my hand, and when push comes to
    shove it will not be defense that will suffer, it will be these
    programs for education and all of the things that are going to
    be squeezed. And that is one of the reasons I like to keep
    defense under control.
        As I say, I do not care how much it is, as long as I am
    satisfied that this country is going to be secure. But I can
    tell you this: This country's security is based on more than
    defense. It is based on how we treat our people.
        Well, Dr. Hamre, I appreciate your candor this morning. I
    think you are an excellent public servant. You have been here
    before this committee many times, and I have always found you
    to be extremely well prepared and very candid, and I appreciate
    that.
        Dr. Hamre. Thank you, sir. I am always gratified when I am
    not considered the biggest monumental mistake the Department
    has made.
        Senator Bumpers. Thank you, Mr. Chairman.
        Senator Stevens. You have just seen the first round of the
    battle of 1997. The F-15's were put online in 1972, the F-18's
    in 1979. By the time we can get an F-22 out there, our people
    will be flying 32-year-old models, and believe me, we have more
    people deployed outside the United States, except for the
    European theater, than any President since Lyndon Johnson. For
    people who advocate that kind of deployment to not want our
    people to have the most modern equipment available, I have
    difficulty.
        We are going to have some real interesting debates,
    Senator, and I look forward to them.
        Senator Bumpers. So do I.
        Senator Domenici. Mr. Chairman, could I make just an
    observation, and then I will be out of your hair.
        Senator Stevens. I was hoping that you would chair when I
    leave.
        Senator Domenici. If you want me to.
        Dr. Hamre. You all can quit any time. [Laughter.]
        Senator Domenici. I have some people waiting.

                          Defense spending in context

        Senator Stevens. Go ahead.
        Senator Domenici. I was just going to say that the picture
    of the American budget presented by Senator Bumpers is just
    kind of one-half of the picture. The truth of the matter is
    that when John Kennedy was President, 50 percent of the
    American budget was defense. Only 17 percent was entitlements,
    and the rest for whatever else we do. It is not defense that is
    denying our people programs that we may need in education and
    the like, it is that 65 percent of the budget is interest and
    entitlements, and that means there is very little left.
        It surely is not extraordinary for America to spend 15
    percent of its budget on defense. We have been spending that or
    more from and after the Second World War, except for a little
    dip in the early and mid 1970's, and we are very sorry about
    that. We made a bad mistake.
        So I think that the record has to be clear, it is not this
    budget that is pushing everybody out, it is our failure to
    control entitlements, Mr. Chairman.
        Senator Stevens. You are absolutely correct, and the real
    problem is that by the time we get to the end of this budget,
    14.6 percent, it will be less money than President Roosevelt
    had to pay for defense in 1938, as a percentage of either the
    budget or of the GNP.
        Senator Bumpers. Mr. Chairman, may I just respond to what
    Senator Domenici said?
        Senator Stevens. Yes; a minute.
        Senator Bumpers. The percentage of the defense budget as a
    percentage of the budget is absolutely irrelevant. I have
    listened to that argument for 22 years, too. I do not care
    whether it is 40 percent or 5 percent. The amount of money we
    spend to make sure that our people have the most modern weapons
    and that we are a secure Nation, as I say, it may be 5 percent
    of the total budget, it may be 30 percent of the budget. The
    percentage that defense is of the budget is absolutely
    irrelevant to a good defense.
        Senator Domenici. Mr. Chairman, could I just urge you,
    before you respond to the administration and agree to the
    rescission package, that you get a briefing as soon as possible
    by the Congressional Budget Office estimators?
        Senator Stevens. We shall do that, and we are going to have
    a series of conferences with Dr. Hamre and whoever else he
    wants to include, and Mr. Raines, and see if we can find some
    way to avoid the collision that I see. If the collision occurs,
    you are not going to get the money until about July.
        Senator Domenici. See, Mr. Chairman, I think the CBO is
    going to tell us that their $800 million is really $4 billion,
    which means their budget is $4 billion off the mark, or more.
    We cannot make that big a rescission.
        Senator Stevens. You are right. They are asking us to take
    more money out of 1998 in order to meet the problems of really
    fiscal years 1996 and 1997.
        Dr. Hamre. Sir, we really do strongly disagree with CBO on
    this.
        Senator Stevens. I know you do, but we have to balance the
    budget somehow.
        Dr. Hamre. Yes, sir.
        Senator Stevens. Let me ask you this: I would like to know,
    and you can just give me these for the record, if you will,
    what is the timetable to complete the 1991, 1993, and 1995 base
    realignment and closures [BRAC] decisions?
        Dr. Hamre. The moves directed by the 1988 Commission are
    complete, while those directed by the 1991 Commission will be
    complete by the end of fiscal year 1997. The decisions of the
    1993 and 1995 Commissions will be completed by fiscal year 1999
    and 2001, respectively.
        Senator Stevens. How much money will--I do not see that. I
    see places open all over the country that were supposed to be
    closed.
        Dr. Hamre. Sir, I will make sure I am right in telling you.
        Senator Stevens. I am talking about BRAC decisions, not
    your decisions within the Department. The Department has not
    followed some of BRAC, apparently.
        Dr. Hamre. All right, sir. I will find that out.
        [The information follows:]

        The Department has maticuously complied with all of the
    recommendations of the four commissions and has not deviated
    from their recommendations. However, latter commissions have
    reversed or redirected some of the earlier commissions
    recommendations.

        Senator Stevens. How much will we spend on BRAC this year
    in the Milcon bill, do you know?
        Dr. Hamre. I think it is like $1.7 billion, but I will find
    that out.
        Senator Stevens. You can put that in the record.
        Dr. Hamre. Yes, sir.
        [The information follows:]

        The Department requested $2.1 billion in fiscal year 1998
    to continue actions directed by the 1993 and 1995 commissions
    as well as continuing environmental cleanup at all BRAC sites.

        Senator Stevens. Can you tell us what funds have not been
    released by OMB up to this period for 1997, again for the
    record?
        Dr. Hamre. Yes, sir.
        [The information follows:]

        OMB has released all of the BRAC funds appropriated through
    fiscal year 1997; however, in fiscal year 1996 OMB revised
    their inflation estimates. Since the program was built using
    higher inflation assumptions than actually materialized, the
    BRAC accounts had more funds appropriated than was required to
    execute the program justified to Congress. As a consequence, I
    have withheld approximately $134 million of BRAC funds from the
    Services and am considering using these savings as a partial
    bill payer for the Bosnia supplemental.

        Senator Stevens. It is obviously the judgment of this
    committee that congressional priorities are being frustrated,
    delayed, and sometimes absolutely overruled by the release
    process from OMB, and as I said to the staff and Senator
    Domenici, we may just have to rewrite that budget law to see
    what authority you really have. That is impoundment, and it is
    violation of the Impoundment Act, and somehow or other it is
    occurring.
        The other thing is we were briefed here this past week on
    the expansion of NATO, and the estimate was that that would be
    a cost of $9 billion for total costs for the change for NATO,
    of which they estimated our cost would be $1 billion. I
    questioned that, and I would like to know to what extent that
    the Department has looked at the military U.S. Department of
    Defense that we cover in this committee cost for the expansion
    of NATO, assuming that there are going to be three additional
    nations join NATO by 1999. That is what we were told to assume.

                       budget amendment for Health costs

        In your statement you said that a budget amendment to deal
    with health costs will be given to us soon. I would like for
    you to elaborate on in the record, or preferably in some sort
    of a letter to us to detail what we are talking about.
        Dr. Hamre. I would be delighted to, and may I just give you
    a thumbnail of it right now? We knew back in July that we had
    about a $250 million problem. Everybody knew about that. It was
    largely a result of paying off the outstanding bills associated
    with the CHAMPUS contract. At the time, we were told by health
    affairs that they could take care of it, and they did not
    propose the additional funding to take care of it. When I put
    the budget together I knew of no shortcoming or shortfall in
    our budget. I would not have embarrassed my President to put a
    budget together that I knew was short.
        Health affairs has subsequently said they cannot absorb
    those funds, and so we met with OMB last night. We will be
    submitting a budget amendment. I will lay out the entire
    history, and it will be for about $270 million, and I will have
    offsets.
        [The information follows:]
                           Letter From John J. Hamre
                            Under Secretary of Defense,
                                         1100 Defense Pentagon,
                                        Washington, DC, March 25, 1997.
    Honorable Ted Stevens,
    Chairman, Subcommittee on Defense, Committee on Appropriations, United
            States Senate, Washington, D.C.
        Dear Mr. Chairman: As soon as the President's fiscal year 1998
    Budget was delivered to you, it was reported that the defense health
    budget was underfunded by $609 million. This report came as a complete
    surprise to me. I have since met with the Assistant Secretary of
    Defense for Health Affairs to examine this allegation. I want to
    explain what I have found and what we are doing about it.
        The $609 million was composed of three categories. They are: (1)
    costs that the Department addressed in the summer program review and
    understood to be absorbed within the health budget, (2) cost growth
    associated with the impact of technology and complexity on medical
    procedures, and (3) costs associated with application of new inflation
    factors.
        The first category includes the transition of the CHAMPUS program
    to TRICARE, and a shortfall in the health program operation and
    maintenance budget. During the program review, everyone agreed these
    were real costs, but Health Affairs reported that they did not need
    funding relief to handle the costs. They did not raise the issue during
    the budget review. My staff was satisfied that we had fully funded the
    health care program and I reported that to Secretary Perry. No one
    appealed the final budget to Dr. Perry. These costs totaled $243
    million of the $609 million. They have since been revised to $241
    million. Even though the health affairs office indicated last summer
    that they did not need funding, they now believe that funding will be
    needed or they will suffer some loss of service during the year.
        The second cost category concerns how much and to what extent new
    technology (MRI's are used much more often than Cat-SCAN's today) and
    intensity of effort (bypass surgery and transplants occur more often
    today than in the past) are taken into account in developing cost
    estimates for health programs. While we know these trends exist, with
    associated cost requirements, no one knows whether past inflation
    experience as reported by the Department of Commerce can distinguish
    between straight inflation and the impact of Technology and Intensity
    (T&I), as this phenomenon is called. It is not clear to what extent T&I
    should be added on top of inflation or if it is already included in the
    inflation projections. As you know, we budget an inflation rate for
    health care that is twice the general inflation rate. Administration
    policy continues to exclude T&I funding from discretionary medical
    budgets. We do not think it is appropriate to budget for a phenomenon
    whose impact on costs is not clearly defined.
        The third category concerns how inflation rates are applied to the
    health program. The $609 million estimate includes $112 million for
    this item. After analyzing this subject, this estimate has been revised
    to $33 million, and I am recommending that this $33 million be funded
    in fiscal year 1998.
        The sum of the three items recommended for funding--CHAMPUS bills,
    O&M underfunding and inflation--totals $274 million. The Assistant
    Secretary of Defense for Health Affairs has confirmed with me that this
    is all that is required to address any presumed underfunding in our
    program. These costs would have been funded in the fiscal year 1998
    budget had we known about them at the time the budget was prepared.
    Therefore, OMB has decided that the Administration will submit an
    amendment to the fiscal year 1998 budget reflecting this increase to
    the budget, fully offset by reductions to other defense programs.
        It is unfortunate that your review of the fiscal year 1998 budget
    has to begin with this situation as a backdrop. It is embarrassing to
    me personally, as well as to the Department as a whole, that these cost
    increases were not brought forward during the Department's budget
    review where they could be reviewed, analyzed, and resolved in the
    correct manner. I assure you that this problem will never happen again.
                Sincerely,
                                                         John J. Hamre.

                                    closing

        Senator Stevens. All right. Do not take offense to any of
    the comments we make here. We have great faith in you, and have
    known you and have worked with you and I think you ought to get
    the magician's award for the year, in terms of making a
    presentation here that you can defend, and at the same time
    sort of making numbers disappear and reappear, John, in places
    where we do not really expect them. So you have done a great
    job at that.
        Dr. Hamre. I think that was a compliment, sir. Thank you.
        Senator Stevens. We have to find out what you did. I just
    wish we could somehow color code the budget--you can trust
    this, you have got to believe this, and you are going to have
    to question this.
        Dr. Hamre. Sir, I will stomp my foot.

                         Additional committee questions

        Senator Stevens. Thank you. There will be some additional
    committee questions from various Senators which will be placed
    in the record after your response.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                   Questions Submitted by Senator Ted Stevens
        Question. Dr. Hamre, for the past several years, Congress has had
    to make up for funding shortfalls in the Defense Department's health
    program. What is the forecast for fiscal year 1998? Has the Department
    fully funded the Defense Health Program?
        Answer. At the time the President's fiscal year 1998/99 budget was
    submitted, there was consensus in the Department that the Defense
    Health Program (DHP) was fully funded.
        Question. Dr. Hamre, it is my understanding that there is some
    dispute within the Department as to whether a funding shortfall
    actually exists. Would you please comment on this.
        Answer. After the President's fiscal year 1998/99 budget was
    submitted, it was reported that the DHP was underfunded by $609
    million. This came as a complete surprise to me and my staff.
        Question. Dr. Hamre, if a shortfall does exist, what options does
    the Department have to correct the problem?
        Answer. After it was reported that a shortfall may exist, we met
    with senior OMB and DHP officials and resolved that $274 million of
    additional funding would be provided for fiscal year 1998. The
    shortfall involves costs associated with awarding Managed Care Support
    contracts ($163 million); pricing of military personnel assigned to the
    DHP ($78 million) and medical inflation ($33 million). OMB has decided
    that the administration will submit an amendment to the fiscal year
    1998 budget to reflect a $274 million increase to the DHP. With the
    addition of this increase, DHP is fully funded in fiscal year 1998.
        Question. Dr. Hamre, DOD will have to dedicate at least 50 percent
    more than the historical average to buy its aircraft modernization
    program according to a recent CBO study. Does the Defense Department's
    commitment to tactical aircraft reflect a balanced approach to
    providing the full range of required military capability?
        Answer. Yes, the Department's plans assume the ability to modernize
    a full range of military capabilities. Obviously, this is an enormous
    challenge and that is why I am hopeful the on-going Quadrennial Defense
    Review (QDR) will provide some insight into our ability to meet the
    goals we have set out for ourselves. I recognize that there are serious
    modernization issues regarding virtually all mission areas, including
    shipbuilding, missile defense, sensor-to-shooter capabilities, combat
    support and others. This will not be easy, however, with the proper
    national security policy framework we should be able to make the kinds
    of prioritization judgments that will need to be made.
        Question. Dr. Hamre, a recent study indicated that the cost of the
    F-22 procurement program may rise from $49 billion to $63 billion. Can
    the procurement budget endure cost growth in tactical aircraft
    modernization programs and still provide for modernizing other combat
    and support systems?
        Answer. Significant cost growth in any acquisition program, whether
    tactical aircraft or something else, is a concern to the Department and
    results in a serious reevaluation by the Department. The final results
    of the independent cost analysis of the F-22 are not complete yet,
    therefore, I think it would be premature for me to discuss any
    specifics at this time. The results will be available in the near
    future and I will let them speak for themselves once they are done. I
    should emphasize that we need the F-22 capability. Given the projected
    threats of the next century it is critical that the United States be
    able to maintain the kind of air superiority we have enjoyed in recent
    times. The F-22 will ensure that we will be able to maintain our air
    superiority advantage well into the next century. All modernization
    programs, including the F-22, are being evaluated as part of the
    Quadrennial Defense Review (QDR) and cost is certainly part of that
    evaluation. Any cost growth in an individual program will make it more
    difficult to meet the Department's modernization goals. We are taking a
    hard look at this and other related issues as we make the tough
    decisions we have to make during the QDR.
                               tactical aircraft
        Question. Dr. Hamre, what threats are driving DOD's robust effort
    to modernize our tactical aircraft inventory?
        Answer. Our efforts to modernize the tactical aircraft fleet are
    being driven primarily by two interdependent factors: the increasing
    cost of sustaining operational readiness with an aging inventory, and
    the growing sophistication and regional proliferation of potential
    threat weapon systems.
        In terms of the threat, a number of countries, ally and adversary
    alike, are developing and fielding sophisticated fighter aircraft, air-
    to-air missiles, and surface-to-air missile systems. Of particular
    concern are the highly capable SA-10 and SA-12 surface-to-air missile
    systems, and the Mica and AA-12 air-to-air missiles. Critical aircraft
    are the Mirage 2000, SU-35, Rafale, Grippen, Chinese F-10, and the
    Euro-Fighter 2000.
        Those aircraft and weapon systems are being aggressively marketed
    to anyone with an interest and the available cash. International weapon
    programs continue to push the leading edge of technology, and may
    eventually pose a significant threat to our current fighter force. That
    is specifically why proliferation of such technology and enditem
    weapons concerns us.
        Our emerging tactical systems will provide the dominant combat
    power necessary to counter all existing or prospective adversaries,
    whether regional or global. We have a substantial investment in these
    aircraft and weapon systems which, properly leveraged, will provide the
    nation with a ready, robust, and cost effective tactical aviation force
    for many years to come.
                            national missile defense
        Question. Dr. Hamre, the fiscal year 1998 budget request includes
    $504 million for development of a National Missile Defense system to
    protect this nation from a limited ballistic missile attack. Does the
    requested level of funding guarantee our ability to develop and deploy
    an NMD system by the year 2003?
        Answer. No. The funding requested is for initial development
    activities leading to a system demonstration in 1999. The ``3 plus 3''
    program is specifically structured to develop sufficient capability to
    allow a demonstration in 1999 but defers many developmental activities
    until after a deployment decision. If made in 2000, the program is
    structured to achieve an IOC by 2003. The entire ``3 plus 3'' effort is
    a high risk program. It assumes success at every step of the
    development and test process. The funding levels do not provide for
    back-ups, parallel efforts or spares. There are many ``single point
    failure'' opportunities in the program. The requested funding certainly
    does not ``guarantee'' that the development can be accomplished to
    support a 2003 IOC. Additionally, since we have not programmed any
    funds for deployment of the system, it could not be fielded without
    significant additional funding.
        Question. Dr. Hamre, the fiscal year 1998 budget includes more than
    $930 million for the Joint Strike Fighter and $504 million for National
    Missile Defense. Is this appropriate given that the nation can meet any
    tactical aircraft threat but cannot stop a single ICBM launched into
    U.S. Territory?
        Answer. Along with fighter aircraft replacement, ballistic missile
    defense (BMD) is one of our highest priorities. Within BMD, Theater
    Missile Defense is our highest priority followed by National Missile
    Defense and Support Technologies.
                  ballistic missile defense procurement funds
        Question. Dr. Hamre, will missile defense procurement funds be
    adequately protected when budgeted in military service accounts?
        Answer. Yes. Ballistic Missile Defense (BMD), as a mission, will
    continue to receive top level DOD review and oversight. Overall BMD
    planning, architecture development and maintenance, and mission area
    management will remain the responsibility of the Ballistic Missile
    Defense Organization (BMDO). BMDO's comprehensive and integrated plans
    will continue to serve as the basis for Defense Resources Board
    decisions on RDT&E and Procurement investment levels for BMD systems
    and technology. My office will ensure that BMDO has adequate
    opportunity to coordinate, assess and advise senior DOD leadership on
    any proposed transfer, realignment or reprogramming of BMD procurement
    funds. Although BMD procurement dollars will be submitted in Service
    budget requests, the Director, BMDO, will be the primary spokesperson
    for DOD on all BMD programs, budgets and issues and BMDO will present
    reports, supplementary budget justification documents, if needed, and
    testimony to Congress covering the entire BMD program, to include
    procurement funds.
        Question. Dr. Hamre, it is my understanding that preliminary
    estimates indicate that there may be a $4 to $5 billion difference in
    outlays between the OMB's and CBO's scoring of the outlays associated
    with your fiscal year 1998 defense budget. Can you provide the
    Committee some insight on this disagreement?
        Answer. On March 3, CBO released its analysis of the President's
    fiscal year 1998 budget. One of its conclusions was that defense
    outlays for fiscal year 1998 were understated in the President's budget
    by $5.6 billion ($4.7 billion related to DOD and $0.9 billion related
    to DOE). The $4.7 billion for DOD was based primarily on differences
    in:
        Spendout rates against prior year unexpended balances ($2.9
    billion).--DOD/OMB projects outlays from prior year balances at the
    appropriation account level, while CBO projects outlays from prior
    years by looking at total DOD prior year outlays. DOD/OMB believes that
    using the certified Treasury actuals by account is more accurate than
    the CBO method.
        Spendout rates for certain fiscal year 1998 programs ($1.3
    billion).--CBO projects that outlays from new budget authority
    requested in fiscal year 1998 will be about $1.3 billion higher than
    the DOD/OMB estimate. Our projection reflects our best judgment based
    on past experience.
        Timing for Congressional action on the fiscal year 1997 rescission
    proposal and fiscal year 1997 supplemental ($0.5 billion).--In
    computing outlays associated with the fiscal year 1997 supplemental,
    DOD used the spendout rates for Operation and Maintenance accounts and
    assumed that about 75 percent of the funding for the supplemental would
    be spent in fiscal year 1997 and the remainder in fiscal year 1998. CBO
    assumed that Congress would not take early action on the supplemental
    and shifted more outlays into fiscal year 1998. In our view, however,
    since DOD is already borrowing money from its other O&M accounts that
    would spend late in the year to fund fiscal year 1997 military
    operations in Bosnia, the supplemental funding will be spent quickly
    once it is approved by Congress. Therefore, the CBO assumption about a
    lag in spending is not valid.
        Question. Are you or anyone in the administration doing anything to
    work with CBO to narrow this difference?
        Answer. Yes. We are working with OMB, who is seeking to convince
    CBO of the validity of our outlay projections and offering meetings to
    try to resolve differences.
        Question. Dr. Hamre, can you provide us with an explanation for why
    these operations, which have been treated as contingency operations in
    the past, are now considered to be a permanent part of DOD operations?
        Answer. Our budget presentation does not bear on how these
    operations are considered. We have requested fiscal year 1998 funds to
    support the continuing operations in Southwest Asia in the various
    Service/Agencies appropriations, as was done last year. The new
    Overseas Contingency Operations Transfer Fund was used only for those
    operations with an identified end date, which only include operations
    in the Bosnia AOR for fiscal year 1998.
        Question. What is your criteria for defining ``contingency
    operations'' in terms of the fund? Do you have written policies and
    procedures in place for operation of the Fund?
        Answer. The Overseas Contingency Operations Transfer Fund for
    fiscal year 1998 was used only for those operations with an identified
    end date, which only include operations in the Bosnia AOR. We would
    also envision in the future using the Fund for any new contingency
    operation because of the inherent difficulty in accurately estimating
    detailed costs for specific appropriations. The Fund allows needed
    flexibility to allocate funds to the proper account as actual costs
    become known. No requirement is perceived for written policies or
    procedures for operation of the Fund since it is basically a transfer
    account whose use is based on currently established procedures used for
    similar funds such as the Drug Interdiction and Counter-Drug
    Activities, Defense Transfer Fund and the Environmental Restoration,
    Defense Transfer Fund.
        Question. Dr. Hamre, the U.S. seems to provide a disproportionate
    share of resources to maintain the free flow of oil out of Southwest
    Asia. Our country gets less that 20 percent of its oil from the region,
    compared to, for example, Japan's requirement of 75 percent. Are any
    efforts being made to shift some of this burden?
        Answer. Relative reliance on Gulf oil supplies may not be the most
    appropriate criterion for viewing burdensharing of our mutual security
    interests. There is a single world oil market, and a disruption in the
    supply of oil from the Gulf would affect prices everywhere, not just in
    those countries whose normal source was interrupted. In this sense, the
    Japanese have no greater interest than the U.S. has in ensuring the
    free flow of oil from the Gulf.
        Our Pacific and European allies provide a broad range of host
    nation support to U.S. forces stationed on their territory, including
    direct cost sharing, land for U.S. bases and material storage
    facilities, logistics support such as ammunition storage and equipment
    maintenance, and pledges of wartime host nation support. Japan, South
    Korea, and Germany all provided generous cash and in-kind support to
    the U.S. during Operation Desert Shield/Desert Storm in 1990-91. The
    1997 Defense Authorization Act largely incorporates the
    Administration's approach to ``responsibility-sharing,'' broadening the
    focus of our concern from cost-sharing narrowly defined to other areas
    where allies can and should contribute to shared security objectives.
    In addition to contributions to U.S. stationing costs, we look to our
    allies to increase their budgetary outlays for defense and foreign
    assistance to levels commensurate with our own and to increase the
    military assets that they contribute to multinational military
    activities worldwide, including United Nations or regional peacekeeping
    operations.
        The U.S. is clearly the most capable of providing the military
    forces to ensure the free flow of Gulf oil, although both the French
    and British air forces make welcome contributions to Operation Southern
    Watch monitoring southern Iraq. In addition, fourteen countries besides
    the United States have participated in the Maritime Interception Force
    that enforces the U.N. embargo on Iraq. Australia, the United Kingdom,
    the Netherlands, and New Zealand are currently participating with the
    U.S. Navy in the Gulf. Oil exporters also benefit from the free flow of
    oil from the Gulf, and both Saudi Arabia and Kuwait contribute
    generously through assistance-in-kind to the needs of our forces in the
    region.
        Question. Dr. Hamre, the fiscal year 1997 Supplemental identifies
    incremental costs totaling more than $2 billion, but provides no
    specifics on potential sources. Can you outline DOD's game plan for
    resourcing these requirements?
        Answer. We will be working with the staffs of the Appropriations
    Committee of the House and Senate to identify potential sources that
    ideally will be mutually acceptable. Early indications are that some of
    the offsets might be relatively painless, like more favorable inflation
    or currency rates.
        Question. What funding in the Supplemental Request is for military
    personnel costs? What does this include? Why is DOD now deploying
    troops for six month rotations vice the one year rotation policy of
    last year?
        Answer. The Supplemental request for $2,006.2 million contains
    $360.1 million for incremental military personnel costs for Imminent
    Danger Pay, Family Separation Allowance, Foreign Duty Pay, and Basic
    Allowance for Subsistence. Under the definition of ``incremental
    costs,'' these expenses would not be incurred except for participation
    in the identified contingency operations.
        With regard to troop rotations, the original IFOR deployment was
    planned as a 12 month effort (January-December 1996) with no troop
    rotations. The current 6 month rotation policy was based on quality of
    life considerations to shorten these kinds of deployment to ensure that
    the soldier is not unduly separated from his family for extended
    periods.
        Question. What inputs are you getting from the Service Chiefs on
    the impact of delaying training, readiness and quality of life to pay
    for the extension in Bosnia?
        Answer. The Service Chiefs have indicated no adverse impact from
    the extension of operations in Bosnia assuming full congressional
    approval of the supplemental request by early April.
                logistics civilian augmentation program [logcap]
        Question. Dr. Hamre, what are the latest projected costs for LOGCAP
    support in Bosnia? What do these costs include?
        Answer. Current cost estimates for LOGCAP support for Bosnia in
    fiscal year 1997 have been revised downward from $386.9 million to $240
    million. The original estimate was based on the potential for added
    costs associated with the transition to a new contractor since a new
    contract award was imminent. This would have resulted in additional
    start-up costs. This did not happen. In February 1997, the Army awarded
    a single source contract to Brown & Root for continued operations in
    Bosnia. The revised estimate of $240 million was based on the award of
    the single source contract and the latest assessment of actual cost
    experience.
        The contractor is responsible for the operation and maintenance of
    all base camp facilities in Bosnia. Additionally, the LOGCAP contract
    for Bosnia operations covers requirements at the Interim Support Base
    to include maintenance and upgrade of facilities, waste management,
    power generation, showers and latrines, kitchens and food service,
    potable water, and laundry services.
        Question. Why is the fiscal year 1997 cost at the same level as
    last year when this should be a period of stability, with a much
    smaller force and fewer camps in operation?
        Answer. The Logistics Civilian Augmentation Program (LOGCAP) cost
    estimate of $386.9 million identified in the fiscal year 1997
    Supplemental, now revised downward to $240 million, covers 12 months of
    LOGCAP support compared to the 9 months of operation in fiscal year
    1996. The Implementation Force operations also remained at full
    strength at the 15 base camps through the first quarter of fiscal year
    1997 when the phasedown to the Stabilization Force began, with
    attendant support at 11 base camps. In fact the fiscal year 1997
    estimate is based on our actual experience in fiscal year 1996 and when
    the above factors are considered, the fiscal year 1997 cost reflects
    almost exactly the average monthly costs as experienced in the last few
    months of fiscal year 1996.
        Question. Dr. Hamre, I understand that the Air Force and Navy are
    establishing separate programs along the same lines as LOGCAP. What
    sort of oversight will OSD have over these programs? Has any formal
    guidance been developed to ensure that these separate mechanisms don't
    end up competing with one another for limited support and personnel,
    driving up the overall cost to DOD?
        Answer. The Navy and Air Force do have similar programs; however,
    they are designed to accomplish different objectives. The Air Force
    contract acquires supplies and services, while the Navy contract is
    focused on construction and engineering services in support of the
    Navy's contract construction agency mission. A team, comprised of
    representatives from the Office of the Secretary of Defense, Joint
    Chiefs of Staff, and the Services, was formed to review the best
    approach for management of these programs. The determination was made
    that civilian augmentation support during operations would be most
    effectively met through individual programs. This does not preclude a
    Service from using another Services' contract, through transfer of
    funds, when an existing contract meets the requirements. It is the
    Service, in consultation with the operational Commander in Chief
    (CINC), that should decide when they require augmentation and when they
    could provide combat service support. When using contract services, the
    CINC within a given area is responsible to provide oversight through
    Joint Procurement Boards to ensure that there is no overlap of
    contractual services.
        Question. What is the status of negotiations with Hungary for the
    rebate of the value added tax? I understand that Brown and Root
    estimates put the potential rebate at $8 million. Do you agree with
    this figure? Who will actually receive this rebated amount?
        Answer. Negotiations with the Hungarians for the ``rebate'' of
    Value Added Tax (VAT) are on-going. It is hoped that an agreement at
    the executive level could be reached by late April or early May 1997.
    The parliamentary ratification process could extend into the late June
    1997 period. The USAREUR analysis, as of 14 March, indicates that the
    potential Brown and Root refund will be approximately $5.7 million. The
    Government of Hungary will reimburse USAREUR directly for the VAT paid
    Brown and Root under its cost-reimbursement contract, USAREUR will
    recover the VAT paid as a refund of a contract overpayment. The VAT
    refund will be returned to the same appropriation from which it was
    disbursed, e.g., refunds for VAT paid in fiscal year 1996 will go to
    the USAREUR fiscal year 1996 account.
                                 unit rotation
        Question. During the summer of 1996, it was decided that some of
    the units with heavier equipment, such as tanks, would be replaced with
    lighter units, such as MP companies. We understand that the most recent
    rotation has again deployed heavy units and in greater numbers than
    were there originally. What has changed operationally that now requires
    these heavier units? What is the difference in OPTEMPO and redeployment
    costs? Do you foresee a period when these heavy units will be replaced
    during the year, resulting in added transportation and reconstitution
    costs?
        Answer. As we continue our presence in Bosnia, a detailed mission
    analysis and threat assessment has been central to properly structuring
    each force rotation to conduct assigned missions, and to ensure the
    necessary level of force protection.
        Through this process, we found that we needed to structure our
    forces to transition from a posture of implementation, to one of
    stabilization. Stabilization Force One (SFOR1), which is currently
    deploying, is task organized to conduct that stabilization mission.
        The SFOR1 structure replaces the initial SFOR's two MP battalions
    with one additional mechanized Battalion Task Force. However, when
    looking only at the number of armored vehicles deployed, SFOR1 is
    lighter than both the initial IFOR deployment, and the reshaped IFOR of
    August 1996. Furthermore, the projected follow-on SFOR2 armored vehicle
    count will be about half that of SFOR1. The Army has projected their
    OPTEMPO costs for the aggregate 17 month SFOR involvement at $338
    million. This projection is considerably less than the roughly $900
    million the Army spent during their 12 month IFOR effort. Naturally,
    aggregate SFOR rotation costs will be greater than the IFOR cost.
    However, by making prudent use of forward deployed equipment stocks,
    and by rotating personnel into mission deployed equipment, the Army is
    making every effort to minimize transportation and reconstitution costs
    associated with the schedule of unit rotations.
                                     ______

                  Questions Submitted by Senator Thad Cochran
               national guard and reserve o&m/procurement funding
        Question. We have seen that the National Guard and Reserve are
    being asked to play an increasingly significant role in peacekeeping
    and peace-enforcing activities, including the operations in Bosnia. In
    recent years the Guard and Reserve forces have relied on this
    Subcommittee to add to the Administration's requests to fund accounts
    for the equipment and training of the Guard and Reserve. Given the
    increased use of the Guard and Reserve, do you believe that additional
    funds for O&M and procurement should be added for the Guard and Reserve
    for fiscal year 1998? I understand there is concern that this budget
    does not meet the needs for National Guard Pay and Allowances and
    Operations and Maintenance. Is this accurate?
        Answer. The Guard and Reserve do continue to share a greater role
    in the defense of our nation. The fiscal year 1998 budget recognizes
    this increasing role and reflects the O&M resources the Department
    believes are necessary to maintain readiness and meet current
    operational requirements. There should not be any concern that the
    needs of the National Guard Pay and Allowances and Operations and
    Maintenance accounts are not being met. The concern that you allude to
    represents the National Guard Association's preference to increase
    fiscal year 1998 funding to further enhance readiness of later
    deploying units. However, given the current threats in the world today,
    a lower level of readiness for later deploying units is acceptable. On
    the equipment side, the Department does rely heavily on the National
    Guard and Reserve Equipment appropriation to improve the state of
    equipment readiness for all Reserve Components. Fiscal year 1998 is no
    exception. The Guard and Reserve do continue to have some unfunded
    equipment requirements.
                                  procurement
        Question. In every one of the Administration's budget requests, the
    Future Year's Defense Plan in the category of Procurement has always
    been greater than what is actually requested the following year. Last
    year, the Administration indicated that it would ramp-up the annual
    procurement budget starting this year. Yet, now we see that the $44.1
    billion requested is $2.9 billion less than what the Department
    originally intended to request for fiscal year 1998. Given that your
    procurement requests continue to decline, how do you expect to reach an
    annual procurement budget of $60 billion by the year 2000?
        Answer. I do not expect the procurement request to decline again.
    The Department has made it clear that we were very disappointed with
    the level of fiscal year 1998 funding for procurement. However, the
    Department was able to retain the growth profile for procurement from
    fiscal year 1998-2003 and I have made it a priority of mine to see that
    it happens. As I have testified, I think it is important not to
    overemphasize any particular number. However, improving the funding
    available for modernization is one of the major goals of the
    Quadrennial Defense Review (QDR) and I have conveyed my thoughts in
    that area to the Department as unambiguously as possible.
                                  shipbuilding
        Question. The Navy has stated that it needs 346 ships. Given the
    average life span of a ship is approximately 35 years, it appears that
    the Navy needs to procure around 9 or 10 ships a year to maintain a
    346-ship Navy. Instead, this budget requests 4 ships for fiscal year
    1998. How do you expect the Navy to reach the Administration's stated
    need at this rate of ship procurement?
        Answer. The quantity of ships procured in fiscal year 1998 has very
    little to do with the number of ships in a future force structure. The
    relatively low procurement numbers reflected in the budget request is
    more indicative of the fact that we currently have a relatively young
    fleet in terms of service life and that we are in the process of
    transitioning to a new generation of warships. In the Future Year
    Defense Program (FYDP) accompanying the fiscal year 1998 President's
    budget, there is substantial funding for the acquisition of a new
    generation of aircraft carrier, attack submarine, surface combatant,
    combat logistics ship, and amphibious assault ship. Rate production of
    these new programs is not expected to be attained until the post FYDP
    period. This is due to the fact that it takes time to prudently design
    and test these new hulls prior to committing to full production. In
    addition, it should be pointed out that the long-term number of total
    battle force ships is also driven by other factors beyond new
    procurement rates, such as retirement rates of existing ships and
    possibly life extensions where warranted.
        The Department is in the process of evaluating future shipbuilding
    alternatives in the Quadrennial Defense Review (QDR). This detailed
    analysis of national security goals, defense priorities, and mission
    objectives is considering not only what our future warfighting and
    presence requirements will be, but also assessing the number of ships
    needed, the mix of ships, and the impact that new technologies like
    Cooperative Engagement Capability (CEC) will have on fleet size.
        With regard to the total size of the fleet, the 346 ships mentioned
    at times by the Navy is their requirement. This figure was first cited
    in the Bottom Up Review (BUR) and should have been considered as a
    intermediate position, not a fixed figure. This amount was subsequently
    clarified to mean a force of between 330 and 346 ships in the fiscal
    year 1994 President's budget request. The fiscal year 1998 President's
    budget request for new construction and total ship inventory sustains a
    force level that is within this parameter. In addition, because of the
    long lead times to develop and construct ships, it is misleading to
    focus on a procurement rate in one budget year, or even an average
    across a given 5-year period (i.e., the FYDP), as a means either of
    judging the adequacy of this year's shipbuilding program funding or of
    predicting future fleet size.
                                  rescissions
        Question. I understand that, unlike past years, the Department is
    asking for blanket authority to rescind $2 billion from the fiscal year
    1997 appropriations bill. It appears that you are asking Congress to
    trust DOD not to rescind funds for programs that Congress believes are
    important. Why aren't you providing a program-by-program rescission
    list?
        Answer. The Department has not proposed a rescission. The fiscal
    year 1998 budget includes a legislative proposal to cancel $4.8 billion
    under a DOD-Wide Savings Proposals fiscal year 1997 Supplemental
    appropriation. If the Congress decides that this legislation is
    acceptable, the Secretary of Defense will determine which accounts the
    cancellation should be applied to.
        Question. Will we have a rescission list before the Congress is
    asked to grant authority for these rescissions?
        Answer. As I noted in the answer to the previous question, our
    proposal is not a rescission, it is an fiscal year 1997 Supplemental
    appropriation that cancels $4.8 billion of the fiscal year 1997
    program. As spelled out in the proposed legislation, the specific
    accounts will be determined upon enactment of the Supplemental
    appropriation.
                           ballistic missile defense
        Question. In the past, funds for Ballistic Missile Defense programs
    almost exclusively have gone through the Ballistic Missile Defense
    Organization to ensure a centralized focus, even though the funds were
    for the most part passed to the services for program execution. Now,
    however, this budget requests funding through the services for Theater
    Missile Defenses (TMD) procurement. Why do you think that in future
    years sufficient TMD procurement funds will be asked for by the
    services, given tight procurement budgets and the TMD programs having
    to compete with tanks, ships and planes?
        Answer. The Services have the responsibility to recruit, train and
    equip the forces under their cognizance. While it might make sense to
    have a central organization like the Ballistic Missile Defense
    Organization (BMDO) develop a class of weapons to take advantage of
    technological synergies, avoid duplication and ensure interoperability;
    once a weapon system reaches the stage where it needs to be procured to
    equip the force it is most appropriate that those decisions be made by
    those responsible for equipping the affected force. BMDO will remain as
    the acquisition executive for all TMD programs and will continue to
    play an active part in all future resource decisions through both the
    acquisition process and the PPBS process. The Service leadership is
    aware of and understands the threats that face the Department in the
    future and are responsible for making appropriate resource
    prioritization decisions.
        An implication of the question is that budgeting the procurement of
    TMD systems in a central office such as BMDO will somehow make them
    immune from the normal competition for resources. Nothing could be
    further from the truth. BMDO is funded within the same topline the
    Services are. The procurement budget for BMDO is subjected to the same
    tight constraints the Service budgets are. The PPBS process will allow
    any and all TMD funding issues to be vetted at the highest departmental
    levels. Allowing the Services to budget for their own TMD requirements
    will enable the Services to exert the influence they think appropriate
    to ensure the TMD requirements are met.
        In addition, the obvious Service investment in the weapon system
    will ensure coordinated planning for all of the essential support
    elements, i.e., logistics, training, etc., necessary for successful
    deployment. The BMDO does not have the resources necessary to replicate
    the full compliment of support required to deploy systems of this
    magnitude.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
        Question. What is DOD's current estimate of the number of active
    duty personnel on food stamps or other forms of public assistance?
        Answer. There are approximately 12,000 active duty personnel
    receiving food stamp benefits. If the value of furnished military
    housing were included in computing food stamps eligibility, this number
    would be less than 5,000. We do not have an estimate for other forms of
    public assistance.
        Question. What measures does DOD employ to assess the condition of
    active duty military families?
        Answer. The Department assesses the quality of life of active duty
    military families in a variety of ways. In December 1994, the Secretary
    of Defense established a Task Force of distinguished individuals (the
    Marsh panel) to review and provide recommendations on how to improve
    the quality of life. This Task Force focused specifically on the areas
    of military housing, personnel tempo, and community and family
    services. The Department also created a Quality of Life Executive
    Committee that has made significant progress in implementing both the
    Secretary of Defense's Quality of Life initiatives and the approved
    recommendations of the Task Force. This Committee brings the military
    services together to provide a formal, institutionalized means of
    assessing quality of life needs and outcomes.
        Quality of Life is also assessed by commanders at all levels
    through formal quality of life programs and by special reviews. For
    example, in May 1995, the DOD Inspector General reported on quality of
    life from the installation commanders' perspective.
        In addition, both the military services and DOD conduct surveys of
    their members. These include annual surveys at the installation level
    that assess satisfaction with local community support programs and
    services. Every five to seven years, DOD conducts a comprehensive,
    longitudinal survey of officers and enlisted personnel and their
    spouses. Our last survey was conducted in 1992. Data analysis from the
    1992 survey examined patterns of community support program utilization
    by members and their families, the relationship between program use and
    satisfaction, and member attitudes about facilities and programs. Use
    of the commissary, exchange, fitness centers, libraries, and
    recreational facilities are consistently seen as very important to
    service members. Support programs such as marriage and family
    counseling, spouse employment, and housing referral showed lower usage
    but high satisfaction among members. The next survey document is being
    developed, and we anticipate administering the survey in 1998-1999.
        Question. Are data collected on spouse and child abuse?
        Answer. The Department collects data on spouse and child abuse
    through the Family Advocacy Program. The data are collected for those
    who are eligible for treatment in a military medical treatment
    facility. Thus the data are collected on active duty families,
    including the families of Reserve component members who are on active
    duty. It also includes a small number of retirees and a small number of
    civil service or contract personnel who are eligible for treatment
    abroad or at remote sites in the United States.
        Question. Are data collected on divorce rates?
        Answer. The Department does not collect data on divorce rates.
        Question. Are data collected on pregnancies or fathering of
    pregnancies among unmarried military personnel?
        Answer. The Department does not collect data on pregnancies or
    fathering of pregnancies among unmarried military personnel.
        Question. What trends do these data show for spouse and child abuse
    for the last ten years?
        Answer. On July 10, 1987, the Department published DOD Instruction
    6400.2, ``Child & Spouse Abuse Report.'' Data collection began
    effective in fiscal year 1988. The following charts depict the spouse
    abuse and child abuse data for the Family Advocacy Program from the
    beginning of fiscal year 1988 to the end of fiscal year 1995. This
    information is not currently available for fiscal year 1996.

                                  SPOUSE ABUSE REPORTED TO THE FAMILY ADVOCACY PROGRAM
    ----------------------------------------------------------------------------------------------------------------
                                                                 Spouse    Substantiated   Rate/     Total     Rate/
                               Year                            population     reports      1,000    reports    1,000
    ----------------------------------------------------------------------------------------------------------------
    Fiscal year:
        1988.................................................   1,139,771        13,705     12.0      17,583    15.4
        1989.................................................   1,061,512        15,335     14.5      18,978    17.2
        1990.................................................   1,026,119        14,840     14.5      19,042    18.6
        1991.................................................   1,040,090        15,657     15.0      20,286    19.5
        1992.................................................   1,016,263        18,052     17.8      23,812    23.4
        1993.................................................     923,206        16,728     18.1      22,799    24.7
        1994.................................................     934,478        17,584     18.8      24,412    26.1
        1995.................................................     855,939        16,282     19.0      22,107    25.8
    ----------------------------------------------------------------------------------------------------------------

        These data show a trend of increased number of reports of spouse
    abuse and of substantiated reports of spouse abuse for the last eight
    years. This increase may be due in part to public awareness campaigns
    by the Family Advocacy Program and the increased visibility of the
    problem of spouse abuse in the national media due to such events as the
    1994 Violence Against Women Act and the 1995 O.J. Simpson trial. The
    rates of substantiated reports and total reports per 1,000 spouses are
    useful in identifying how frequently spouse abuse occurs, particularly
    when the size of the force is changing. Since the beginning of fiscal
    year 1992, the increase in the rate of reports per 1,000 has slowed.
    Reported abuse and substantiated spouse abuse per thousand within the
    Department is far below the remainder of the U.S. civilian population.
    However, the data are not comparable to civilian programs that include
    abuse between dating couples, cohabiting couples, and formerly married
    couples.

                                   CHILD ABUSE REPORTED TO THE FAMILY ADVOCACY PROGRAM
    ----------------------------------------------------------------------------------------------------------------
                                                                 Spouse    Substantiated   Rate/     Total     Rate/
                               Year                            population     reports      1,000    reports    1,000
    ----------------------------------------------------------------------------------------------------------------
    Fiscal year:
        1988.................................................   1,556,190         9,378      6.0      20,715    13.2
        1989.................................................   1,572,219        10,336      6.6      20,891    13.3
        1990.................................................   1,580,494         9,696      6.1      20,857    13.2
        1991.................................................   1,707,327        10,552      6.2      22,608    13.2
        1992.................................................   1,643,669        10,251      6.2      23,343    14.2
        1993.................................................   1,546,693        10,219      6.6      23,475    15.2
        1994.................................................   1,419,867        10,436      7.3      21,292    15.0
        1995.................................................   1,299,283         8,246      6.3      17,902    13.8
    ----------------------------------------------------------------------------------------------------------------

        In interpreting the child abuse data, it is important to keep in
    mind that the term ``abuse'' includes neglect and sexual abuse. The
    alleged abuser may be a parent who is an active duty service member or
    a civilian parent, or a staff member or volunteer in a DOD-sponsored or
    sanctioned caregiving role, such as a child care center or youth
    program.
        The DOD rates of substantiated reports and total reports of child
    abuse have remained relatively constant over the eight-year period.
    Both rates are approximately one-half of comparable rates in the U.S.
    civilian population as compiled by the U.S. Department of Health and
    Human Services. This may be explained in part by the strong support
    military families receive and the success of prevention efforts
    sponsored by the Family Advocacy Program and other military family
    support programs. Another reason is that about half of the civilian
    cases involve alleged child neglect due to poverty; in contrast,
    military families have at least one wage-earner, thus making poverty-
    related neglect cases less common.
                                 family housing
        Question. What is the number of family housing and barracks units
    that are currently in excess of 20 years old or are otherwise in need
    of renovation or replacement? What is the projected cost for renovation
    or replacement by traditional methods? What innovative ideas are being
    considered for this problem?
        Answer. The aggregate number of family housing units requiring
    renovation or replacement is approximately 206,000. The estimated cost
    of improving these units using traditional military construction
    methods is approximately $16.45 billion.
        In the past, the Department has estimated that it would take
    approximately $9 billion to improve its barracks stock. The new 1+1
    barracks standard, which was approved in November 1995, has changed the
    way in which the Services collect data for renovation and replacement
    planning. Each Service is now on its way towards completing
    installation-level master plans which will detail implementation of the
    new construction standard. Included in these plans are costs for future
    renovation requirements.
        Initiatives the Department is pursuing to improve the housing
    problem include expansion of the privatization tools included in the
    Fiscal Year 1996 Defense Authorization Act, efforts to demolish
    unneeded housing/barracks facilitates, and improving our housing
    allowance system.
                                    tricare
        Question. Dr. Hamre, before and after TRICARE, what measures are
    used to indicate problems and complaints? What trends do these data
    show since the initiation of TRICARE?
        Answer. The Office of the Assistant Secretary of Defense for Health
    Affairs (OASD-HA) has conducted two surveys to track problems and
    complaints by measuring satisfaction with specific aspects of health
    care delivery. The Annual Health Care Survey of DOD Beneficiaries is
    sent to all categories of beneficiaries eligible for military health
    care. The TRICARE Prime Enrollee Satisfaction Survey samples
    individuals enrolled in TRICARE Prime. Together, the two surveys (which
    will be merged after TRICARE is fully implemented) provide a detailed
    and consistent picture of satisfaction with health care delivery. Both
    surveys suggest that TRICARE is improving satisfaction and reducing
    problems among DOD beneficiaries.
        In 1995, the OASD-HA fielded the first Annual Health Care Survey of
    DOD Beneficiaries. This survey is being used to track satisfaction,
    health status, use of care, and access. By carefully sampling
    beneficiaries, the survey data can be used to identify problems and
    also to determine how widespread those problems are. This allows the
    Department of Defense to target its resources to the most serious and
    pervasive problems.
        TRICARE has been implemented in some locations for two iterations
    of the Annual Survey. While this does not provide enough data to
    identify nationwide trends, it is possible to track year-to-year
    changes in those regions that have implemented TRICARE and compare with
    changes in regions that have not yet implemented TRICARE. This
    comparison can be used to indicate whether TRICARE has increased
    satisfaction among military families.
        Among beneficiaries living inside U.S. catchment areas (the largest
    group of beneficiaries), overall satisfaction with care at military
    facilities rose between 1995 and 1996. However, regions that offered
    TRICARE for at least one year (specifically, Regions 6, 9, 10, 11 and
    12), now have higher satisfaction ratings than regions that do not yet
    have TRICARE. Satisfaction with quality of care also rose between 1995
    and 1996. But the change was much greater in regions offering TRICARE.
    Regions not yet offering TRICARE showed a negligible increase.
        Analysis of the TRICARE Prime Enrollee Satisfaction Survey also
    indicates that beneficiaries are enjoying greater satisfaction and
    experiencing fewer problems. This survey, which was sent to enrollees
    in Regions 6, 9, 10, 11, and 12, found that Prime improved their access
    to care, quality of care, and the benefits package. Specifically, over
    a third of enrollees report that Prime improved overall access, with
    only 12 percent citing a decline. Over a third report that Prime
    improved quality of basic health care, with only 8 percent citing a
    decline. Finally, just under 40 percent of enrollees thought the
    overall benefits package had improved with only 16 percent perceiving a
    decline.
        Since the 1996 Annual Survey and the Enrollee Survey were
    completed, more regions have implemented TRICARE. The 1997 survey will
    provide information on how TRICARE has affected beneficiary
    satisfaction in those regions. In addition, survey results, which are
    still being analyzed, have been disseminated to the Services, regional
    commanders and local military treatment facilities to make them aware
    of the problems and to track their efforts to improve satisfaction.
        Question. Dr. Hamre, under TRICARE, what opportunities exist for
    active duty military personnel to be denied healthcare that did not
    exist previously? What number of denials of health care to active duty
    personnel, and to their families, have been brought to your attention
    under the TRICARE system. How does this compare to the previous system?
        Answer. Under TRICARE, active duty personnel should not experience
    any change in their access to medically necessary care. Active duty
    will continue to receive priority for all care appropriate to the
    treatment of the patient's diagnosis, symptoms, and history at military
    medical treatment facilities. Family members, especially those who
    choose to enroll in Prime, should see access to care improve. For
    family members, TRICARE also covers generally accepted, medically
    necessary, and appropriate care that is not experimental or
    investigational. Moreover, TRICARE Prime covers many enhanced benefits,
    including preventive screenings, immunizations and other services.
        Recent data from the 1996 Health Care Survey of DOD Beneficiaries
    supports the Department's position that beneficiaries should not see
    increases in denials of healthcare. If denials were a problem in the
    system, satisfaction with access to system resources should reflect
    this problem. This measure of satisfaction is based on 6 questions in
    the annual survey that ask about satisfaction with access to health
    care resources, including access to specialists (if needed), medical
    care in an emergency, and access to hospital care if needed.
        In fact, between 1995 and 1996, satisfaction with access to
    resources rose among those beneficiaries living inside U.S. catchment
    areas. Moreover, the increases were largest in regions that had offered
    TRICARE for at least six months (regions 6, 9, 10, 11 and 12). Based on
    this analysis, TRICARE has improved access to system resources,
    indicating that denials of care are not worsening.
        Analysis of the TRICARE Prime Enrollee Satisfaction Survey also
    indicates that beneficiaries who enroll in Prime are not experiencing
    denial of care. This survey of enrollees in Regions 6, 9, 10, 11 and 12
    found that 35 percent of beneficiaries rated Prime's coverage as very
    good or excellent, while only 5 percent rate it as poor. This
    satisfaction scale is determined from beneficiaries' ratings of the
    range of services covered by Prime, the number of doctors to choose
    from, choice of hospital and ability to see specialists.
        Results of both the Annual Survey and the Prime Enrollee
    Satisfaction Survey indicate that access to care will improve as
    TRICARE is fully implemented. Active duty and family members will
    continue to receive the medically necessary and appropriate care they
    need.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                    army national guard o&m/milpers accounts
        Question. Dr. Hamre, it has come to my attention that the Army
    National Guard personnel and Operation and Maintenance accounts are
    short $743 million. This looks to me like you are setting the National
    Guard up to be unable to meet much less maintain, its basic readiness
    requirements. With the training account funded at 11 percent of its
    requirements, it seems to me that this will insure the hollowness of
    our force and is exceptionally shortsighted on the part of the
    Department of Defense. Is it the intent of the Army and the Department
    of Defense to dismantle the Army National Guard, or is this indicative
    of a greater, more encompassing fiscal crisis facing the entire
    department in its readiness accounts?
        Answer. It is not the intent of the Army or the Department of
    Defense to dismantle the Army National Guard, nor is the $743 million
    identified by the National Guard Association of the United States
    indicative of a greater or more encompassing fiscal crisis facing the
    entire Department of Defense in its readiness accounts. The National
    Guard budget is consistent with the fiscal year 1997 funding level and
    reflects the resources the Department believes are needed for the ARNG
    to maintain readiness and meet current operational requirements. For
    several years the Department has used a tiered readiness approach to
    ensure that early deploying units receive priority in funding. This
    means that some late deploying units are maintained at lower levels of
    readiness. Although the National Guard Association would prefer to
    devote a higher level of funding to these units, a lower level of
    readiness for late deploying units is acceptable given current threats.
    The $743 million represents the National Guard Association preference
    to increase fiscal year 1998 resources to further enhance readiness of
    later deploying units. As you know the Department has begun the
    Quadrennial Defense Review (QDR) and we will be looking at tiered
    readiness to see how well it is working and whether it is appropriate
    to apply to other units.
        Question. Dr. Hamre, Secretary Money has made it known to you that
    the Air Force requires the aircraft for which we budgeted last year. I
    would like for you to address specifically your plan to release the
    funds for all six F-15E airframes.
        Answer. The funding for all six F-15E aircraft will be released by
    the end of March.
        Question. Dr. Hamre, as we are half way through the fiscal year, I
    would also like you to address why, as of this morning, the F/A-18 C/D
    funds which the Marine Corps and Navy have asked for, have likewise
    been withheld.
        Answer. As you know, the Department is faced this fiscal year with
    the need to finance nearly $2 billion in unfunded costs to extend
    operations in Bosnia. Therefore, I, as DOD Comptroller, have been very
    circumspect with regard to releasing funds for a number of programs in
    case the Department needed those funds to help finance the contingency
    costs. That is part of my Title 10 responsibility as Comptroller. Funds
    for programs have been released on a case-by-case basis when the
    program identifies a need to execute contracts or maintain production
    lines. The F/A-18 C/D funds will be released by mid-March.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                                force structure
        Question. Dr. Hamre, I understand your budget request does not
    achieve the modernization goals you set last year. Is your department
    examining additional reductions in other areas of the budget to free up
    additional funding for modernization?
        Answer. I have indicated we were disappointed we could not fund the
    fiscal year 1998 procurement program at the level we forecast last
    year. However, given our emphasis on readiness and quality of life
    issues, I think the fiscal year 1998 budget does reflect an appropriate
    balance of requirements. The Secretary has made it clear that
    everything is on the table for the Quadrennial Defense Review (QDR). We
    are hopeful that the on-going reexamination of force structure,
    readiness, infrastructure and modernization will provide us with some
    new insights. We are committed to improving the modernization-funding
    situation and are looking forward to working with the Congress to
    achieve the most appropriate balance of defense resources when the
    results of the QDR are complete.
        Question. Mr. Secretary, there are some who believe forces will
    have to be reduced further to live within the tight budgets foreseen
    for the future. What is your view on this?
        Answer. That is one of the central questions being addressed by the
    QDR, and I am reserving judgment until I read its analysis and
    recommendations.
        Question. Dr. Hamre, over the past few years, has the Army's
    investment budget been squeezed by its high costs of military manpower?
        Answer. I would not characterize the cost of military manpower as
    high. The cost of military manpower for all the Services is appropriate
    given the force structure requirements driven by the current national
    security strategy and the need to provide our volunteer military force
    with a reasonable, competitive compensation package. As the Secretary,
    Chairman and I have noted throughout our testimony, readiness and
    quality of life remain the highest priorities of the Department. My
    sense is that policy is well founded and for which there is a consensus
    both within the Department and among the congressional oversight
    committees. The budgetary impact of making readiness and quality of
    life issues our highest priority is that those accounts that fund pay,
    training, maintenance, supplies, medical, housing and other related
    costs will be emphasized. The further outgrowth of that emphasis is to
    limit the funding available for modernization for all Services, not
    just the Army. We recognize the need to increase the funding available
    for modernization and that is a major focus of the on-going Quadrennial
    Defense Review (QDR).
                           quadrennial defense review
        Question. Dr. Hamre, if the QDR were to substantially change DOD's
    requirements, would you recommend submitting a budget amendment to the
    Congress to readjust your funding plan?
        Answer. Secretary Cohen has said that the QDR results will be
    incorporated into next year's budget for fiscal year 1999 and beyond. I
    do not anticipate any developments that would cause him to alter that
    plan by submitting an amendment to this year's budget.
                               health care costs
        Question. Mr. Secretary, we are told that your health care budget
    is underfunded by more than $500 million; however, we have also heard
    reports that you fully funded the amount requested by the Surgeons
    General. Can you clarify this matter for the Committee?
        Answer. Currently, the Defense Health Program is not underfunded.
    At one point a communication problem existed but that has been
    corrected. An additional $274 million was added to the budget proposal.
    At the present funding level, although challenging, I believe
    sufficient resources are available to meet the Department's medical
    responsibilities.
        Question. Assuming for the moment that the health care requirements
    are underfunded by $500 million, what recommendations would you have
    for solving this problem?
        Answer. Currently, the Defense Health Program is not underfunded.
    As a result, I am unable to speculate on solutions to a $500 million
    shortfall.
                            economizing health care
        Question. Dr. Joseph, can you identify ways to economize in the
    health care field?
        Answer. The fiscal year 1998/99 Defense Health Program (DHP) budget
    includes a number of initiatives that I believe will serve to economize
    the Department's health care operations. The first and most significant
    is the completion of our managed care support network. By the end of
    fiscal year 1998 the network will be in place providing many of the
    cost containment capabilities private sector medical operations are now
    accessing. Second is the implementation of aggressive utilization
    management principles across our system. Our budget includes
    utilization management cost savings of $165 million. While this
    presents an extremely challenging goal, I believe it is achievable. In
    terms of infrastructure, the DHP is economizing by re-engineering 17
    small hospitals from ones that provide inappropriate levels of
    inpatient care to facilities that can provide improved access to
    ambulatory care for beneficiaries and ensure that care is rendered in a
    cost effective, high quality manner. On a smaller but very important
    scale is the resourcing of a variety preventative medicine programs in
    each of the Services.
                            defense spending trends
        Question. Secretary Hamre, I am told that the Office of Management
    and Budget disagrees with the Congressional Budget Office on the amount
    of current year spending--outlays in the budget vernacular--that your
    budget includes. Can you assure this Committee that no games were
    played with this estimating by the Administration, no smoke and
    mirrors?
        Answer. Yes, I can. We are working with OMB to show CBO and others
    that our estimates of outlays are valid.
        Question. Dr. Hamre, could you submit for the record an explanation
    of any differences between the Administration's and CBO's outlay
    estimates for fiscal year 1998?
        Answer. On March 3, CBO released its analysis of the President's
    fiscal year 1998 budget. One of its conclusions was that defense
    outlays for fiscal year 1998 were understated in the President's budget
    by $5.6 billion ($4.7 billion related to DOD and $0.9 billion related
    to DOE). The $4.7 billion for DOD was based primarily on differences
    in:
        Spendout rates against prior year unexpended balances ($2.9
    billion).--DOD/OMB projects outlays from prior year balances at the
    appropriation account level, while CBO projects outlays from prior
    years by looking at total DOD prior year outlays. DOD/OMB believes that
    using the certified Treasury actuals by account is more accurate than
    the CBO method.
        Spendout rates for certain fiscal year 1998 programs ($1.3
    billion).--CBO projects that outlays from new budget authority
    requested in fiscal year 1998 will be about $1.3 billion higher than
    the DOD/OMB estimate. Our projection reflects our best judgment based
    on past experience.
        Timing for Congressional action on the fiscal year 1997 rescission
    proposal and fiscal year 1997 supplemental ($0.5 billion).--In
    computing outlays associated with the fiscal year 1997 supplemental,
    DOD used the spendout rates for Operation and Maintenance accounts and
    assumed that about 75 percent of the funding for the supplemental would
    be spent in fiscal year 1997 and the remainder in fiscal year 1998. CBO
    assumed that Congress would not take early action on the supplemental
    and shifted more outlays into fiscal year 1998. In our view, however,
    since DOD is already borrowing money from its other O&M accounts that
    would spend late in the year to fund fiscal year 1997 military
    operations in Bosnia, the supplemental funding will be spent quickly
    once it is approved by Congress. Therefore, the CBO assumption about a
    lag in spending is not valid.
                         supplemental contingency costs
        Question. Last year, Congress provided $1.14 billion to cover all
    of DOD's estimated costs for overseas contingencies. Since then, the
    President has authorized U.S. troops to stay in Bosnia through most of
    fiscal year 1998. Can you tell us, is the entire $2 billion
    supplemental request to cover the costs of the S-FOR in Bosnia, or are
    there new higher costs for other overseas activities as well included
    within this amount?
        Answer. The supplemental request covers additional incremental
    requirements to support the extended operations in Bosnia, the enhanced
    level of operations in Southwest Asia, and recovery of expenses related
    to drawdown of stocks and services in response to unforeseen foreign
    emergencies.
        Question. Dr. Hamre, last year following the Khobar Towers bombing,
    several improvements were recommended for protecting our troops in the
    region. How are these costs going to be paid for?
        Answer. The costs to improve force protection in Southwest Asia
    (SWA) are being funded in three ways. First, $149.5 million was
    appropriated in the fiscal year 1997 Appropriations Bill (Section 8137
    and Title IX) to relocate troops to safer locations in Saudi Arabia
    ($122.6 million); to procure body armor and armor kits for vehicles for
    operations throughout SWA ($13.5 million); to improve physical security
    for troops in Bahrain ($12.2 million); and to establish three Air Force
    antiterrorism specialty teams in SWA ($1.2 million). Second, additional
    force protection requirements in SWA have been funded internally
    through realignment of funds. Specifically, in fiscal year 1997, the
    Air Force will spend $30.8 million to upgrade force protection measures
    for Southern Watch operations in Saudi Arabia, Kuwait and United Arab
    Emirates and to complete relocations in Saudi Arabia. Third, the Saudi
    Arabian Government has agreed to fund $200 million fixed facilities for
    U.S. forces in Saudi Arabia. This includes force protection, troop
    housing, a medical facility, relocation of housing in Taif to more
    secure location; consolidation of housing at Dhahran; communications
    facilities; and operations, administrative and maintenance facilities
    for air-based operations.
        Question. Dr. Hamre, what oversight do you have into the use of the
    funds provided to the CINCS in these overseas contingencies?
        Answer. The only combatant CINC that has a direct fiduciary
    responsibility is the CINC, U.S. Special Operations Command (USSOCOM).
    All other CINCS rely upon the various Services to maintain and field
    the forces required to meet CINC requirements and therefore are not
    directly provided any contingency funds. The Services, USSOCOM, and the
    various Agencies provide through their comptroller organizations a
    monthly cost report identifying the incremental costs incurred in
    support of designated contingency operations.
        Question. I understand that several members have expressed a
    concern that the funding provided could be construed as helping to
    sustain a long term presence in the mid-east. Can you assure the
    Committee that this is not the case.
        Answer. The continuing missions in Southwest Asia are designed to
    contain the Iraqi threat to the region and should remain until such
    time as Iraq complies with applicable United Nations Security Council
    Resolutions. The funds requested for Southwest Asia are limited to the
    amounts necessary to sustain essential operations. These costs include
    certain personnel pays associated with deployment and normal operating
    and base support costs. Those costs associated with establishing fixed
    facilities to relocate U.S. forces for force protection are being paid
    by the Saudi Arabian Government.
        Question. Dr. Hamre, are there other unfunded DOD requirements
    which are not addressed in the supplemental request?
        Answer. In addition to the supplemental request of $2 billion for
    ongoing operations in Bosnia and enhanced operations in Southwest Asia,
    the Department has submitted two other supplemental requests for
    consideration: one for $72 million for the Ready Reserve Mobilization
    Income Insurance Fund, and a second for $20 million for eligible
    claimants for Vietnamese POW's. I also expect to submit an Omnibus
    Reprogramming later in the year to address other requirements
    identified by the Services based on execution of their programs.
                               submarine programs
        Question. Dr. Hamre, your budget would buy four new attack
    submarines over the next five years. As Comptroller, are you satisfied
    that this plan which uses two shipyards to build these ships is
    financially sound and affordable?
        Answer. As we are all aware, the Department had originally proposed
    to build nuclear attack submarines at one shipyard, based to a large
    extent on our perception that the relatively low annual production
    rates in the future would not adequately support maintaining two
    separate vendors. However, despite our analysis on this subject, the
    Congress did not agree with the Department and directed a competitive
    procurement strategy to retain two separate shipyards. While we readily
    admit that there are certain positive benefits in retaining two nuclear
    submarine-capable shipyards for new construction, this alternative is
    not viewed within DOD or the Navy as being either efficient or
    affordable.
        In order to satisfy congressional concerns, the Navy, after
    evaluating various alternatives, proposes proceeding under a teaming
    arrangement that would leverage the considerable experience in each
    shipyard. This strategy, while innovative, is unproven and may not
    generate the savings we are hoping for. Notwithstanding these concerns,
    the Navy and the two shipyards are committed to making this plan work
    and believe that the program, as currently funded, is executable. The
    Department has monitored the evolution of the memorandum of agreement
    between the two shipyards, and believes that they are off to a good
    working relationship. Based on preliminary analysis, it seems clear
    that relative to the previously congressionally directed competitive
    plan the teaming arrangement proposed in this year's budget will expend
    considerable less money across the FYDP, while maintaining both nuclear
    capable shipyards.
        Question. Dr. Hamre, can you assure us that it is cost effective to
    split the total new attack submarine program between two shipyards?
        Answer. It is the Department's view that the most affordable and
    cost-effective solution is to award the contract for the New Attack
    Submarine to only one prime contractor, and that delivery of all of the
    ships of the class be from the same location. However, the Congress has
    repeatedly indicated a general discomfort with the Department's plan to
    award the production contract for the New Attack Submarine to only
    shipyard. Given the Congress's position, the Department and the Navy
    have searched for strategies that are programmatically and fiscally
    executable.
        Based on our estimates of the cost of the competitive program
    proposed by the Congress, I am firmly convinced that the cost of
    sustaining two shipyards at relatively low production rates would be
    prohibitively expensive. Given that the Department will not be able to
    afford to procure New Attack Submarines at rates greater than two ships
    per year in the foreseeable future, this teaming strategy appears to be
    appropriate and more cost-effective than a competitive plan. Therefore,
    in light of the interest of the Congress to maintain two nuclear
    capable submarine shipyards, the teaming strategy reflected in the
    budget request is the most affordable and cost-effective solution.
        Question. How many submarines per year would the Navy have to fund
    to allow both Electric Boat and Newport News to produce them
    efficiently?
        Answer. It is not possible at this time to define what will be an
    ``efficient production rate'' at these shipyards. Under the teaming
    arrangement reflected in the budget request, the most efficient
    production will evolve over time. Currently each shipyard would
    concentrate its expertise on the portion/section of the New Attack
    Submarine it can produce most efficiently.
        Question. Have you calculated whether it will cost more for the
    Navy to have two producers of submarines?
        Answer. Of all the alternatives available to the Department, I
    believe that the most expensive approach is to sustain two full service
    (design, construction, test, and ship delivery) new construction
    shipyards. The least expensive approach is to build the New Attack
    Submarine at one shipyard, as originally proposed by the Department in
    the Bottom Up Review (BUR). The new teaming approach reflected in the
    fiscal year 1998 President's budget, falls in-between these two plans,
    since its cost goal is to deliver a submarine whose cost is the
    equivalent of building the ship at one shipyard. This goal will be
    possible if each shipyard can concentrate its expertise on the portion/
    section of the New Attack Submarine it can produce most efficiently.
                              infrastructure costs
        Question. Dr. Hamre, I understand that there is a growing sense in
    the Defense Department that additional base closures are required to
    balance military needs with current DOD infrastructure. Are you
    considering recreating the Base Closure Commission, some other means to
    close bases, or are there no plans to close more bases?
        Answer. New legislation would be required to recreate the Base
    Closure Commission. The Department is looking hard at its
    infrastructure as part of the Quadrennial Defense Review. Secretary
    Cohen has noted that all issues are on the table, but it is too early
    to predict whether the Department will ask for authority for an
    additional round or rounds of closure.
        Question. Dr. Hamre, is it clear that closing bases has actually
    saved DOD money? Can you validate these savings for the record?
        Answer. Yes, Sir, it is very clear that the Base Realignment and
    Closure process is saving the Department of Defense significant
    dollars. Our projections show that the four rounds of closures will
    costs about $22 billion and will generate savings of approximately $36
    billion through the end of the final BRAC implementation period, fiscal
    year 2001. This will result in net savings of about $14 billion through
    the end of the implementation period and annual recurring savings of
    about $5.6 billion. Although it is generally acknowledged that the
    Department has and will continue to realize significant savings from
    base closures, these savings are difficult to audit. The Department's
    budgeting and accounting systems are designed to identify and track
    costs, not savings. As a consequence, the DOD Inspector General has
    been asked to review and validate the costs and savings resulting from
    base closures. The Department will provide the results of that review
    when they become available.
        Question. Dr Hamre, I am told that one of the reasons you were
    unable to meet your goal for investment funding was because of higher
    than anticipated costs for the DOD infrastructure. Can you give this
    committee any assurance that infrastructure costs will not continue to
    increase?
        Answer. Sir, I cannot give you assurances at this time that
    infrastructure costs will not continue to increase. However, I can
    assure you that the Department is taking a very hard look at the entire
    infrastructure during the Quadrennial Defense Review (QDR) with the
    goal of reducing overall requirements and costs while maintaining
    mission readiness. We will report the results of the QDR to the
    Congress later this spring.
                             infrastructure savings
        Question. Dr. Hamre, when considering infrastructure savings, are
    we talking mostly about cutting civilian employees and closing bases?
        Answer. The Quadrennial Defense Review (QDR) will be looking at all
    aspects of the Defense infrastructure with the goal of reducing
    requirements and costs while maintaining mission readiness. Until the
    QDR report is complete it is difficult to speculate on where most of
    the potential savings will be generated. We will all have to wait until
    the report comes out this spring.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                             defense budget topline
        Question. Dr. Hamre, as I mentioned in my statement, one of the
    chief aspects of this year's defense debate will be whether the
    President's budget adequately funds procurement and weapons
    modernization, both in fiscal year 1998 and in future years.
        I think it is interesting to look at this question over the full
    length of the competing budget plans. In fiscal year 1998 and fiscal
    year 1999, the Administration has requested $3 billion and $2 billion
    less, respectively, in budget authority than the majority's budget
    resolution provided last year. However, in fiscal year 2000, fiscal
    year 2001 and fiscal year 2002, the Administration's budget exceeds the
    fiscal year 1997 budget resolution by $2 billion, $5 billion and $11
    billion, respectively.
        For planning purposes, in order to accommodate weapons
    modernization efforts, which is more realistic: the Administration's
    request, which rises from $266 billion in fiscal year 1998 to $290
    billion in fiscal year 2002, or the majority's fiscal year 1997 budget
    resolution, which rises from $269 billion in fiscal year 1998 to only
    $279 billion in fiscal year 2002?
        Answer. The Administration's request would be better for
    accommodating planned weapons modernization efforts, which will
    increase substantially between now and fiscal year 2002.
        Question. Last year's defense appropriation bill included $11.5
    million for modifications of B-52 attrition reserve aircraft. That was
    funding that I worked hard to secure last year for our nation's B-52
    fleet; I do not want there to be a second class of B-52 bombers without
    upgrades. You can imagine my surprise last week when I learned that the
    Air Force was considering part or all of that money for another
    program. Can you confirm that the Air Force is no longer considering
    this reprogramming option?
        Answer. Yes, I can confirm that. The Air Force had been considering
    reprogramming B-52 funds from procurement to development to support
    future modifications associated with enhanced electronic
    countermeasures (ECM). The Air Force now plans to identify an
    alternative source of funds to satisfy that requirement.
                         fiscal year 1998 b-52 funding
        Question. Looking ahead funding for the B-52's in this year's
    appropriation bill, what is the Air Force's projected cost in fiscal
    year 1998 of retaining 23 B-52H aircraft, not in the POM as of February
    1996, as fully maintained attrition reserve aircraft?
        Answer. The Department's approved requirement for B-52 aircraft
    calls for a total inventory of 71 aircraft, which includes 56 Primary
    Authorized Aircraft (PAA), 8 attrition reserve (AR) aircraft, 6 backup
    aircraft (BAI) and 1 test aircraft. The Department has determined that
    the 71 aircraft B-52 fleet meets all conventional and SIOP missions. If
    the Department is forced to fund an additional 23 B-52 attrition
    reserve aircraft, then funding for critical bomber enhancements such as
    incorporation of Precision Guided Munitions (PGM's) as well as other
    reliability and maintainability modifications will be delayed,
    resulting in a potential degradation in future bomber fleet capability.
    The Department does not have a requirement to fund an additional 23 B-
    52 attrition reserve aircraft and no funding for this effort is
    included in our Future Years Defense Program (FYDP).
        The fiscal year 1998 cost of retaining 23 B-52H aircraft as fully
    maintained attrition reserve aircraft, assuming no retention beyond
    fiscal year 1998, is estimated to be:

                                                            Fiscal year 1998
            Appropriation                                dollars in millions

    O&M, Air Force....................................................  39.2
    Military Personnel, Air Force.....................................   4.5
                            -----------------------------------------------------------------
                            ________________________________________________

          Total

                                                                        43.7
                             b-52 re-engining study
        Question. Report language in last year's defense appropriations
    conference report directed the Office of the Secretary of Defense and
    the Air Force to examine the potential savings of a plan to lease new
    engines for the B-52 fleet. That report is due to the defense
    committees by March 15, 1997; when do OSD and the Air Force intend to
    submit it?
        Answer. The Office of the Secretary of Defense and the Air Force
    have examined this issue and the report is substantially complete. In
    order to deliver an accurate report to the Congress, the Department
    expects to submit the report before April 15, 1997.
        Question. I understand that the cost savings of this plan depend
    largely on assumptions regarding fuel costs and engine replacement
    rates. Why does the Defense Department use a different set of fuel
    price projections than the estimates available in the private sector?
        Answer. The Air Force chose to use a risk-adjusted fuel index when
    conducting their Life-Cycle Cost (LCC) estimate. The Air Force
    developed an expected range of fuel prices over the next 40 years. The
    range captured the DOE low-end expected fuel price index of 2 percent
    as the low estimate, the OSD index of 2.7 percent as the most likely,
    and the DRI index of 4.6 percent as the high estimate. The Air Force
    then used simulation analysis to predict the most likely outcome. The
    Air Force is required by OMB and OSD to use rates they provide for
    budgetary estimates. However, the Air Force can use private sector
    forecasts for sensitivity analysis.
        Question. Are private sector estimates not the ``best commercial
    practices and methodologies'' that should be used to evaluate
    commercial programs?
        Answer. Both the DRI index (commercial index) and the risk-adjusted
    rate that the Air Force used in their analysis represent bet guesses.
    No one can project fuel prices in the year 2036 with any degree of
    certainty. This is why the Air Force used simulation analysis to
    generate the most likely outcome. However, the Air Force did conduct a
    sensitivity analysis of the LCC estimate using the DRI fuel index. In
    this case, the lease option still required additional funding about the
    projected cost of maintaining the status quo which was unacceptable to
    the Air Force.
        Question. I understand that the Air Force is using engine removal
    rate projections from the TF33 Engine Division even though real-time
    data and records are available, since the RB211-535E4-B engines have
    been in commercial use on the Boeing 757 aircraft for years now. How
    does the Air Force justify using projections when historic data from
    objective sources are available?
        Answer. The Air Force used the same data as Boeing in developing
    projected engine removal rates for the RB211-535E4-B. These
    projections, derived from commercial historic data, were used in
    calculating the contractor logistic support (CLS) costs associated with
    maintaining the RB211-535E4-B in the Boeing proposal. The Air Force did
    use TF33 Engine Division data in projecting the total engine removal
    (TER) rates for the TF33 engines currently installed on the B-52. These
    projections were based on 26 years of historical data.
        Question. I understand the TF33 commercial vendor quotes of the
    repair and rejuvenation costs for the B-52's current engines are
    actually much higher than the repair costs predicted by the OC-ALC TF33
    engine depot. Could the Air Force please explain this discrepancy?
        Answer. The commercial vendor quotes which Boeing obtained were for
    complete overhauls and included commercial requirements that aren't
    levied upon the Air Force. Based on past history, only 14 percent of
    the engines returned to depot require this level of maintenance. The
    remaining 86 percent of the engines require significantly less
    maintenance. The depots develop a weighted average composite rate each
    year based on the maintenance requirements of the engines they
    anticipate maintaining. In fiscal year 1997 the composite rate for
    TF33-3 engines is $275,064; the composite rate for TF33-103 engines is
    $191,786.
        Question. Lastly, has the Air Force included in its study the
    savings that leased engines would provide from reductions in mobility
    footprint and greater environmental noise compliance?
        Answer. Yes, the savings reductions in mobility footprint are
    included in the Air Force Study. The Air Force included the cost of the
    AGE equipment in the status quo estimate; this expense is not included
    in the lease option. The Air Force isn't subject to the noise
    compliance requirements levied upon commercial aircraft. Therefore,
    there wouldn't be any savings associated with this enhancement.

                              subcommittee recess

        Senator Stevens. The subcommittee will be in recess now. We
    are going to hear the Chairman of the Joint Chiefs provide an
    assessment on global national security requirements next
    Wednesday.
        Thank you very much.
        [Whereupon, at 12:03 p.m., Thursday, February 27, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                            WEDNESDAY, MARCH 5, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Gregg,
    Hutchison, Inouye, Leahy, Bumpers, and Dorgan.

                             DEPARTMENT OF DEFENSE

                             Joint Chiefs of Staff

                               Global assessment

    STATEMENT OF GEN. JOHN M. SHALIKASHVILI, CHAIRMAN

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. General, since this morning we inaugurate
    the new facility, we thought it best that you be the first one
    to appear here. We look forward to the overview you are going
    to give us.
        Hopefully, more of our members will be arriving. There are
    several other meetings going on and I just left one. I am going
    to thank you for coming.
        Do you have any statement, Senator Inouye?
        Senator Inouye. No; I would just like to join you in
    welcoming the chairman. I may not be able to stay very long,
    though, because of other business. But I may have a statement
    for the record later.
        Senator Stevens. Are there any other opening statements?
        Senator Leahy. I will probably have questions for the
    record, Mr. Chairman.
        Senator Stevens. Very well.
        General, we welcome you. Not only do we admire you, but we
    have a great feeling of friendship for you and what you have
    done for our armed services. We have some questions we would
    like to ask.
        But first, we would like to have your global overview.
        General Shalikashvili. Thank you very much, Mr. Chairman. I
    am only sorry the cameras aren't here for the inauguration of
    this beautiful room.
        Senator Stevens. If the cameras come in here, we are in
    trouble. [Laughter.]

                                Global overview

        General Shalikashvili. Thank you very much for letting me
    come and present this global overview. I am going to try to
    emphasize our current worldwide deployments, which I know you
    are interested in.
        I trust that each one of you has a set of slides in front
    of you. You may wish to follow along with me.

                                   [Chart 2]

        This chart, chart 2, shows a quick overview of the
    geographic areas of responsibility for our six regional CINC's.
    Currently, that is, today, these six regional CINC's are
    responsible for 12 ongoing operations involving some 35,800
    military personnel.

                                   [Chart 3]

        The next chart, chart 3, shows how this number of 35,800
    compares to the deployments we have had since October 1994. As
    you can see, during this period the number of personnel
    deployed on our operations has fluctuated anywhere from a high
    of 68,000 back in October 1994 to a low of 22,000 in the fall
    of 1995.
        As a matter of fact, since I have been chairman, the
    average has been about 14 operations and some 40,000 personnel
    deployed on any given day.

                                European Command

        With that, let me now start with our European Command and
    let me ask you to turn to chart 4.

                                   [Chart 4]

        The major areas of concern for General Joulwan, our
    commander in EUCOM, are, of course, the developments in Russia,
    progress in Bosnia, and in the last few days the developments
    in Albania. You know that, while the capital, Tirana, is quiet,
    troop movements have been observed in Albania and clashes with
    demonstrators have occurred in the south. The Italians
    yesterday conducted a small, noncombatant evacuation. It is
    useful to remember that we have some 250 Americans, official
    Americans, in the country and some 2,200 unofficial ones. So
    we--and George Joulwan, in particular, need to watch that area
    to make sure that we are prepared to conduct a noncombatant
    evacuation should that situation arise.
        Having said that, our Ambassador right now feels fairly
    comfortable and does not see that as a problem.
        An additional area of concern to us, of course, is the
    deteriorating situation in central Africa, especially Zaire,
    and it is also important that we keep watching that. I will
    have a little bit more to say about that in 1 minute.
        There are in Europe right now, in the European theater,
    five separate military operations ongoing. So let me turn to
    chart 5 and start with the situation in Russia.

        ----------------------------------------------------------------

                           Russia: Status of Military
        Size of force
      --[Deleted]
        Readiness
      --Ground Force: [Deleted] divisions combat-ready
      --Navy: [Deleted]
      --Air: [Deleted]
      --Air Defense: [Deleted]
        Nuclear C\2\
      --System remains responsive
      --Equipment aging
      --Leadership retains control
        Nuclear Safety
      --[Deleted]

        ----------------------------------------------------------------

                                   [Chart 5]

                                     Russia

        Let me concentrate on the military aspects of the situation
    in Russia, if I may.
        Today, Russia's armed forces are very different from what
    they were in 1990. The overall strength has gone from some
    [deleted] in their active forces. But that does not begin to
    tell the story.
        The Army has gone from some [deleted] divisions. But to the
    best of our knowledge, only about [deleted] divisions are
    combat ready on any given day.
        The Navy is down to [deleted] submarines and [deleted]. And
    the surface combatants in Russia, to the best of our knowledge,
    are also down to [deleted]. It is not known how many of those
    really could go to sea on any given day.
        The Air Force went from [deleted] aircraft and the
    [deleted]. However, there is no evidence, contrary to reporting
    in the press, that the [deleted]. That said, however, there are
    indications that they have [deleted] there are some [deleted]
    and probably there is [deleted].

        ----------------------------------------------------------------

                            Russia: Military Crisis
        Wage arrears most acute problem
      --[Deleted]
        Russian military in decline
      --[Deleted]
        Military discontent at high levels
      --Junior officers leaving service
      --Troops moonlighting to survive
      --Draft evasion persists
        [Deleted]

        ----------------------------------------------------------------

                                   [Chart 6]

        If you turn to chart 6, you will see that wage arrears in
    the military is perhaps the most serious problem facing the men
    and women in uniform. Russia's military continues to decline,
    as you can see from this chart. The economy will probably
    remain too weak for some time to come to reverse the declining
    capabilities of Russia's armed forces.
        Now with that look at Russia, let me now turn to Bosnia and
    ask you, in turn, to turn to chart 7.

        ----------------------------------------------------------------

                            Bosnian Situation Today
        Former Warring Factions (FWF) cooperating with SFOR
        Military capabilities substantially reduced since 1995
        Freedom of movement impaired
        Freedom of residence blocked
        Economic reconstruction/civil institutions still lagging

        ----------------------------------------------------------------

                                   [Chart 7]

                                     Bosnia

        For the moment, it is fair to say that, as long as there is
    a credible NATO force, large-scale fighting is not likely to
    resume. Bosnian Serbs have reduced their military from some
    [deleted] troops to about [deleted] with their heavy equipment
    in cantonment areas and under observation by NATO forces.
        The federation, that is, the Moslems and the Croats, in
    turn, have gone from some [deleted] troops to somewhere between
    [deleted] troops, and their equipment as well is in cantonment
    areas and being monitored by SFOR.
        The federation remains handicapped by its partners' deep,
    mutual distrust, and that has been like that from the
    beginning. Freedom of movement across the inter-entity boundary
    line remains impaired, while freedom of residence in minority
    areas remains blocked in most, if not all, cases.
        Certainly, economic reconstruction and building of
    political institutions continues to go slower than anyone would
    like. But progress is being made.
        It is in this environment that SFOR, the Stabilization
    Force, has been operating since last December, with a mission
    that is shown on chart 8.

        ----------------------------------------------------------------

                                 SFOR's Mission
        Deter resumption of hostilities, and stabilize and consolidate the
    peace in order to contribute to a secure environment thus facilitating
    civilian implementation.

        ----------------------------------------------------------------

                                   [Chart 8]

        Just as important as it is to know what SFOR's mission is
    and what they will do, so it is to understand what they have
    been told not to do. That is shown on chart 9.

        ----------------------------------------------------------------

                                SFOR Will . . .
        NOT engage in civil police functions
        NOT guarantee the movement of individuals or forcibly return
    refugees
        NOT enforce arms control agreements
        NOT provide logistical or organizational support to the OSCE to the
    same extent as IFOR
        ONLY detain indicted war criminals if they are encountered in the
    course of performing its mission and if the tactical situation allows

        ----------------------------------------------------------------

                                   [Chart 9]

        SFOR has been told not to act as a civil police force on a
    daily basis. For that there are the indigenous police forces.
    The Bosnian Serbs, the Croats, and the Moslems maintain their
    police forces and, under Dayton, are required to keep law and
    order. And there is a number of international police monitors
    there who are supposed to see that police work is done and that
    human rights violations are reported.
        SFOR is also not there to guarantee the movement of
    individual people or to forcibly return refugees. They will not
    enforce arms control agreements or provide the same logistical
    support during the next elections, which are tentatively
    scheduled for July. But there is already some talk among the
    Europeans of perhaps postponing them into September, which we
    oppose. I oppose it because it simply kicks the can down the
    road.
        And, of course, as you know, SFOR will only detain indicted
    war criminals if they fall into their hands, but they will not
    mount operations to hunt them down. There is, however, an
    effort ongoing right now, and the first planning meetings are
    being held in Europe, [deleted].
        As a matter of fact, several European countries and the
    United States are going to start meeting in Stuttgart, Germany,
    [deleted].

                            SFOR Contributing Nations

    NATO (15):
        Belgium.......................................................   300
        Canada........................................................ 1,300
        Denmark.......................................................   785
        France........................................................ 4,500
        Germany....................................................... 3,500
        Greece........................................................   250
        Italy......................................................... 2,300
        Luxembourg....................................................    23
        Netherland.................................................... 1,000
        Norway........................................................   600
        Portugal......................................................   400
        Spain......................................................... 1,600
        Turkey........................................................ 1,300
        United Kingdom................................................ 5,000
        United States................................................. 8,500
    Non-NATO (17):
        Albania.......................................................    30
        Austria.......................................................   225
        Czech Republic................................................   600
        Egypt.........................................................   400
        Estonia.......................................................     3
        Finland.......................................................   300
        Hungary.......................................................   390
        Jordan........................................................    10
        Latvia........................................................    50
        Lithuania.....................................................   140
        Malaysia...................................................... 1,500
        Morocco.......................................................   810
        Poland........................................................   420
        Romania.......................................................   200
        Russia........................................................ 1,200
        Sweden........................................................   350
        Ukraine.......................................................   400

    [Chart 10]

        Chart 10 shows you the nations that now contribute to SFOR
    and the numbers which they have pledged to support it. As you
    can see, all NATO countries, with the exception of Iceland, of
    course, which does not have a military force, contribute to
    SFOR, as do 17 non-NATO nations. And 13 of those 17 non-NATO
    nations are Partner for Peace nations.
        As you know, the President has announced that our
    contribution inside Bosnia would be 8,500.

                                   [Chart 11]

        Chart 11 shows the actual numbers that we have there today
    and have had there for some time, both inside and outside of
    Bosnia.
        Inside Bosnia, we are about 1,000 below the cap that the
    President had established. Shown as well are the numbers in
    Croatia, Hungary, and Italy.
        Again, you can see they are way below the caps. The reason
    the caps are so high is because those numbers increase when you
    bring forces in and they will increase again as you withdraw
    them. So there is no intention of keeping people in Croatia to
    the numbers that the cap indicates. But we want to have the
    head room during the times that you bring the force in and
    bring it out. The same is true of Italy.

                                   [Chart 12]

        On chart 12, I tried to attempt to show the way ahead. We
    plan to conduct formal assessments at 6 month intervals.
    Starting this June, we will begin to see if the situation will
    permit us, sometime late this fall, to further reduce the force
    from some 8,500 United States personnel in Bosnia to perhaps a
    number like 5,500. But much will depend on the security
    situation.
        But, currently, the thinking is that there ought to be one
    further reduction possible. And if things go as expected, the
    thought now is to end the mission in June 1998, and to have
    Americans withdrawn shortly thereafter.
        I am sure you have been reading Secretary Cohen's remarks
    in Europe these last few days, where he has been very strong
    and very positive that he does not expect to see Americans
    participating in the operation after June 1998 and has so
    stated in London and in Bonn. I think he is on his way to Paris
    to do the same thing.

        ----------------------------------------------------------------

                                Threats to SFOR
        SFOR dominant military force in Bosnia
      --Terrorist threat reduced, not eliminated
        Bosnia in compliance with foreign forces provisions of Dayton
    Accords:
      --[Deleted]
        Mines, weather and disgruntled individuals and criminals remain
    primary threats

        ----------------------------------------------------------------

                                   [Chart 13]

        Today, the threats to our troops in Bosnia are shown on
    chart 13. These threats have not appreciably changed except
    that the threat that we initially had from the [deleted].
        Depending on who you talk to, estimates are that there are
    probably still around [deleted] type folks in Bosnia, but that
    they are not [deleted]. Those that just stayed behind married
    local women or are working for nongovernmental agencies and
    what-not.
        Let me next turn to our small, ongoing operation in
    Macedonia, as shown on chart 14.

                      Operation ABLE SENTRY--June 28, 1993

    [U.S. contingent of U.N. operation to observe sanctions violations along
                           Serbian/Macedonian border]

    U.S. forces.......................................................   530
    Nordic Forces.....................................................   500
    Indonesian Forces.................................................    50

                                   [Chart 14]

        Since June 1993, we have maintained some 530 soldiers in
    Macedonia as part of a U.N. operation to observe sanctions
    violations along the Serbian-Macedonian border. This operation
    so far has been virtually incident free and has done much to
    stabilize that border and probably Macedonia itself. Next to
    us, the Finns have the largest contingent there.
        The other operation dealing with the Balkans is shown on
    chart 15.

        ----------------------------------------------------------------

                    Operation DELIBERATE GUARD--Aviano Italy

                              [December 20, 1996]

        Mission: Conduct air operations in direct support to SFOR * * * to
    execute the military tasks, to protect friendly forces, and be prepared
    to provide emergency support.

    U.S. Aircraft:
        Fighters.................................................. [Deleted]
        Support................................................... [Deleted]
    Allied Aircraft:
        Fighters.................................................. [Deleted]
        Support................................................... [Deleted]

                                   [Chart 15]

        The United States maintains some [deleted] fighter aircraft
    and some [deleted] appropriate support aircraft as part of an
    operation called Deliberate Guard. That operation is designed
    to support our ground troops in Bosnia [deleted].
        As a result of the situation in Bosnia and your visit, Mr.
    Chairman, there, we are under direction from Secretary Cohen to
    relook this operation and see how many aircraft can be brought
    out of there without jeopardizing the troops. This is not a
    deny flight operation, but when we reduced the troops by the
    numbers that we did from IFOR to SFOR, from some 17,000 or
    18,000 to 8,500, General Joulwan felt that he needed some
    reserve that would be there, readily available, in case trouble
    came. So that is why these numbers of aircraft are being
    maintained for that.
        But we are probably at a point where we can make some
    adjustments of that, and, hopefully, we will do that in the
    near future.

        ----------------------------------------------------------------

                         Operation NORTHERN WATCH--Iraq

                                [April 6, 1991]

        Combined operation to enforce the no-fly zone and provide
    surveillance/monitor Iraqi military forces in Northern Iraq

    U.S. Combat Aircraft.......................................... [Deleted]
    Allied Combat Aircraft........................................ [Deleted]
    U.S. Support Aircraft......................................... [Deleted]
    Allied Support Aircraft....................................... [Deleted]

    [Chart 16]

        Since April 1991, we have been patrolling the skies over
    northern Iraq as part of an operation that was first called
    Provide Comfort and recently renamed Northern Watch. That
    operation is shown on chart 16.
        Today we are joined in this operation by the Turks, with
    [deleted] aircraft, and the United Kingdom, with [deleted]
    aircraft. The French participated until last September, when
    they withdrew mainly because of [deleted]. But they, at that
    time, had something like [deleted] aircraft in that operation.
        Let me now turn to Africa and chart 17.

        ----------------------------------------------------------------

                         Operation ASSURED LIFT--Africa

                               [January 29, 1997]

        Operation to support airlift of troops from designated African
    nations to Liberia in support of ECOMOG

    U.S. forces.............................................             200
    U.S. aircraft...........................................               8
    Sorties flown...........................................              47
    Total Pax...............................................           1,119
    Total Short tons........................................             428
    End date................................................   March 4, 1997

    [Chart 17]

        Yesterday, we concluded a month long operation, flying in
    some 1,200 African troops into Liberia to reinforce the
    peacekeeping operation there, called ECOMOG. It is an ongoing
    peacekeeping operation that has been there for quite some time
    and has had a spotty record of success in keeping trouble out
    of that country.
        You might recall that last spring we conducted a very
    intensive operation in Liberia because the fighting had gotten
    almost out of control. At that time we brought out some 2,400
    civilians from 83 different countries, including 485 Americans
    who had been caught up in that fighting.
        Today, the security situation, while it is still tense, has
    returned to fairly normal, and our Embassy is, once again,
    operating with its full complement.

        ----------------------------------------------------------------

                                 Central Africa
        Zaire: Insurgency threatens government
      --Conflict internationalized
      --200,000 at risk
        Burundi: Government confronting ethnic war
      --Both sides radicalized
      --Political solution unlikely
        Rwanda: Insurgency growing
      --Hutu militants targeting Tutsis, NGO's

        ----------------------------------------------------------------

                                  [Chart 17B]

        Let me, on chart 17B, discuss for a moment the situation in
    Zaire. We, of course, don't have anyone involved in Zaire right
    now. But I want to highlight that to you because the situation
    is not getting better. The rebels that are operating in the
    eastern part of the country continue the movement westward.
    Depending on whose reports you listen to, some 100,000 to
    300,000 or 400,000 refugees are being relocated in the area by
    the fighting. Negotiations between the government and the
    rebels are going nowhere right now.
        The U.N. Secretary General and France have resurrected
    their idea of a multinational force, and the loss of the major
    city in that part of Zaire, Kisingani, if that city were to
    fall to the rebels, it could very well unhinge the government
    in Zaire.
        We do have a large number of Americans in the area. So we
    are looking very carefully at whether we will need to conduct a
    noncombatant evacuation here in the near future and will need
    to be ready for that. But it won't be easy. It will probably be
    a very complex operation.
        That is the reason I point it out to you, because the signs
    are not good in that country, as they are not good, really, in
    all of that central region of Africa.
        Senator Leahy. Is this a huge operation or not?
        General Shalikashvili. When you have to evacuate several
    thousand Americans over an area that is as huge as Zaire, God
    knows where they all are because the Embassy has great
    difficulty staying in touch with everyone--the missionaries,
    the NGO's. They are found in many parts of the country. It is
    not going to be an easy operation if we have to conduct a
    noncombatant evacuation.

                                   [Chart 18]

                                Central Command

        Let me now leave the European Command, if I may, and with
    chart 18 turn to the CENTCOM region.
        The areas for General Peay to worry about are Iran, Iraq,
    and, of course, terrorism.
        There are four military operations ongoing in this area
    with a total of [deleted] military personnel deployed as of
    today.
        Let me first turn to Iraq on chart 19.

        ----------------------------------------------------------------

                             Iraq: Situation Update
    Threats
        Threaten regional stability
        Challenge No-Fly/Security Zone
        Acquisition of WMD
        UNSCOM at odds with Iraq
      --[Deleted]
        Baghdad thinks sanctions near end
      --Implementation of UNSCR 986
        Willingness to use military
      --Attack on Irbil--1996
      --Kuwait border--1994
    Weapons of mass destruction
        [Deleted]

        ----------------------------------------------------------------

                                   [Chart 19]

        Today's Iraqi military consists of some [deleted] as
    compared to some [deleted] during Desert Storm. Saddam's
    republican guard divisions, his best, went from [deleted] and
    his regular army divisions from [deleted].
        However, these divisions are now [deleted]. They continue
    to do [deleted] training. They have shown us time and again
    that [deleted]. So they do that fairly well. [Deleted.]
        Although there are currently today some very intrusive
    UNSCOM inspections ongoing, we expect [deleted]. Yet there is
    every suspicion that [deleted].
        [Chart 20 deleted].
        If you turn to chart 20, while Iraq is a [deleted] threat
    to our interests in the region, so is actually Iran. More
    importantly, Iran is [deleted] for us.
        Iran is not only building up its conventional capabilities,
    but also its weapons of mass destruction programs, while all
    along supporting terrorism and working to undermine the regimes
    in the region, [deleted] and others.
        As a result of press speculations here within the last
    month or so that [deleted] the Iranians have been [deleted].

        ----------------------------------------------------------------

                    U.S. Central Command Operations Summary
    MFO Sinai--July 1983
        Observe and report violations of the 1979 Egyptian-Israeli Treaty
        U.S. Forces--[Deleted]
    Southern Watch--August 27, 1992
        Joint/Combined operation to preserve regional peace and order in
    Southern Iraq
        U.S. Forces--[Deleted]
        U.S. A/C--[Deleted]
        U.S. Ships--[Deleted]
        Allied Ships--[Deleted]
        Allied A/C--[Deleted]
    Arabian Gulf MIO--August 1990
        Conduct Maritime Intercept Operations to enforce UNSCR 661/687
    against Iraq
        U.S. Ships--[Deleted]
        Allied Ships--[Deleted]
    Intrinsic action--1991
        Multinational Ground Field Training Exercise
        U.S. Forces--[Deleted]

        ----------------------------------------------------------------

                                   [Chart 21]

        Chart 21 describes the four operations now ongoing in the
    region. Let me start in the upper right hand corner, if I may.
        The Arabian Gulf maritime intercept operation continues
    with [deleted] U.S. ships today. Usually, allied ships
    participate as well, usually [deleted]. But today, as we are
    meeting, there is [deleted] in that operation.
        This morning, just to illustrate the kind of work they do,
    off the coast of [deleted]. That situation is still ongoing.
    Probably, like all situations, it will resolve eventually. But
    that is the kind of work that goes on almost every day.
        We never hear about it. It is a fairly quiet operation. But
    there are on any given day, the estimate is, [deleted] that are
    trying to [deleted].
        The next operation listed there is Intrinsic Action. It is
    a near continuous presence of a mechanized armored task force
    in Kuwait to train with the Kuwaitis [deleted].
        This operation, these training events, are forecast for the
    year, and all that is forecast, other than personnel costs, is
    paid by the Kuwaiti Government. It is essential training for
    them and it is very good training for us. If you talk to
    soldiers who have gone to train there, they find it very
    beneficial. So does the Army.
        The next one is the multinational force and observers in
    the Sinai. We usually do not talk about it as an operation,
    again because we never hear about it. But that is nearly 1,000
    soldiers who have been there since the Camp David accords were
    signed.
        Their task is to be, in fact, what they are, observers
    along the Israeli-Egyptian border. [Deleted.] They have been
    doing this for all these years now.
        My discussions with the Israelis--and I try to bring it up
    as often as I can, when would it be time to go home--the answer
    that you get is that it would undermine the peace process if we
    took them out now, that we need to wait. So there has been no
    sympathy on the part of the Israelis to let that force go.
        The operation, by the way, is paid equally by Israel,
    Egypt, and the United States. It is a one-third, one-third,
    one-third arrangement.
        The final operation, of course, is the one that we all know
    about, Operation Southern Watch, the enforcement of the no-fly
    zone, to last September up to the 32d parallel, since last
    September up to the 33d parallel.
        As you know, after Khobar Towers, we consolidated almost
    all of our flight operations at the remote Prince Sultan Air
    Base south of Riyadh.
        Prince Sultan, who was just here last week after reviewing
    the security situation with us, [deleted] both in that air
    base, in the housing area, Eshkon Village, south of Riyadh, and
    for improvement in quality of life for the airmen stationed
    there.
        The discussions we have had with Prince Sultan, Mr.
    Chairman, [deleted].
        The gist of the answers, at the risk of oversimplifying,
    was that it was a [deleted].
        Nevertheless, Secretary Cohen has directed us as a part of
    the total review of our worldwide forces to take a very close
    look and see what adjustments can be made there.
        I must tell you, though, Mr. Chairman and members of the
    committee, that going back to September and October 1994, when
    Saddam Hussein moved his forces toward Kuwait, Secretary Perry,
    then, after visiting the area, felt that as long as Saddam
    Hussein was around and was as unpredictable as he was, we
    needed to make sure that we did not try to save on what we
    could do to deter him from moving and then have to pay a higher
    price if he were to repeat something that he attempted to do
    during Desert Storm. [Deleted.]
        We have done a lot of computer runs and other things to see
    what we could do to halt an Iraqi attack [deleted].
        Having said that, we are relooking it to see if other
    adjustments can be made downward.

        ----------------------------------------------------------------

                    Central Command Air Expeditionary Force
    AEF to [deleted] Qatar
        (February 20-May 20, 1997) AEF deployed to [deleted] Qatar
        90 day deployment [deleted]
        AEF will fly missions in support of Operational SOUTHERN WATCH
        AEF flew 8 SOUTHERN WATCH sorties within 24 hours of arrival
    AEF Composition
        [Deleted] F-16C (Air-to-Air)
        [Deleted] F-15E (PGM)
        [Deleted] F-16CJ (HARM-Capable)
        [Deleted] Tankers (Standby)
        [Deleted] Bombers (CONUS Standby)

        ----------------------------------------------------------------

                                   [Chart 22]

        On chart 22, I show a deployment that we have ongoing right
    now in Qatar. As we have done in the past, when there were
    [deleted] an Air Force expeditionary force of some [deleted]
    aircraft is deployed in the area, currently now in [deleted] in
    Qatar.
        They are now scheduled to stay there until May [deleted].

        ----------------------------------------------------------------

                        Prepo Equipment Central Command
    Kuwait
        AWR-5--1 BDE
    Qatar
        AWR-5 Division Base (0 percent)
        1 BDE [deleted]
        Projected Completion January 2000
    AWR-3 [Deleted]
        Cape Douglas
        Cape Horn
        Cape Hudson
    AWR-3 [Deleted]
        Cape Henry
        Cape Washington
        Note.--MPSRON located Diego Garcia

        ----------------------------------------------------------------

                                   [Chart 23]

        Finally, chart 23 shows the prepositioned combat equipment
    we have in the region because you cannot talk about what you
    need to do against [deleted] without understanding what is
    prepositioned there.
        There is one Army brigade set of equipment prepositioned in
    Kuwait. It is on that equipment that these task forces that go
    to Kuwait train.
        Another Army brigade set of equipment is being started at
    Qatar, and we have there now one battalion. It shows on the
    chart that we are about [deleted] complete. We expect to
    complete that prepositioning by about the year 2000.
        Another Army brigade and a division base is on board five
    ships near [deleted]. But that is also equipment that will go
    to [deleted]. So this is equipment that would swing either way.
        So we watch very carefully the situation in [deleted] to
    make sure that we start moving the equipment in time as things
    heat up in that part of the world.
        Finally, a complete set of Marine equipment is in Diego
    Garcia.
        With that, let me now turn to the Pacific Command, if I
    may.

                                   [Chart 24]

                                Pacific Command

        Certainly the areas watched by Admiral Preuher are China
    and Taiwan, certainly the Korean Peninsula, but also India and
    Pakistan. There are two operations ongoing right now, Joint
    Task Force Full Accounting, with which you are very well
    familiar, which today is deployed to Cambodia and Laos; and
    Operation Pacific Haven, in Guam, which I will discuss in 1
    minute.
        A total of some [deleted] personnel are deployed on these
    two operations. Of course, in addition to the [deleted] or so
    that are on the Korean Peninsula.

        ----------------------------------------------------------------

                                  Flashpoints
        Taiwan Strait
      --Chinese goal of reunification by 2010
      --Expect yearly Chinese military exercises involving island attack
            scenarios
      --Taiwan refuses to acknowledge ``one China'' under PRC
        South China Sea
      --Competing resource claims
      --China agreed to ``shelve'' dispute for now
      --Resource development continues

        ----------------------------------------------------------------

                                   [Chart 25]

        Chart 25 shows the two flash points involving China. China
    continues to renounce force to settle reunification with
    Taiwan. But China's military exercises increasingly include
    island attacks in areas.
        However, it is my judgment that China will not be capable
    of a successful invasion of Taiwan for a number of years.
        As an aside, China's military consists now of some
    [deleted] million personnel, [deleted] million, of those are
    organized in [deleted] divisions as ground forces. It has some
    [deleted] combat aircraft, some [deleted] major surface
    combatants, and some [deleted] submarines.
        They also have some [deleted] launchers. We are not sure
    [deleted]. A small number of that is active.

        ----------------------------------------------------------------

                       North Korea: Potential Flashpoint
        Situation
      --Military training despite food/material shortages
      --Four major leadership changes in less than one month
      --Economy in downward spiral; infrastructure breaking down
      --Fall harvest inadequate
      --Capable of inflicting mass damage on south
        Military forces: [Deleted]
        Manpower: [Deleted]
        SOF: [Deleted]
        Reserves: [Deleted]
        Divisions: [Deleted]
        Tanks: [Deleted]
        Artillery/MRL: [Deleted]
        Aircraft: [Deleted]

        ----------------------------------------------------------------

                                   [Chart 26]

        Chart 26 shows the current situation in North Korea.
        First, canning of radioactive material at Yongbyon reactor
    continues. But the very long, very large conventional
    capability is still there and very close to the DMZ. Despite
    severe food shortages and all that we read about that is
    happening in North Korea, training there continues.
    Miscalculation is always possible. Long-range artillery,
    missiles, special operations forces still give the regime the
    capability to inflict enormous damage.
        We just have to remember that much of their long range,
    though not all of their long-range, artillery is within range
    of Seoul, and certainly their extensive Scud systems can hurt
    as well.
        When you look at their [deleted].
        So despite what is happening, we have to understand that
    the threat on the Korean Peninsula is still real. Despite what
    intentions the North Koreans might have, the chance for
    miscalculation is very great.
        The economy, of course, is probably in a free-fall.
    [deleted].
        But it is also important to remember that the North Koreans
    probably have an enormous capacity to absorb hardship. That is
    another thing that we also ought to remember about Russia.
    Despite the unraveling and what we hear about the military,
    they do have a much larger capacity to absorb hardship and to
    muddle through somehow than we sometimes give them credit for.

        ----------------------------------------------------------------

                       India-Pakistan: Strategic Rivalry
        Both sides seek better relations; Kashmir major obstacle
        Pakistan improving ballistic missile capabilities
      --M-11 [deleted]
        Indian improving missile arsenal
      --[Deleted]
        Both are outside arms control regimes

        ----------------------------------------------------------------

                                   [Chart 27]

        Chart 27 describes the strategic rivalry between India and
    Pakistan. The Indian Army has about [deleted] military
    personnel in Kashmir. Pakistan has nearly [deleted] troops
    along or near that line of control.
        Overall, India has about [deleted] under arms while
    Pakistan has [deleted]. This rivalry continues to drive the
    pursuit for weapons of mass destruction as Pakistan seeks to
    counter India's conventional superiority.
        The M-11 missiles that have a range of about [deleted] that
    they receive from China are [deleted]. Pakistan, we believe,
    [deleted].
        The Indians have the Prithvi missile, which has a shorter
    range of [deleted].

                   Operation PACIFIC HAVEN (Groups II and III)

    Current Population................................................ 3,594
    Security Checks Completed......................................... 3,503
    Population on Guam with Sponsorship...............................   945
    Ready to Airlift..................................................   959

        Total Moved: 889 (20 percent)
        Initial Population: 4,434
        Births to Date: 47

        ----------------------------------------------------------------

                                   [Chart 28]

        Chart 28 describes the status of our ongoing operation in
    Guam. As a result of Saddam Hussein's military operation in
    northern Iraq last September, the United States Government has
    brought some 4,400 Kurds out of northern Iraq to Guam for
    processing prior to movement to the United States. So far, some
    890 have been processed and moved to the United States. We have
    no good estimate of how long this operation will take. But
    probably we should not expect it to be finished before June or
    July, or maybe even later.
        There are currently some 1,380 service personnel there in
    Guam caring for and running this operation.

        ----------------------------------------------------------------

                                Atlantic Command
    Areas of Concern
        Cuba
        Haiti
    Operations
        Counter Drug Ops
      --2,992
        1 Exercise
      --484 Participants

        ----------------------------------------------------------------

                                   [Chart 29]

                                Atlantic Command

        Let me now turn to chart 29 and the Atlantic Command, where
    General Sheehan continues to watch carefully the developments
    in Cuba and Haiti, while continuing to oversee counterdrug
    operations.

        ----------------------------------------------------------------

                                      Cuba
        Castro remains in control; [deleted]
        Manpower/equipment
        Army--[Deleted]
        Navy--[Deleted]
        Air Force--[Deleted]

        ----------------------------------------------------------------

                                   [Chart 30]

        Chart 30 summarizes the situation in Cuba. Major political
    or economic change is unlikely while Castro remains in power.
    There is little reason to believe that he will soon depart.
        The current situation is stable, but we need to understand
    that that could change with very little warning. [Deleted.]

        ----------------------------------------------------------------

         Haiti: Post-UNSMIH Security and Stability Assessment--6 Months
        Political institutions functioning, but Preval unable to satisfy
    popular demands for economic improvements
      --Protests/strikes have increased
      --Poverty underlying cause for crime
        HNP slowly improving
      --Gaining public acceptance
      --Able to handle routine police duties
        HNP unable to cope with:
      --[Deleted]

        ----------------------------------------------------------------

                                   [Chart 31]

        Chart 31 shows the situation in Haiti. The Haitian National
    Police, some 6,000 of them that had been trained by us, are
    handling the routine police duties, but certainly need more
    experience and more training. It is my judgment and the
    judgment of General Sheehan, who just returned from Haiti a
    couple of days ago, that they would [deleted].
        At the moment, [deleted] if for no other reason, the
    population seems to view the Preval government as a legitimate
    government. But, again, it is one of those tenuous situations
    at best, and you don't know when you are in places like City
    Soleil or somewhere else if some violent event will occur that
    could get out of hand.

                                   [Chart 32]

        Chart 32 shows the operations that General Sheehan is
    currently overseeing. In Guantanamo Bay, he is still caring for
    some 40 Cuban migrants. These are migrants that weekly one or
    two will come in or swim in from Cuba that are held in
    Guantanamo and, as soon as possible, are either returned back
    to Cuba or turned over to the proper civilian governmental
    agencies that handle these folks.
        But ever since the end of our mass migration there that we
    have handled, we have maintained anywhere from 30 to 40 Cuban
    migrants on any given day.
        In Haiti, we maintain a support group of some 490 personnel
    to support ongoing engineer exercises and training similar to
    those kinds of exercises in training that we conduct in Central
    America. Our ongoing counterdrug operation in General Sheehan's
    area involves on any given day some 1,300 military personnel.

        ----------------------------------------------------------------

                                Southern Command
    Areas of Concern
        Narcotics
        Peru-Ecuador
    Operations
        SAFE BORDER--68
        LASER STRIKE--331
        STEADY STATE CD--459

        ----------------------------------------------------------------

                                   [Chart 33]

                                Southern Command

        Chart 33 brings us to the Southern Command, where narcotics
    is our main concern and where along the Peru/Ecuador border we
    participate in a small peacekeeping operation. You can see that
    on chart 34.

                                   [Chart 34]

        Since January 1995, the United States, Brazil, Argentina,
    and Chile, the four guarantor nations, have been providing
    observers to oversee the ceasefire between Peru and Ecuador. We
    provide some observers and helicopter support. This helicopter
    support, by the way, is now going to be taken over by Brazil.
    They have purchased American Blackhawk helicopters, and as soon
    as the training is completed, they will take over that mission.
    So we will be able to reduce our personnel there further.
        I must tell you that [deleted]. They have been making very
    moderate progress. Now the hostage situation in Peru, the fall
    of the government in Ecuador, the purchase by Peru of Mig
    aircraft which further raise the level of anxiety in Ecuador,
    [deleted].
        But, meanwhile, it is felt that this is a small investment
    to keep them at least from fighting each other.

        ----------------------------------------------------------------

                   U.S. Southern Command Operational Overview
        LASER STRIKE U.S. Forces--331

        ----------------------------------------------------------------

                                   [Chart 35]

        Chart 35 describes a counterdrug operation that is ongoing,
    called Laser Strike, which started in April 1996. It is
    designed to disrupt the production and air and waterway
    movement of illegal drugs from and within this source region.
    Some [deleted] U.S. personnel are supporting host nations that
    are actually doing the work. [Deleted.]
        Again, all of it is to assist the host nations that do the
    work.
        Let me finish really quickly, if I may, Mr. Chairman, with
    just four slides that sort of summarize what the terrorist
    situation is around the world where our troops are stationed.

                                Counterterrorism

        I will then be prepared to answer your questions.

        ----------------------------------------------------------------

                  Terrorist Threat Overview: Europe and Africa
        [Deleted]

        ----------------------------------------------------------------

                                   [Chart 37]

        If you will then go to chart 37, in the European theater,
    that is, Europe and a major part of Africa, only [deleted]
    right now. That is the highest we have. In essence, what that
    means is that a terrorist act can occur at any moment now. We
    cannot expect any more information.
        [Deleted.] Periodically, particularly in Saudi Arabia, that
    goes up to--not in Saudi Arabia, [deleted]. But it has not now
    for some time.

        ----------------------------------------------------------------

                    Terrorist Threat Overview: South America
        Peru and Colombia are major concerns
      --[Deleted]
        High Terrorist Threat countries: Peru and Colombia

        ----------------------------------------------------------------

                                   [Chart 38]

        If you turn to chart 38 and Latin America, [deleted].

        ----------------------------------------------------------------

                        Terrorist Threat Overview: Asia
        No High Threat countries in PACOM
        Area of least concern from terrorist attacks against U.S. forces
        [Deleted]

        ----------------------------------------------------------------

                                   [Chart 39]

        On chart 39, in Asia, there are no countries right now in
    [deleted] are [deleted]. Again, we have to be prepared that
    this could change overnight, particularly if [deleted].

        ----------------------------------------------------------------

                     Terrorism Threat Overview: Middle East
        Arab-Israeli conflict driving force behind most terrorism
        Saudi dissidents opposition to U.S. presence
        [Deleted]

        ----------------------------------------------------------------

                                   [Chart 40]

        On chart 40, finally, in the Middle East, the current
    [deleted]. As I alluded to, just a second ago, [deleted] and so
    on.
        One of the problems we have and that I do not know how to
    solve is that you can really keep troops on a high-threat level
    for only so long before numbness sets in and you begin to
    operate fairly routinely. And so, when to gauge, when to bring
    them up and then how to bring them down so you didn't get
    caught at the wrong time coming down is a difficult issue that
    the CINC's and I talk about. That is really the big issue.
        Let me tell you that, as far as counterterrorism is
    concerned, we have worked very hard since Khobar Towers. I have
    established an office in the Joint Staff that works that very
    exclusively. It is their only function. We have worked on the
    Downing report and all the recommendations. There were some
    seven or eight recommendations. All but two are fully
    implemented. The two that are not are issues that we are still
    waiting for contractors to deliver certain equipment on to
    fully implement them.
        The CINC's are all very well aware of this.
        The fact is that we are indisputably the best at many
    things. We are the best if you ask someone about nuclear
    submarine operations, or armored warfare, or dissimilar air
    combat. People know to come to the United States to learn how
    to do that.
        The one area where they will go somewhere else is force
    protection and antiterrorism. They will probably go to Israel
    or maybe to the United Kingdom because of their experience in
    Ireland.
        Our task, then, and the task I've set for myself and for
    the CINC's and the services is to turn that around so that as
    soon as we can bring it about, we will become known as the best
    in force protection and antiterrorism.

                               prepared statement

        It is easy to talk about but harder to do, and much of it
    is a mindset change. But we absolutely have to do that.
        Mr. Chairman, with that let me finish. Thank you for your
    time and I am prepared to try to answer your questions.
        [The statement follows:]
                Prepared Statement of Gen. John M. Shalikashvili
        Mr. Chairman, members of the committee. I am proud to report to you
    that the United States' military remains the finest military force on
    earth. Time and again this past year, the 3.1 million members of the
    Total Force performed superbly in a variety of challenges around the
    globe. Success was due in large measure to the strong support of
    Congress, the Administration, and the American people. But more
    importantly, the force succeeded because of quality people, outstanding
    unit leadership, and its unique ability to adapt and persevere in an
    environment characterized by change and uncertainty.
        As busy as the force has been and with all of the talk about
    today's dangerous world and the difficulties Americans have faced, it
    is too easy to overlook the fact that today the United States and its
    Allies are much safer than they were in the dark days of the Cold War.
    This ``strategic pause,'' where the United States has no adversaries
    who are global powers, is providing us with the time to regroup,
    reflect on the challenges ahead, and prepare America's forces for the
    next millennium.
        One of the strategic consequences of the post Cold War period is
    that the U.S. has been able to reduce military force levels. Since
    1989, the active all-volunteer force has been reduced by 700,000
    people--about a third of the active force. The Army has gone from 18
    active divisions to 10, a 45 percent reduction; the Navy from 566 ships
    to 352, a 38 percent decline; and the Air Force, from 36 to 20 fighter
    wings, down 45 percent. These are the lowest force levels since before
    the Korean War. The Defense Budget has also been cut by about 40
    percent since 1985. In fiscal year 1998, it will represent only 3.0
    percent of the Gross Domestic Product, the lowest since before World
    War II.
        The force drawdown these past few years has not been an easy
    experience for military members. Many outstanding Americans were asked
    to leave the service of their country, thousands of whom had hoped to
    make the military a career. But through all this, the great people in
    uniform have persevered and once again confirmed the importance of
    American leadership in a number of contingencies around the globe.
                                   operations
        America's military today is performing more missions, in more
    places than it did during the Cold War, and is doing so with
    significantly fewer personnel. Yet our men and women have performed
    brilliantly from one end of the world to the other, with Bosnia
    standing as a prime example.
    Balkans
        Fifteen months ago in many Bosnian towns and cities, artillery fire
    was killing men and women in their homes and snipers often shot
    children playing in the streets. Atrocities were nearly a daily
    occurrence. U.S. forces went into Bosnia with the Implementation Force
    (IFOR), the NATO force tasked to accomplish the military tasks assigned
    in the Dayton Accords. It was a heavy force, involving nearly 20,000
    U.S. military members who participated in keeping the factions
    separated, demobilizing forces, and achieving the other military goals
    of the Dayton accords.
        The situation has changed dramatically since then. Today there are
    no weapons firing into towns and children once again play in the
    streets. The absence of war brought by IFOR offers a ray of hope for
    the future. On December 20, 1996, U.S. forces reached a milestone with
    the successful transition from the Implementation Force to a
    Stabilization Force (SFOR).
        SFOR continues to build on the success of IFOR by providing time
    and an environment that will permit civilian initiatives to proceed. Up
    to approximately 8,500 U.S. personnel in Bosnia and an additional 5,000
    in neighboring countries are supporting the Stabilization Force. SFOR
    is a mobile force that will concentrate on providing a safe and secure
    environment for civilian implementation of Dayton accords. The
    Commander, Stabilization Force (COMSFOR) is supported by an air
    operation built on the foundation of the successful Operation Deny
    Flight; 1,800 U.S. personnel are involved in this facet of operations.
        Our forces will be in place for 18 months. Every six months, a
    review of the security situation and civil initiatives will be
    conducted with the goal of moving to a deterrent force of reduced size.
        Equally important to regional stability in the Balkans was
    Operation Able Sentry. Able Sentry is the U.S. contribution to the
    United Nations Preventative Deployment operation in Macedonia. 500 U.S.
    personnel joined 500 troops from other nations to ensure containment of
    the crisis in Bosnia.
    Middle East
        Operations in the Middle East remained key to the preservation of
    regional peace and stability during 1996. Nowhere was this more evident
    than in efforts to deter additional Iraqi aggression and enforce U.N.-
    ordered sanctions and resolutions.
        With the closing of the Military Coordination Center last year, the
    Secretary of Defense approved a modification of the mission in Northern
    Iraq. Since 1991, Operation Provide Comfort had provided humanitarian
    assistance to the Kurds and enforcement of the northern no-fly zone.
    The new Operation Northern Watch will focus exclusively on enforcement
    of the no-fly zone. Approximately 1,100 U.S. personnel support these
    efforts along with personnel and aircraft from the U.K. and Turkey.
        Operation Southern Watch remained in effect throughout 1996, tasked
    with ensuring compliance with United Nations' Security Council
    Resolution 949 and the 1994 U.S. demarche prohibiting the build-up of
    Iraqi ground forces south of the 32d parallel. Southern Watch remains a
    multinational operation with participants from the U.K., France, Saudi
    Arabia, and Kuwait.
        Arabian Gulf maritime intercept operations continued to monitor
    shipping to ensure compliance with pertinent U.N. Security Council
    Resolutions. Although the U.S. assumed the bulk of responsibility for
    operations, during 1996, the U.K., Netherlands, Australia, Belgium,
    Italy, and France also participated.
        In spite of international efforts to maintain the peace and force
    compliance with U.N. resolutions, Iraq still conducted military
    operations against its Kurdish population in the North. Operation
    Desert Strike was the U.S. response to this aggression. Designed to
    deter Iraq from further offensive operations, U.S. forces struck
    military targets in Southern Iraq and expanded the no-fly zone in the
    South, further constraining Iraq's military.
        The attack on the Kurdish population made it clear that the
    coalition could no longer guarantee the safety of civilians that had
    been working with the United States and international relief
    organizations to secure the peace. Operation Pacific Haven was
    initiated to evacuate and relocate former U.S. Government employees,
    political refugees, and their families. Using facilities on Guam, the
    DOD in cooperation with the Department of State and other agencies,
    airlifted approximately 6,500 Kurds from Iraq to the island of Guam.
    1,540 service members and 150 civilians support this operation on Guam.
        All these operations were in addition to on-going participation in
    the Multinational Force and Observer (MFO) missions in the Sinai.
    Nearly 1,000 U.S. forces man outposts in the Sinai. Since 1982, these
    troops have performed monitoring duties in accordance with the
    provisions of the peace treaty between Egypt and Israel.
    Latin America and the Caribbean Basin
        The United States participated in a wide range of operations the
    past year in Latin America.
        In Haiti, Exercise Fairwinds continues to help promote the building
    of a safe and stable environment. Approximately 500 U.S. medical,
    engineering, and security personnel currently are in Haiti. Together
    with monthly port calls from Navy and Coast Guard vessels, our forces
    perform select humanitarian projects designed to restore the devastated
    infrastructure and provide hope for the population struggling to emerge
    from this crisis.
        Counter-drug operations continued in cooperation with regional
    governments in Operation Laser Strike. Working to support host nation
    counter-drug operations, Laser Strike focused on data collection and
    interdicting air and sea movement of illegal drugs. More than 500 U.S.
    personnel are making significant contributions to the development of a
    more comprehensive regional approach to counter-drug operations.
        In Honduras, Joint Task Force Bravo (JTF-B) continued its 12th year
    of operations designed to promote cooperative security and regional
    stability. The 500 members of JTF-B conduct medical training,
    engineering operations, disaster relief, counter-drug operations, and
    CJCS-sponsored military exercises.
        Another operation is Safe Border, the U.S. contribution to
    monitoring the cease fire along the Ecuador-Peru border. Established by
    the Rio Treaty, 60 U.S. personnel joined observers from Brazil,
    Argentina, and Chile to mitigate the conflict.
        Finally, U.S. forces continued support to migrant operations at
    Guantanamo Bay, Cuba. Only a few cases remain to be resolved after more
    than 58,000 Haitian and Cuban refugees transited the base between 1994
    and early 1996.
        But these were by no means the only operations U.S. forces
    participated in during 1996. In Southeast Asia, America continues to
    seek resolution of those missing in action through Joint Task Force
    Full Accounting. In less than 48 hours, our forces successfully
    evacuated 2,400 non-combatants from 68 countries in Liberia. In the
    Pacific, when tensions flared between China and Taiwan, U.S. forces
    quickly responded by diverting two carrier battle groups to the region
    to limit the chances of escalation. This kind of mobility and response
    acts to stifle any potential misperceptions about our ability to show
    resolve in areas where U.S. interests are at stake.
        In support of domestic requests, men and women in uniform deployed
    to support the 1996 Olympic Games, fought fires in the West, provided
    flood relief in the Northwest, and assisted in clearing transportation
    routes during a particularly difficult winter in the Dakotas.
        Today, over 40,000 men and women in uniform are deployed on 14
    different operations. On an average day during the past year, 50,000
    military professionals participated in deployed operations, and an
    average of 1,700 defense civilians also deployed to support the
    uniformed Services.
        These numbers do not necessarily include the more than 250,000
    forces forward stationed or routinely deployed at sea, that are in
    addition to the hundreds of local unit training deployments and Joint
    or multinational exercises that occur on a routine basis.
        In Korea, for example, 36,000 U.S. forces stand ready with 600,000
    troops from the Republic of Korea to ensure peace on the peninsula
    against 1.8 million North Korean forces. The instability in North Korea
    remains a concern as economic problems, food shortages, and energy
    deficiencies continue to worsen. Kim Jong Il's repressive regime and
    brittle ideology cannot address the current crisis. Thus it is
    imperative that our forces stand guard to protect a fragile peace.
        During the past year, the importance of selected reserve component
    contributions to operations around the world also continued to remain
    key. Reserve units and individuals possess many of the capabilities
    needed for regional contingencies and crises, exercise support, and
    peacetime augmentation.
        The Services continue to leverage the cost-effective contributions
    of the reserve components to compensate for a smaller Total Force.
    Support is funded by taking advantage of scheduled routine training
    periods, or through the Active component funding Reserve active duty
    days to meet surge requirements. As a practical example, last year,
    nearly 145 Guard and Reserve units activated to support operations in
    Bosnia. They have proudly met the challenge. The active force fully
    appreciates the contributions of America's citizen-soldiers.
        The Services continue to take action to avoid unbudgeted costs of
    non-routine operations from absorbing funds required for readiness and
    modernization. In fiscal year 1997 Congress appropriated $1.3 billion
    to cover military operations anticipated at the time. Two unanticipated
    operations resulted in $2 billion in unbudgeted fiscal year 1997 costs:
    Iraq's provocation in the North and the President's approval of SFOR in
    Bosnia. To cover these costs, the Administration is requesting a fiscal
    year 1997 $2 billion supplemental appropriation.
        The fiscal year 1998 President's Budget requests $1.5 billion in
    the Overseas Contingency Operations Transfer Account to complete
    operations in Bosnia, and an additional $700 million for operations in
    Southwest Asia. This funding is important for the sustainment of
    critical operations and continued success in two regions.
        Looking back on the operations this past year, it is gratifying to
    count the large number of successes. Key military determinants of
    success included: early involvement of military leaders in establishing
    a clear mission and achievable objectives, a clear chain of command,
    robust Rules of Engagement for operations and force protection,
    sufficient assets to achieve the objectives, outstanding pre-deployment
    training, and great people. These operations demonstrate both the
    importance to our nation's security of Peacetime Engagement, Conflict
    Prevention, and Forward Presence, as well as the necessity for our
    military forces to have the ability to conduct successful operations
    across the full spectrum of challenges.
        As an integral part of a framework for success, commanders and
    planners must also give priority consideration to protecting our
    soldiers, sailors, airmen, and marines.
    Force protection and combating terrorism
        Few challenges loom as large as that of terrorism. The problem of
    terrorism and the issue of force protection are much more complex than
    they were 20 years ago. But terrorism isn't a new problem, it is simply
    an old problem getting worse. And so today, the Combatant Commanders
    and the Services are redoubling their efforts to provide America's men
    and women with the best possible force protection measures available.
        Those out to do us harm are no longer just political zealots with a
    few sticks of dynamite. These are determined operatives, with access to
    very sophisticated information and technology. They construct bombs of
    immense destructive power like those used at the World Trade Center and
    Khobar Towers.
        Equally challenging is the problem of chemical and biological
    weapons in the hands of terrorists or rogue states, dangers that U.S.
    forces may face in future operations. The Chemical Weapons Convention
    is an important step in implementing comprehensive measures to address
    this particular problem. I strongly urge your support for its
    expeditious ratification so that the U.S. has a strong voice in the
    control regime.
        Adding to the danger is the increasing level of financial support
    these groups receive from private sources and hostile states. Unable to
    confront or compete with the United States militarily, rogue nations
    are spending millions of dollars each year in an attempt to counter
    U.S. influence. These states try to achieve their policy objectives by
    exploiting small groups to do the dirty work for them.
        The Secretary of Defense commissioned the Downing Assessment Task
    Force to examine the facts and circumstances surrounding the Khobar
    Towers bombing. In response to the Downing Task Force, the Secretary
    designated me as his principal advisor and the Department's focal point
    for all matters related to force protection.
        The Downing Report addressed 26 findings and 81 recommendations, 79
    of which have been implemented. The actions taken in response to the
    Downing Report include organizational changes, policy changes,
    intelligence emphasis, increased use of technology, and additional
    physical security funding. The remaining two recommendations yet to be
    implemented involve contract deliveries for vehicle armor kits and
    personnel body armor which should be completed by April 1, 1997. The
    SECDEF determined one finding, dealing with the number of ambulances
    available in CENTCOM's area of responsibility, was faulty.
        Organizational changes were made in the Joint Staff, combatant
    commands, and Services. I established a new Deputy Director for
    Operations for combating terrorism (J-34) that is now the focal point
    for coordinating the combating terrorism program among the Services and
    combatant commands. The Services and combatant commands also
    established focal points to ensure force protection is addressed in all
    daily operations and is a consideration during long range planning and
    funding.
        Policy changes were codified in DOD Directive 2000.12, ``DOD
    Combating Terrorism Program.'' This directive establishes the Chairman
    of the Joint Chiefs as the principal advisor to the Secretary of
    Defense on antiterrorism force protection matters. Additionally, it
    establishes new responsibilities for the Services, combatant commands,
    defense agencies, and OSD staff. These responsibilities range from
    implementation to assessment of antiterrorism programs.
        A major policy change resulting from the Downing Report is the
    delineation of force protection responsibilities between the DOD and
    the Department of State. In the future, force protection for overseas
    DOD personnel will be provided by the department which is most able to
    provide the best security. Currently the Joint Staff and DOD are in the
    process of finalizing specific country-by-country agreements between
    DOD and the Department of State for the Arabian Peninsula. Similar
    agreements are being considered for the other overseas commands. In
    addition, DOD Directive 2000.12 also implemented DOD Handbook O-
    2000.12H, as the standard for antiterrorism force protection. The
    handbook establishes threat assessment, education and training,
    physical security, personnel protection, and weapons of mass
    destruction related standards for all of the Department of Defense.
        Force protection training for DOD personnel and assessing the
    physical security of the installations on which they work, are two
    critical areas of our overall personnel security program. Through the
    Services and CINC's, I have implemented a four-tiered program which
    includes individual, unit, commander, and senior executive level
    training.
        Individual training is conducted by the Services upon entry into
    the military and throughout an individual's career in conjunction with
    various formal training courses. Unit level training is conducted by
    the individual organization. This includes formal training for the unit
    antiterrorism force protection instructors. Commander training is
    provided during the Services' pre-command training programs. This
    training focuses on the commander's force protection responsibilities
    as outlined in DOD Directives, Joint, and Service publications.
    Professional Military Education will also incorporate force protection
    into its curriculum. The final level of training is the executive level
    seminar for commanders involved in force protection planning and
    execution. Executive training culminates with a force protection
    wargame.
        The Joint Chiefs are committed to ensuring the best available force
    protection equipment is available to U.S. forces. During several fora,
    military leaders noted the lack of ``state of the art'' anti-terrorism
    protection devices and challenged industry to draw on their extensive
    expertise to fulfill requirements. The response has been encouraging.
    But, before America procures new equipment, commanders must have a firm
    understanding of potential vulnerabilities and requirements.
        This is where a new program of vulnerability assessment plays a key
    role. J-34, in close cooperation with the Defense Special Weapons
    Agency (the executive agent) is forming a number of assessment teams
    that will visit more than 650 facilities and installations on a
    prioritized schedule. Approximately fifty assessments are scheduled in
    1997. Once the teams reach full strength they will complete 100
    assessments per year. These teams will not only provide commanders with
    vulnerability assessments and recommendations, but most importantly
    will educate commanders on the types of force protection capabilities
    available to address shortfalls.
        Timely intelligence information available at the appropriate level
    is a key factor in successfully combating terrorism at all levels of
    command. We have worked with the Defense Intelligence Agency to
    prioritize collection efforts in order to improve analysis of terrorist
    related events, both at the national and theater levels. At the
    national level, the Defense Intelligence Agency created the Office of
    Counterterrorism Analysis to provide support to the Joint Staff and
    combatant commands. Additional improvements were made by integrating
    the Deputy Director for Operation for combating terrorism (J-34) with
    the Defense Intelligence Agencies' Transnational Warfare
    Counterterrorism Office. This fusion of intelligence and operations
    functions improved both the analysis and dissemination of threat
    information to the Combatant Commanders. In addition, an Antiterrorism
    Watch Cell has been established which supports the National Military
    Command Center Watch Teams in the event of a terrorist incident.
        Despite recent improvements in policy, procedures, and intelligence
    DOD's best efforts will not prevent every terrorist incident.
    Therefore, OSD initiated an effort to infuse technology improvements
    into force protection programs. Currently OSD has three programs; the
    Counterterrorism Technical Support, Physical Security Equipment Action
    Group, and Commercial-Off-The-Shelf Technology Insertion Program to
    address force protection technology improvements.
        As the SECDEF's principal advisor, I play a strong role in this
    process. In November 1996, the Joint Staff sponsored a force protection
    symposium to discuss force protection requirements with industry.
    Industry is providing DOD with technological solutions and equipment to
    improve force protection. Evaluations of both off-the-shelf and
    emerging technologies are underway.
        As the priority for force protection is raised we need to ensure it
    is also given a high budget priority. We initiated a review of future
    funding for force protection and have designated force protection as a
    major issue for the fiscal year 1998-2003 program review. In the near
    term, a Combating Terrorism Readiness Initiatives Fund was authorized
    in direct support of a Downing Report recommendation to fund emergency
    or high priority antiterrorism requirements.
        This effort was possible only because of the exceptional
    cooperation between the Services, Unified Commands, DOD and other
    government agencies, and commanders at all levels. The ultimate goal is
    to make the U.S. military the premier anti-terrorism force in the
    world.
                       quality people--the key to success
        The ability of the United States military to sustain its record of
    operational success into the next century is based first and foremost
    on our ability to recruit and retain highly capable men and women. This
    is the reason my number one priority remains people; their recruitment
    and retention through strong support of the issues important to service
    members.
        During the last fiscal year, the DOD met 101 percent of the
    recruitment goals. 96 percent of new recruits have high school diplomas
    as compared to 1974, when that rate was only 61 percent. 70 percent of
    these young people scored in the top three categories of the mental
    aptitude test. Twenty years ago in 1977, 32 percent of new recruits
    scored in the lowest recruiting category. Today it is less than 1
    percent (0.3 percent).
        However, emerging trends are cause for concern. The Services
    anticipate an increase in the number of new recruits they will need to
    sustain the force now that the drawdown is nearing completion.
    Moreover, the Services are going to continue to find themselves
    competing more with private industry for the best and brightest young
    people. This is especially true given that the soldier of the 21st
    century, just as the worker of the 21st century, will most likely
    require greater math, computer, and language skills.
        But recruiting is only part of the picture. The Services must
    concern themselves with retaining these outstanding Americans once they
    enlist. Overall retention rates have increased the past year. The
    retention rate for DOD was the highest it has been during the past
    seven years. The Army and Marine Corps maintained retention rates near
    83 percent, the Navy increased by 2 percentage points to 85 percent,
    and the Air Force increased 3 percentage points above last year, from
    86 percent to 89 percent. This stability provides evidence of the
    dividends paid by investment in quality of life programs for America's
    service men and women, and reinforces the focus on these issues in the
    coming years.
    Quality of life programs
        Looking out on the horizon, military operations will continue to
    demand great sacrifice and dedication from U.S. forces. It is important
    to reaffirm the importance of the top five ``people'' priorities:
    compensation, retirement, medical benefits, housing, and personal
    dignity.
        Congress deserves much credit for supporting the 1997 pay increase
    and the additions to the Basic Allowance for Quarters. The fiscal year
    1998 budget funds a 2.8 percent pay increase and 3.0 percent in the
    out-years. But, it is bothersome that so many of the young enlisted men
    and women still have difficulties making ends meet.
        When Congress made the decision to move away from the draft to an
    all volunteer force, the demographics of the force changed as more
    people viewed service as a professional career. Forty-three percent of
    the force is now below 26 years of age. The Services now attract more
    young married couples, as opposed to the single draftees of years past.
    61 percent of the active force is married, and together have more than
    1.3 million children. Since the military reflects society in general,
    it should come as no surprise that 5 percent of the force are single
    parents, with all the challenges that accompany such status.
        Congress and DOD should jointly explore solutions to the problem of
    adequate compensation for these young Americans. The arduous life style
    and devotion to duty asked of young men and women deserve a fair
    recognition of their efforts through adequate compensation.
        Congress should resist pressures to make additional changes to the
    existing 20-year retirement compensation system. The foundation of the
    military pay system has historically been based on the concept of
    delayed compensation. The 20-year retirement system provides an
    incentive for members to make the Services a career. Reforms this past
    decade have already cut by over 20 percent, the value of retirement for
    a member leaving at 20 years. The greatly reduced force levels of today
    will eventually result in savings in this area in the out-years. Any
    additional changes made now may have unanticipated consequences in
    terms of force retention, recruitment, and force composition down the
    road.
        In light of decreasing military medical assets, maintaining an
    adequate level of health care for Service members, dependents, and
    retirees is a critical quality of life issue. With the drawdown and
    restructuring initiatives occurring throughout the Services, access to
    military medical facilities could become more difficult, especially for
    dual-eligible retirees (those over 65 and Medicare eligible). Medicare
    subvention will allow retirees to enroll in TRICARE and have
    appropriate access to military facilities. Congress should support a
    subvention test as a means to maintain the good faith promise to
    retirees and validate cost estimates. The military's peacetime health
    care system maintains wartime readiness and is a key retention issue.
        Again this year, the Services request your support for the
    continued improvement of military quarters and family support. In
    fiscal year 1998, quality of life funding is continued in such areas as
    barracks and family housing, child care, family support programs, and
    Morale, Welfare, and Recreation (MWR) activities. The planned fiscal
    year 1998 funding for replacement or refurbishment of 5,900 family
    housing units and 11,000 barracks living spaces is a program worthy of
    unanimous support.
        But adequate pay, medical, and retirement benefits alone will not
    attract or retain the quality people we must have to sustain our armed
    services. We must create an environment that fosters an atmosphere of
    trust and respect for personal dignity.
        The recent incidents of sexual harassment at training centers and
    hazing are particularly troubling because these events are not
    consistent with our values of integrity, moral courage, trust and
    confidence. Moreover, sexual harassment and hazing destroy teamwork, a
    key element of combat success. We have an absolute responsibility to
    ensure these events do not occur. The Chiefs and I reaffirm our zero-
    tolerance policy for discrimination, harassment, and all actions
    contrary to our core values.
        Ours must be a military that any American can be proud to serve in.
    America's parents must be able to trust in our commitment to treat
    their children fairly and justly and provide them a safe, harassment-
    free environment.
                                   readiness
        The ability to respond to national crises requires that readiness
    remain the Services' next priority. Today's force is among the busiest
    in our history. This fact presupposes a high level of readiness, but it
    also makes maintaining readiness a more complex task.
        The Services made a determined effort to heed the warnings about a
    hollow force. Resolved to avoid the mistakes of the past, readiness
    accounts received top priority funding. This strategy paid big
    dividends in terms of mission success. However, readiness requires our
    constant attention as the tension between modernization, personnel
    programs, operations, and training becomes more acute.
    Operations/personnel TEMPO
        America's professional force maintained readiness the past year
    even with an increased level of tasking. The high OPTEMPO stressed our
    Operations and Maintenance accounts (O&M), as forces required
    additional supplies, maintenance, and training in preparation for
    impending taskings and exercises. In the budget, O&M receives a
    justified increase from $92.9 billion in fiscal year 1997 to $93.7
    billion in fiscal year 1998. Each military Service is working to
    sustain high levels of readiness while implementing new initiatives to
    reduce costs.
        The rotational nature of operations such as SFOR in Bosnia and the
    enforcement of the no-fly zones in Iraq, challenged the operations
    tempo (OPTEMPO) and personnel tempo (PERSTEMPO). The regional CINC's
    and the Services continue to deftly manage these key issues to maintain
    the quality of the force. However, the increased time away from home
    brought on by frequent training events as well as actual operations,
    can erode the quality of life and family unity of Service members.
        Several processes and tracking mechanisms are being put into place
    in order to monitor the pulse of PERSTEMPO and attempt to alleviate
    hardships. As problems are identified, the Joint Monthly Readiness
    Review provides a forum for bringing them to the attention of the
    Services, OSD, and me for action. Initiatives are also underway to
    monitor those individuals in critical jobs that seem to get tasked more
    often than others. Prior to issuing deployment orders, the Joint Staff
    (J-3) in conjunction with the Service and CINC staffs, now discuss the
    impacts on PERSTEMPO and explore potential alternatives as required.
        The Navy has defined and developed OPTEMPO and PERSTEMPO programs
    aimed at meeting both DOD directed requirements and ensuring reasonable
    conditions for Navy families. PERSTEMPO exceptions are personally
    approved by the Chief of Naval Operations; last year there were only
    five. PERSTEMPO rose only slightly above the Navy goal of 50 percent of
    the time in home port, due primarily to meeting CINC requirements and
    unforeseen contingency operations.
        Today's Air Force is very much an expeditionary force. It is 36
    percent smaller, 66 percent less forward based, and has nearly five
    times more airmen deployed today than in 1989. Yet careful management
    has resulted in less than 3 percent of Air Force personnel exceeding
    the Chief of Staff's PERSTEMPO goal of 120 days per year away from
    home.
        The Marine Corps deployment tempo (DEPTEMPO) for the past year once
    again demonstrated an ability to provide initial response to
    unanticipated contingencies, such as the crises in Liberia and the
    Central African Republic, while sustaining forward presence. All this
    despite a 12 percent decrease in force structure since 1989. On an
    average day, the Marine Corps has approximately 25 percent of the
    operating force deployed. Marine Corps EA-6B electronic warfare
    aircraft are good examples of assets in high demand around the globe.
    These units are carefully managed to ensure they meet both the
    Commandant's DEPTEMPO guidelines and the requirements of our Global
    Military Force Policy.
        Last year, the Army remained a resilient quality force which
    deployed on an average day, over 34,000 soldiers, not including many
    soldiers already forward deployed in countries such as Panama, Italy,
    South Korea, and Germany. The average yearly deployment rate rose by
    more than 2 percent last year.
        Although the Services carefully monitor the effects of increased
    PERSTEMPO, the adverse effects may not appear immediately. This is one
    reason the Joint Staff aggressively pursues PERSTEMPO measurement
    initiatives.
        Family oriented programs are another area in which the Services are
    very aggressive. During on-going operations in Bosnia, family service
    centers setup counseling services in schools attended by children of
    deployed Service members. Additionally, American forces have access to
    on-line E-mail, morale calls to home, and Morale Welfare and Recreation
    (MWR) support facilities throughout the area of responsibility (AOR).
    Chaplain support during the Bosnia operations is particularly strong to
    both families and deployed members.
        Readiness of the force is based on several components, but an
    important new element the past several years has been jointness.
    Jointness: Ten years after Goldwater-Nichols
        The changes brought about by the Goldwater-Nichols Act have had a
    positive effect on our readiness and have become a major source of what
    we refer to as ``jointness.'' The tenth anniversary of Goldwater-
    Nichols was celebrated with a symposium at the National Defense
    University. Several panels of distinguished speakers offered unique
    insights into the both the process and progress of Goldwater-Nichols
    implementation. The symposium was an opportunity to take a historical
    look at Goldwater-Nichols, the improvements in jointness that it
    brought about, and what remains to be accomplished.
        Much has been accomplished. Jointness cannot be measured by the
    number of joint publications produced or by listing the new Joint
    Centers and organizations. Jointness is out in the field, in the air,
    and on the oceans. One only has to compare the inadequate level of air-
    ground cooperation in Grenada with the outstanding efforts in Haiti,
    where an Army light division deployed from an aircraft carrier, or look
    at Bosnia, where two successive commanders on the ground were admirals.
        The effort to improve the military advice provided to the
    President, Secretary of Defense, and National Security Council is an
    important success story. The roles of the Chairman and Vice Chairman
    are well established and have produced tangible results. Additionally,
    the added voice in the resource allocation process that Goldwater-
    Nichols provided the CINC's has proven most beneficial.
        Following Goldwater-Nichols, the Department of Defense revised its
    acquisition directives, thus helping ensure military requirements and
    mission needs are met responsively through cost-effective modernization
    programs. OSD has initiated very important acquisition reforms this
    year which will help us field the warfighting capabilities postulated
    in 2010.
        Increasing the number of senior leaders who have significant Joint
    duty experience is still key to improving the process. A process is now
    in place to assess all joint manpower positions to ensure a particular
    manpower position provides sufficient joint expertise to be included on
    the Joint Duty List. An oversight board composed of eight Flag Officers
    or civilian equivalents have validated the process. The results of
    these initiatives are being codified in a DOD manual covering the Joint
    Officer Management Program.
        Joint doctrine has emerged as a central organizing force. Without
    establishing the basic beliefs about the best way to fight the Joint
    war, operations were in danger of falling victim to ``doctrine du
    jour,'' the tendency to adopt ad hoc procedures. Developing Joint
    doctrine has not been an easy process by any stretch of the
    imagination. Nevertheless, the Services, CINC's, DOD Agencies, Joint
    Staff, and the Joint Warfighting Center have teamed to produce a large
    body of authoritative Joint doctrine to enhance operational
    effectiveness. To date, 76 Joint doctrine manuals are in place and the
    body of approved Joint doctrine continues to evolve. The value of Joint
    doctrine has been demonstrated numerous times in deployed operations
    around the globe.
        Joint education continues as a pillar of force readiness. The
    National Military Strategy requires an educated officer corps capable
    of coping with a broad range of operations while simultaneously shaping
    the strategic environment. Continued improvements to joint education
    programs will prove to be future force multipliers.
        The Joint Requirements Oversight Council (JROC) continues to evolve
    into one of the most useful tools available to the SECDEF, the
    Chairman, the Services, and CINC's. The JROC has grown from an acorn to
    a sizable oak tree in terms of responsibility and effectiveness. Now
    the JROC tree must grow to full maturity.
        Within the context of strategic planning, the JROC has expanded its
    scope and focus dramatically over the past three years. It now plays an
    increasingly central role in two areas, one associated with the
    validation of mission needs for the acquisition process, and one
    related to the assessment of Joint warfighting capabilities. In both
    these roles, the JROC supports me in executing one of my important
    Title 10 responsibilities--to advise the Secretary of Defense on
    requirement priorities, assess military requirements for Defense
    Acquisition Programs, and provide the SECDEF with alternative program
    recommendations to achieve greater conformance with the priorities
    established.
        Codifying the JROC and Chairman's role in the last Defense
    Authorization Bill, was an important step in the process. As Vice
    Chairman of the Defense Acquisition Board (and the only military member
    of that board) and my designated Chairman of the Joint Requirements
    Oversight Council (JROC), the Vice Chairman now plays a pivotal role in
    ensuring that we achieve the optimal military capability, at the right
    time.
        The Joint Warfighting Capabilities Assessments (JWCA's) have
    provided an analytical foundation for JROC deliberations. The JROC
    oversees the JWCA process, directing assessments of specific Joint
    military areas. Through improvements in the JWCA process, the JROC has
    further increased the interaction with CINC's and the Services on
    warfighting capabilities and requirements issues. Additionally, the
    Joint Staff has been able to further integrate the JROC and JWCA
    process with the Planning, Programming, and Budgeting System (PPBS).
    This process continues to mature and gain relevance, facilitating
    consensus among the JROC, CINC's, and the JCS on military planning and
    requirements.
        Readiness to conduct effective operations is also tied very closely
    to improvements in Joint training. This is where an aggressive program
    of Joint training and education initiatives is so important. These
    initiatives combine the teachings of Joint doctrine and Joint
    operations to fully utilize all aspects of Service capabilities as a
    Joint force. Professional Military Education programs have made great
    progress in educating officers about each Service's capabilities and
    the contributions that each brings to the full range of Joint
    operations. These programs provide a unique environment which allows
    future leaders to critically assess the status today, and think ``out
    of the box'' about the future. But the theoretical must be reinforced
    with the practical. During the past year, the Joint Staff continued
    efforts to fully integrate new modeling and simulation efforts.
    Additionally, the staff has taken steps that enable training
    efficiencies by matching training requirements to the exercise program.
    The feedback from the theater CINC's is positive and results from the
    Joint Exercise Program are encouraging.
        Jointness is moving into the future, building on the core
    competencies of each of the Services. Continued cooperation will allow
    realization of the operational goal to achieve full spectrum dominance
    in the near term and out into the challenging future.
            modernization--equipping the force for the 21st century
        The most challenging aspect of modernization remains the continuing
    underfunding of our acquisition accounts. In my last two reports to
    you, I have stressed the need to raise procurement funding to a steady
    state of about $60 billion per year. This is still an operative goal
    although the Quadrennial Review may adjust it to meet the dictates of a
    new or modified force structure.
        This budget does not reach the target level of funding until 2001.
    While this is later than I think is optimal, I am encouraged that at
    least it is now accepted as a realistic, achievable goal. If we are to
    achieve this goal, as a minimum, we will have to cut out excesses and
    learn to work smarter.
        As difficult as it is politically we will have to further reduce
    our infrastructure. The BRAC process reduced our base infrastructure by
    some 18 percent and should provide a net cost avoidance of $14 billion
    between 1990 and the year 2001. But at the same time, while we cut
    these bases by a little less than a fifth, we also reduced the force by
    a third, and reduced our combat structure even more than that. The
    result is that we perhaps have more excess infrastructure today than we
    did when the BRAC process started. In the short run, we need to close
    more facilities, as painful and as expensive as it is.
        We also must change how we do business, relying more on
    outsourcing, privatization, and the procurement of off-the-shelf
    equipment and services. Where possible, we will also have to trim
    personnel end strength especially where technological changes such as
    improved weapons systems, afford us the possibility to consider fewer
    or smaller units.
        During the last year, the Joint Chiefs and Unified Commanders
    established a common vision of future capabilities that will lead us in
    a common direction towards future warfighting concepts and
    complementary interoperable capabilities. In tandem with the great work
    being done by the Joint Requirements Oversight Council, Joint Vision
    2010 provides the Services and Unified Commands the conceptual template
    to achieve dominance across the full spectrum of future operations. The
    implementation plan for Joint Vision 2010 is already well underway and
    will ensure that the vision is turned into reality.
        As the Joint Chiefs look to the future vision and requirements, the
    Chiefs also recognize that new technology is not the answer to all
    operational challenges. Some missions will still require forces to
    engage in many of the same activities they have had for the past 200
    years. The Services remain committed to improving capabilities across
    the full spectrum of combat capabilities, not just on the high end.
        Future modernization plans will be rooted in one of four key
    operational concepts contained in Joint Vision 2010: focused logistics,
    precision engagement, full dimensional protection, and dominant
    maneuver. Looking to the future, a few key areas require increased
    emphasis and wider support. DOD has already begun a number of
    initiatives to make these capabilities more affordable.
        A top priority remains strategic lift, a substantial pillar of
    America's military strategy. The C-17 Globemaster III is an
    increasingly important component of America's strategic mobility fleet
    and today the program is in good shape. The C-17 program is executing a
    seven year procurement for a total of 120 aircraft by 2003 (last C-17
    delivered by 2004), saving approximately $1 billion compared to annual
    lot buys. The C-17 program remains necessary to replace the aging C-141
    fleet.
        Strategic sealift is critical and requires additional attention.
    Over 95 percent of the equipment deployed during a major conflict will
    be lifted on ships. The Mobility Requirements Study/Bottom Up Review
    Update (MRS BURU), validated a need for 10 million square feet of surge
    capacity to move the forces for one Major Regional Conflict (MRC). This
    is the minimum surge sealift required for a single MRC, and it would be
    recycled for a second conflict.
        In order to ensure appropriate types of vessels required, primarily
    Roll-on/Roll-off (RO/RO) ships, DOD embarked on an ambitious
    acquisition plan of organic sealift. The nineteen Large Medium Speed
    Roll-On/Roll-Off (LMSR) vessels which DOD will acquire by fiscal year
    2001 will be the centerpiece of America's strategic sealift capability.
    Upon delivery of the last ship, five million square feet of capacity
    will have been added to the fleet, three million square feet for surge
    and two million square feet for pre-positioned equipment. This program
    has enjoyed strong support from Congress in the past and is funded in
    the Navy budget. Keeping this program on track for a fiscal year 2001
    completion is essential and a top strategic lift priority.
        In addition to the LMSR's, the study identified a need to add 19
    smaller RO/RO ships to the Ready Reserve Force (RRF). This piece of the
    surge requirement has proved to be more difficult. Although we've added
    14 of the 19 RO/RO's to the RRF since 1992, it is unlikely the Mobility
    Requirements Study/Bottom Up Review Update (MRS BURU) completion goal
    of fiscal year 1998 for these ships can be met. The Joint, TRANSCOM,
    and Navy Staffs are looking at all options, including evaluation of
    commercial U.S. flag programs, not available at the time of the BURU,
    in order to fill surge requirements, to reach a capacity goal of 10
    million square feet. DOD had been converting foreign built vessels in
    the absence of suitable U.S. built vessels. The requirement for five
    more RO/RO's, or an additional 550,000 square feet, remains today, but
    Congress has not authorized RO/RO acquisition the past two years. We
    need to remain committed to reaching the Ready Reserve Force capacity
    goal in order to close the gap.
        My next priority focuses on providing U.S. forces with systems that
    enhance situational and battlefield awareness, and command and control.
    Several technologies will enhance both the ability to maneuver and
    engage precisely.
        First, the exploitation of emerging Unmanned Aerial Vehicle (UAV)
    technologies offer the potential of becoming great force multipliers.
    The JROC has done an enormous amount of work appraising UAV programs
    and manned platforms in order to provide recommendations regarding the
    reconnaissance force structure necessary to support CINC requirements.
    Warfighters have a requirement for a tactical UAV and my top UAV
    priority is a system to support the ground commanders.
        The JROC-chartered UAV Special Study Group is reviewing UAV
    programs to assess the proper funding priority for UAV programs. Once
    the Services establish that UAV's can carry the necessary sensors and
    meet mission requirements in anticipated weather conditions, DOD should
    move swiftly to evaluate the cost-saving tradeoffs between manned and
    UAV reconnaissance systems. I remain committed to fielding a UAV force
    that is interoperable among all Services as an important enhancement to
    warfighting capability.
        Next, the ability to ensure precision engagement and dominant
    maneuver as described in Joint Vision 2010 depends on providing an
    effective mix of both offensive and defensive information
    infrastructures. The fusion of all-source intelligence with the
    effective integration of platforms, command organizations, sensors, and
    logistics support will be what distinguishes the U.S. from second-rate
    military forces.
        The Services have come a long way in this area the past ten years.
    The lack of interoperability between the Services' disparate command,
    control, communications, and computer (C\4\) systems was a major theme
    of the 1970's and 1980's. Compare this with the recent successes in
    Joint Task Force (JTF) operations across the globe, particularly in
    supporting the Implementation Force in Bosnia where the U.S.
    established a communications and information architecture that
    integrated hundreds of different systems from 32 different nations. The
    progress made in C\4\ coordination was as much a miracle as the
    successes in transportation and enforcement. In the future, Joint Task
    Force integration becomes even more dependent on information
    superiority and new communications solutions.
        However, with technology advancing so rapidly, acquisition and
    budgeting processes may be inadequate to address C\4\ needs with the
    speed required. Potential opponents can buy state of the art C\4\
    systems right off the shelf, but DOD requirements go through a lengthy
    acquisition and budgeting processes. This delay results in the
    warfighter often receiving ``old'' technology. The Services cannot
    afford the long lead-time of the system given the rapidly advancing
    status of C\4\ technologies. It seems prudent that where significant
    capabilities are commercially available in the open market,
    particularly when these capabilities are essential to the future
    vision, DOD could have a more responsive acquisition and budgeting
    process. This is an area that needs a hard look.
        The military is also facing a new challenge from the commercial and
    international sectors over an issue no one anticipated 20 years ago:
    availability of the frequency spectrum. In the rush to provide
    ``bandwidth'' for the myriad of new communications and information
    systems flooding the worldwide market, governments are selling-off
    portions of the frequency spectrum. It is critical that future spectrum
    sales take the impact on defense systems into account. There is
    potentially a significant dollar impact involved in this issue. If DOD
    has to yield portions of the spectrum to new commerce, existing
    military equipment operating within these frequencies must be replaced
    with systems that can operate on other portions of the spectrum.
        As the United States continues to improve its combat information
    and communication systems, an important consideration is the impact
    such modernization will have on friends and allies.
        The United States is the world's leader in the exploitation of
    information technologies. This is evident in every facet of American
    life and is particularly true with respect to the military. Information
    dominance is the common thread running throughout the fabric of future
    operational concepts. As a result, the Services are making key
    investments in new information technologies, investments that will
    produce significant combat multipliers in the next century.
    Unfortunately, friends and allies are not proceeding at the same pace
    or with the same levels of interest.
        The United States must ensure key information systems remain
    interoperable and complementary with allies. This is particularly
    important to the success of multinational operations. America's
    strategy must envision information architectures that avoid the same
    compatibility pitfalls encountered within our own Services in the
    1970's and early 1980's.
        Additional enhancements to the operational concepts of precision
    strike and full dimensional protection center on the recapitalization
    of our tactical aviation programs. The Joint Chiefs supported
    transitioning the Joint Advanced Strike Technology effort into an
    acquisition program.
        The Joint Strike Fighter (JSF) program is the benchmark for future
    Joint weapon system efforts. The JSF program will provide the Navy,
    Marine Corps, and Air Force with a critical, survivable, lethal, and
    highly interoperable multi-role strike capability. The efficiencies
    associated with this cooperative, Joint-Service development approach
    are substantial and deserve support from Congress and the
    Administration. Additional aviation modernization programs and
    technology upgrades will be needed to ensure voids in capabilities do
    not occur in the next century.
        Stealth technologies have provided America with an unmatched combat
    capability in the F-117 fighter and B-2 bomber. Low observable
    technologies will eventually be exploited in a wider array of combat
    systems including the F-22, naval vessels, tanks, ground vehicles, and
    the JSF. Both DOD and Congress should fully support leveraging this
    technology through continued investment. However, funding for
    additional B-2's is not in the best interest of the force. The limited
    procurement budgets can be put to better use on higher priorities.
        One of those advancing priorities key to protecting our force is
    the development of effective Theater Missile Defenses (TMD) for
    deployed forces. U.S. forces face danger from the proliferation of
    weapons of mass destruction and their associated delivery systems. The
    JROC is monitoring progress in the TMD area and is taking the prudent
    course in relation to concerns about the priority of the National
    Missile Defense Program. For example, in fiscal year 1996, JROC actions
    prioritized funding for lower tier systems to address the near-term
    ballistic missile threat. Recently (Jan. 24, 1997), the Navy Area
    Defense System successfully intercepted a ballistic missile in the
    first test of its new infrared seeker at the White Sands Missile Range.
    The Patriot Advanced Capability 3 system is scheduled to conduct its
    first test by this summer. Additionally, earlier this fiscal year, DOD
    increased funding for upper tier programs. This will accelerate the
    fielding of the Theater High Altitude Air Defense System (THAAD) and
    provide for additional risk mitigation testing of the Navy Theater Wide
    Defense System.
        The NMD Deployment Readiness Program optimizes the potential for an
    effective National Missile Defense System. If the decision is made to
    deploy a NMD system in the near-term, then the system fielded would
    provide a very limited capability. If deploying a system in the near-
    term can be avoided, DOD can continue to enhance the technology base
    and the commensurate capability of the NMD system that could be fielded
    on a later deployment schedule. The objective here is to be in a
    position to be three years away from deployment, so America can respond
    to the emergence of a threat. This approach fields the most cost
    effective capability that is available at the time the threat emerges.
        The fiscal year 1998 budget authority requested for ballistic
    missile defense is $3.5 billion. During fiscal year 1999-2003, an
    additional $17.9 billion is planned. Beginning with the fiscal year
    1998 budget, funding for Theater Missile Defense programs are in the
    appropriate Service accounts.
                                    the qdr
        The Quadrennial Defense Review (QDR) does not start with a clean
    slate, rather it begins with the fact that the U.S. currently has the
    best force in the world. America's military is the envy of the world
    because of what it can accomplish on a daily basis. It is not just the
    equipment that other nations admire. It is the organization,
    leadership, training, and the great people. Thus, the QDR must ensure
    that tomorrow's force is every bit as capable to protect America's
    interests as is today's force.
        The QDR is a serious effort to examine strategies, force structure,
    force modernization plans, infrastructure, budget plans, management,
    and other elements. It will highlight what is right and those areas
    where change is required. If there is an opportunity to restructure
    ourselves to be better prepared to protect America's interests, then we
    will respond appropriately.
        However, when the nation's security is at stake, changes have to be
    made carefully. American forces must have the capability to prevent
    future conflicts by shaping the strategic environment, deter
    conventional and nuclear war, and when necessary, fight and win the
    nation's wars.
        These tasks underscore the need to maintain well-balanced forces to
    prevent conflict through engagement, deter conflicts before they start,
    or fight and decisively win those that do. In short, America must
    maintain a military capable of dominating an opponent across the full
    range of military operations. Mobility and forward deployment will be
    essential characteristics of the force.
        Like mobility, forward deployment provides military commanders with
    several advantages. The ability to forward deploy forces, whether
    permanently, rotationally, or temporarily in the Pacific, the Middle
    East, and Europe dramatically reassures allies of America's commitment,
    reduces the response time to regional crises, signals a commitment to
    defend American interests, and moderates potential aggressiveness
    directed at friends and allies.
        Prepositioning of equipment is a facet of overseas presence that
    demonstrates to allies the U.S. commitment to come to their aid if
    threatened or attacked. Prepositioning also gives the U.S. the ability
    to respond faster to a developing crisis and increases the ability to
    deter war.
        The capabilities of forward deployed units must be sufficient to
    quickly and decisively prevail across a wide range of potential
    operations. In the future, success or failure of operations may be
    determined by America's response in the first few hours or days of a
    crisis.
        Forward deployment provides significant side benefits as well. A
    continuing program of engagement relying on military-to-military
    contacts, multinational exercises, and Joint training opportunities
    provides the regional Combatant Commanders with the building blocks
    necessary for effective operations. The complex political demographics
    unique to each AOR are carefully considered in developing a proper
    level of Joint and Multinational exercises to support each CINC's
    engagement strategy. These programs enhance levels of trust between
    regional friends, strengthen command relationships, promote doctrinal
    and tactical awareness, and enhance the mission of conflict prevention.
        The array of bilateral and multinational cooperative efforts this
    past year reinforce the importance of the alliances and partnerships
    that grow out of engagement programs. Nowhere is this more evident than
    in the cooperation between a rejuvenated NATO and members of the
    Partnership for Peace (PFP) program. America's active and reserve
    soldiers, sailors, airmen, and marines are establishing the ties so
    critical to ensuring a lasting peace on the European continent.
        Today, the United States has the best military in the world. With
    continued support from Congress and key investments in quality people,
    readiness, and modernization, America's forces will remain preeminent
    in the year 2010 and beyond.

        Senator Stevens. Thank you very much, General. We do have a
    full complement of people here and I expect that we will get
    more. So if there is no disagreement about this, I would like
    to limit the first round to 10 minutes.
        Let me just run through the charts with you, General, if I
    could.

                              Overseas deployments

        On chart 3, don't we have a record number of people
    overseas for peacetime in the period shown there, between 1994
    and 1997? If you discount Europe, we just are maintaining more
    people overseas in different spots. You said it was in some 17
    different spots, didn't you?
        General Shalikashvili. We are maintaining, since I have
    been chairman, we have had 14 operations, that is, a Bosnia, a
    Haiti, a Rwanda, those kind of operations. We have averaged
    about 14 operations on any given day involving some 40,000.
        This number, 40,000, only partly includes people that we
    routinely keep overseas--approximately 100,000 in northeast
    Asia and 109,000 in Europe that are permanently stationed
    there.
        Some of the people that go on operations in the Middle East
    and go on operations certainly in Bosnia come from Europe. So
    they are included in that 100,000. But many of them come from
    the United States. Many of them come from the Pacific theater.
    For instance, Haiti, for the longest time, had a brigade sized
    unit from Hawaii participating in that operation.
        So in addition to that, of course, you have the normal
    naval deployments and marine deployments. I was just referring,
    Mr. Chairman, to the named operations that we run, the Bosnias
    and so on.
        Senator Stevens. It just seems that the level of deployment
    is maintained at a fairly high level. Even with Europe and
    Korea, we are running at 240,000 to 250,000 overseas at all
    times right now, isn't that right?
        General Shalikashvili. We maintain, if you don't count the
    marines, we maintain 209,000 plus this year. Part of it is
    counted--yes, it is probably less than 250,000, but probably
    close to that that are either living overseas or on a temporary
    deployment overseas.
        Senator Stevens. I don't think we have ever figured into
    this rotation, if there is rotation for those, and we have
    problems with some of the people that they leave behind. I
    think we have a new dynamic entering into defense deployment in
    terms of family problems.
        General Shalikashvili. We have two issues here, Mr.
    Chairman. One is that we do maintain these 40,000 on
    deployments. But when you look at a force of 1.5 million, you
    would say that is something we can manage. So you have to look
    and see what else is happening that is causing this.
        I hate to say that, but sometimes we are our own worst
    enemy. It is probably fair to say that we have not seen an
    exercise we don't like. We haven't seen a training opportunity
    we don't like. So you will not get a solution to this if you
    just look at the deployments.
        We really have to look also at how many days away from home
    does a soldier at Fort Hood, TX, spend, who never goes on one
    of these deployments, perhaps, but goes to the National
    Training Center, participating in this or that exercise.
        We are an extraordinarily well trained force. I know that
    we read in the paper how our readiness and our training is
    suffering. But we are a very well trained force.
        The Chiefs and I have agreed that as part of this
    ``Quadriennial Defense Review'' [QDR] process we have to look
    at the totality that causes our people to move on operational
    deployments but also on training events.

                                Russian military

        Senator Stevens. I think that is something we ought to go
    into.
        On Russia, we are going to go to Hvarsk, Vladivostok, and
    Sakhalin in the latter part of March. Would you see what you
    can do to give us some information on what is out there?
        General Shalikashvili. I surely will.
        Senator Stevens. I have a feeling there is more military in
    Eastern Russia than most people realize.
        General Shalikashvili. [Deleted.] Much of their nuclear
    strategic capability is out there.
        Senator Stevens. And they also are not subject to
    limitations as they are in the Western zone. That is something
    I would like to see.
        There are some interesting figures about the Duma with only
    62 percent support of their military budget. I think we ought
    to learn a little bit more about that.
        Do you see any change in terms of the arrearages and paying
    military people in Russia?
        General Shalikashvili. I was in Russia to visit my
    counterpart in December. [Deleted.]

                                     Bosnia

        Senator Stevens. Switching to Bosnia, when we were there,
    we got the word that most of this equipment has been in
    cantonment now for over 1 year. Have you looked at how much of
    that will be usable when we leave?
        Let's assume that we leave at the end of 1998, as
    scheduled. If all of that equipment has been in cantonment
    areas and has not been exercised, not been utilized, how much
    of it is reusable?
        General Shalikashvili. I will try to give you a very
    precise answer for the record, if I may.
        Senator Stevens. Yes.
        [The information follows:]

        All three Former Warring Factions have access to their
    equipment in cantonment sites and have been conducting
    maintenance to keep equipment in working order. Some of the
    equipment has been exercised, all of which must be approved by
    SFOR, but the [deleted] compliance with the military aspects of
    the Dayton Accord began.
        The Bosnian Serb Army has the most heavy equipment in
    cantonment and [deleted]. The Bosnian Serb Army has been able
    to perform a minimum level of maintenance necessary to keep the
    majority of weapons in working order. [Deleted] but SFOR
    inspections indicate [deleted]. However, over time, the
    [deleted] Federal Republic of Yugoslavia. In contrast, the
    [deleted]. By 1998, the Federation Army will have [deleted].
    Both the Bosnian Croats and Moslems [deleted]. While the
    Bosnian Moslem Army is [deleted].

        General Shalikashvili. The information that I have now is
    that they do take some of it out. They have to come to
    stabilization forces [SFOR] and say I want to take 12 tanks out
    to go on an exercise. They may do that, and then they have to
    return them. So they do exercise the equipment.
        Senator Stevens. They do.
        General Shalikashvili. [Deleted.]
        Senator Stevens. How much is really in cantonments? Do we
    know how much did not get there? How much of their armaments
    are not under our control now?
        General Shalikashvili. To the best of our knowledge, all of
    the heavy equipment, that is, tanks, APC's, artillery pieces,
    those are the three sets of equipment that need to be there.
    All of those that we know about are in cantonment areas or are
    being processed for destruction. They sell some of that stuff,
    also.
        General Joulwan has no worry now that somehow there is a
    large number of equipment that's not there.
        An interesting thing is that the [deleted].
        The Moslems were very accurate in what they told us they
    had. It is just one little bit of information for you.
        Senator Stevens. I am down toward the end of my time. I
    will ask other questions later, but let me ask this now.
        I noticed on charts 10 and 11, if we are down to this
    level, why are our costs still so high in Bosnia?
        As a matter of fact, we provided almost $1 billion for
    Bosnia and now you have asked for reprogramming for this year
    and there is a substantial request for next year.
        Why are our costs so high if we have only 8,500 out of the
    total, whatever it is, deployed there? Are we paying for more
    than we realize? Are you paying for--are we the host nation for
    these other forces?
        General Shalikashvili. No; not at all.
        Senator Stevens. Where is all the money going?
        General Shalikashvili. Again, we have a fairly, I think we
    have a very good accounting of where that money is going, and I
    will provide that to you for the record. We have scrubbed this
    and scrubbed this because we were so off in the initial
    estimate last year.
        We have hired a firm that is reworking our costing model. I
    think you will find that the costs that we carry for that are
    now very accurate. But to see exactly what it is for, I need to
    really give you the detailed information and ask your staff to
    review that.
        Much of the cost comes from moving people in and out. So
    what we are paying now is, remember, implementation forces
    [IFOR] had to go home. This SFOR came in. Camps had to be
    broken down because we are so much smaller now. So much of the
    cost--not ``much,''--a good chunk of the cost is also in moving
    the force into the area. But it is also just sustaining the
    force.
        They have a very high optempo. Particularly now that they
    are smaller, they no longer just sit like they did before. But
    they continue on the road in patrolling.
        [The information follows:]

                           COST ESTIMATE FOR UNITED STATES PARTICIPATION IN BOSNIA OPERATIONS
                                                [In billions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                              Fiscal year--
                           Estimated costs                       ---------------------------------------    Total
                                                                      1996         1997         1998
    ----------------------------------------------------------------------------------------------------------------
    Army........................................................          1.9          1.8          1.0          4.7
    Navy........................................................           .1           .1           .1           .3
    Air Force...................................................           .3           .3           .3           .9
    Agencies....................................................           .2           .2           .1           .5
                                                                 ---------------------------------------------------
          Total.................................................          2.5          2.4          1.5          6.4
    ----------------------------------------------------------------------------------------------------------------
    Note: This cost may vary depending on pace, timing, and extent of SFOR drawdown during fiscal year 1998

        The following major cost categories are included in the above
    estimate:
         Military Personnel.--Additional special pay, such as family
    separation, received by U.S. troops involved in operations, as well as
    pay for the activated reserves.
        Personnel Support.--Subsistence (food and water), TDY, and medical
    support.
        Operations Support.--Fuel, spare parts, communications and
    engineering support.
        Transportation.--Deployment, sustainment, rotation and redeployment
    costs.
        The estimate is based on the following assumptions:
        Operations will be accomplished in a peaceful environment.
        Under the Implementation Force (IFOR), forces peak at approximately
    20,000 in Bosnia, with an additional 5,000 in other sections of the
    Former Yugoslavia, and 7,000 logistics support troops in Rim countries.
        Forces reduce to approximately 8,500 in the AOR in March 1997 for
    the Stabilization Force (SFOR).
        Further force reduction anticipated for fiscal year 1998 following
    completion of SACEUR's operational assessment.
        Activation of reserves for support activities in Bosnia.
        Continues U.S. air forces currently involved in Operation Deny
    Flight at an Optempo similar to that maintained during the past year.
        U.S. naval forces deployed in the region would be available if
    required.
        No support provided to other than U.S. troops.
        No humanitarian or nation building efforts.
    Fiscal year 1996
        Deployment and start up, building to 20,000 troops.
        Ten months of operation.
        No redeployment or reconstitution.
    Fiscal year 1997
        Continuation of 20,000 for first quarter, drawing down during
    second quarter to 8,500.
        Six months of operations at the reduced level (8,500 through the
    end of fiscal year 1997).
        One full rotation of troops.
        Redeployment of IFOR and SFOR.
        Reconstitution of IFOR and SFOR.

                               Budgeting control

        Senator Stevens. This is my last question.
        Dr. Hamre, when he was before us last week, I asked him if
    these things have a financial officer, a deputy from his shop.
    He told us no.
        Why don't we have some such concept. In wartime, now, it
    might be different. But in peacetime, why don't we have a
    concept of really budgeting control for the CINC's? It appears
    that they ask for things from all over and they get the
    support. But they don't have to figure out what they can
    afford.
        Is that a defect in Goldwater-Nichols?
        General Shalikashvili. I don't think so.
        Let me explain how I think the system works. First of all,
    on a day-to-day basis, whatever the CINC's needs are compete in
    a normal budget process through their components back to the
    services. So if you raise the issue why do we have so many
    airplanes in Aviano, that process with Aviano should be there
    and how many aircraft should be there, competed not only
    through the services, competed with OSD, was briefed to Milcon
    committees, and so on. That happens day to day.
        So there is very good control.
        When an operation comes up--and the quicker the operation
    comes up, the bigger the problem--when an operation comes up,
    that is when we need to understand how the system works because
    it works differently than on a day-to-day operation.
        Senator Stevens. Let me stop you, General. I want to get
    with you on that one of these days, but I don't want to take
    the time of my colleagues on it now. But I do think we need to
    have some understanding of how can the CINC's have someone
    standing right beside them saying: General, you really cannot
    afford to do that now, and in peacetime in particular.
        But let me move on, if I may. I don't want to be rude, but
    I want to give my friend his time.
        Senator Inouye.

                                 Northeast Asia

        Senator Inouye. Thank you very much.
        General, I will have just one question if I may.
        The policy of the United States, diplomatic and military,
    as it relates to North Korea and South Korea, I believe can be
    divided into two parts. The first is to minimize the threat
    that North Korea presents to the stability of that area. Second
    is to bring about at the earliest a reunification of North and
    South Korea.
        Having said that, during the past several years I have made
    it a point to meet and discuss this issue with the leaders of
    Japan, China, and South Korea. In my discussions, I get the
    impression that these leaders would prefer to maintain the
    status quo.
        They seem to be concerned that if the American policy is
    put into reality, that North and South Korea are reunited and
    we have a one-country peninsula there, a new element of threat
    would be presented in that part of the world.
        The Japanese, for example, make no bones about it. They are
    concerned about the combined military and the economic threat
    that a combined Korea would present to them. The Chinese seem
    to express the same, and South Korea seems to be content with
    the present level of confrontation.
        Is my observation wrong or is it correct? What is your
    call, sir?
        General Shalikashvili. Senator Inouye, when I travel
    through the Pacific, what I hear is the hope that our policy in
    the Pacific is not a temporary sort of policy that will change
    because some changes in the near-term occur, might it be in
    Korea or wherever else. They feel that one of the greatest
    stabilizing influences in the Pacific as a whole, but certainly
    in the Northeast Asia region, is the forward presence of
    American troops; that they do not want us to look at that
    forward presence as a presence against North Korea, but as a
    presence for stability in the region.
        They always remind me that this is an extraordinary area of
    the world, where the interests of the major powers come to a
    very sharp point--Russia, China, Japan, the United States, and
    Korea--and that if it were not for our presence there, it would
    be very destabilizing.
        So the U.S. Government, at least ever since I have been
    chairman, has continually made the point that our presence, our
    military presence, there is a vital, long-term component of our
    long-term interests in the Pacific.
        We have experienced within the last year problems on
    Okinawa that have raised that issue. My sense is, however, that
    it is incumbent upon us and the Japanese Government, because I
    believe firmly that they also feel that our presence is vital
    in that area, to work that issue to find a way to lessen the
    burden on the people of Okinawa while at the same time not
    lessening our forward presence there.

                              Korean reunification

        Senator Inouye. I agree with you that our forward presence
    is absolutely essential at this time of history and that,
    without our presence there, instability would be, well, high on
    the agenda of Asia and the Pacific rim. But my question related
    to our policy on reuniting Korea.
        If that is our policy, I get the impression from my
    discussions with the leaders of China, Japan, and South Korea,
    that they would prefer that we kept the status quo. They are
    quite concerned that we may succeed in reuniting the Koreas.
        Is my observation correct?
        General Shalikashvili. I think your observation is correct.
    I am not sure that the U.S. Government would say now that our
    policy is the reunification. Our policy is to bring to an end
    the hostilities between the two Koreas and to let them work out
    what best suits their circumstances.
        It is to that end that we have encouraged, and, I guess,
    starting today is the resumption of the North-South talks again
    in New York, to let those two reach an agreement between them
    and reach a peace agreement between them and get away from the
    armistice that we have had all this time.
        Also, if I may, my sense is that probably both North and
    South Korea also are not at all convinced that reunification,
    at least in the near-term, is the right answer--for South Korea
    because of the extraordinary expense involved. After all, they
    have watched what has happened in Germany. For North Korea,
    they have also watched what happened in Germany and they see
    how the regime could disappear overnight. So I would be very
    much surprised if the North Koreans were supportive of that
    notion.
        Senator Inouye. I realize that this is long term, but would
    a united Korea present a new element of concern?
        General Shalikashvili. It could, depending on which way it
    went. [Deleted.]
        Senator Inouye. One final question, sir.
        We are now about at the end of carriers using conventional
    energy, and we will soon have a fleet entirely of nuclear-
    powered carriers.
        I believe the Japanese have made it clear that they will
    not welcome the presence of any nuclear-powered vessel, like a
    carrier, in their ports. If that is the case, where would our
    presence of carriers be quartered?
        General Shalikashvili. I would very much hope that the
    Japanese would not insist upon it, but it's possible that they
    would. I cannot give you an immediate answer of what the
    alternative would be that the Navy would come up with.
        Certainly, the forward presence of a carrier in Northeast
    Asia has been of great assistance to us not only in being close
    to a trouble spot like Korea but also because it has so
    significantly shortened our deployments to the Middle East. So
    it is a good thing for us to have a carrier forward deployed.
        I would hope that we would be able to continue doing that
    in Japan. But you are exactly right, we might have to find some
    alternatives.
        Senator Inouye. Thank you very much, Mr. Chairman.
        Senator Stevens. Thank you.
        Senator Gregg.

                                   Terrorism

        Senator Gregg. Thank you, Mr. Chairman.
        General, I wanted to pursue the issue on the terrorism
    question for the foreseeable future, at least, that being
    defined as the next 10 to 15 years. It appears that the biggest
    physical threat to the United States proper and our citizenry
    would be a terrorist attack of either chemical, nuclear, or a
    biological nature.
        If that is our most significant threat to our people, I am
    wondering if you could give me your thoughts on how you are
    coordinating with the different agencies and whether you think
    that that coordination is adequate if that threat were to come
    from outside the United States.
        I recognize that there is a domestic threat. But I am
    talking about a threat from outside the United States. How are
    you coordinating with the FBI, with the CIA, and with the State
    Department? Where do you think there might be a weakness in
    that coordination in anticipating the threat versus reacting to
    the threat?
        I recognize that there is significant coordination in
    reacting to an event. But my concern has been and continues to
    be toward nations at the highest levels and down through the
    agencies on reacting and anticipating such a threat and being
    able to communicate between the military, law enforcement,
    State Department, and the intelligence agencies of where that
    threat might come from and how to deal with it.
        General Shalikashvili. Our coordination with the
    intelligence agency has always been good. It doesn't mean that
    the intelligence agency was always capable of producing the
    threat information that we wanted, because we always want very
    precise information that often is not available.
        But that coordination has always been very good and I think
    the linkage is all there.
        Senator Gregg. I'm not talking about the threat against
    military installations. I'm talking about the threat against
    the U.S. population.
        General Shalikashvili. The terrorist threat in general, for
    instance if there is a threat against an airline or something,
    I believe that that information within the interagency here
    gets passed around very quickly and works very well.
        When you ask me now how is the coordination between the
    military and the FBI here in country or with the State
    Department on issues that go on overseas, I think it is getting
    better, but it is nowhere near the same coordination that we
    have with the intelligence agencies.
        How is the coordination with the FBI and the local
    community where the terrorist threat might, in fact,
    materialize? I probably am not the right person to talk to.
        Senator Gregg. No; I wouldn't expect you would be.
        General Shalikashvili. But I would say it varies from
    agency to agency. We have always had it well from intelligence
    because we had a central focus for intelligence in each
    Department. I have now created a central focus for
    antiterrorism in the Joint Staff for all the military that
    involves everything. It involves State and other agencies, the
    FBI agency, all of that. So I feel comfortable that I am
    beginning to get a handle on all of that.
        But I feel very uneasy about how this information were to
    be translated to the civilian community. Let me give you an
    example of why I am worried about it.
        In almost every city in the United States, at some shopping
    center we have recruiting stations. We have soldiers, airmen,
    marines working in that shopping center. What do I know about
    the terrorist threat in Peoria, IL, where that recruiting
    station is? Probably very little; not as much as I should know,
    because we have our people so diffused in the area.
        So as long as I still have that feeling, the answer must be
    that we are still not doing as well as we should.
        It is an extremely difficult thing to get the word to
    everyone, for the FBI to get the word out, for the Government
    to get it to the States and to the local municipalities. The
    problem even gets multiplied when you go overseas.
        There we have started to get a handle on it for the
    military, but not for the Americans who live in Frankfurt, for
    instance. For the military, now, we are taking over more and
    more of the responsibility for antiterrorism that in the past
    has been handled by State Department, taking it over in the
    Defense Department for our own people because we think we are
    more capable of doing it. They don't have the resources to deal
    with it.
        So I would tell you that we are a way off yet before anyone
    can report to you that the system we have, which should insure
    that when a terrorist threat arises that information is passed
    to where it needs to go and that there is someone exercised,
    trained, and ready to respond to that, to prevent that incident
    from happening, is adequate. The record, at best, is spotty
    right now.
        Senator Gregg. I agree with that analysis just from my
    limited knowledge, chairing the committee that has jurisdiction
    over the FBI and State Department operations.
        I guess my followup question to you is this. Have you given
    any thought to how we should develop a system within the
    different agencies that are involved in this to correct what is
    clearly a gap?
        I notice that the Israelis have gone to a system on this
    just recently where they actually, I think his name is General
    Digan, has been asked to take over the coordination. He is
    physically responsible for all of it.
        Now that is a smaller country and they have the ease their
    size offers. I don't think we want a terrorist czar. But I do
    think that we need to have some very thoughtful effort made on
    getting coordination for anticipation of terrorist events
    between your agency, CIA, FBI, and State. I do not see it now
    in place. I think it has to come from the top.
        General Shalikashvili. It seems to me, Senator Gregg, that
    the first instance is a dissemination of threat information.
        Senator Gregg. You have to have a structure for this,
    though.
        General Shalikashvili. Correct. You have to have some
    center that is responsible for that and then has the
    communications means to pass it to the local law enforcement
    agencies which will have to deal with it wherever it is.
        So if I were working that problem, I would work it first to
    get the information to everyone who needs to have it. That
    ought not to be that hard. You establish some center here and
    you establish the communication means to the point of contact
    in wherever it is. It is doable, I think.

                      Chemical, biological, nuclear threat

        Senator Gregg. Well, I think the second problem is being
    addressed by the FBI. I think they are aggressively addressing
    it.
        I think the bigger issue is the major threat, the chemical,
    biological, and nuclear threat, trying to basically model where
    it is coming from, anticipate where it is coming from, from the
    intelligence sources, and then responding to it. There seems to
    be no centralized effort on this that brings all of the
    different parties to the table on a regular basis at the level
    necessary to do it.
        I am hopeful that we can move in that direction.
        General Shalikashvili. There is a center established here
    that is responsible for that, I think.
        Senator Gregg. Yes; and the FBI is looking into that, too.
    Also, the National Security Council is actually specifically
    directed to do that. But I don't sense that it is working yet.
    I don't think it is up and functioning at the level we need.
        I believe my time is up.
        Thank you, Mr. Chairman.
        Thank you, General.
        Senator Stevens. Senator Dorgan, I think this is the first
    committee meeting that you have been to. We welcome you here
    today.
        Senator Dorgan. Thank you very much. It is a pleasure and
    an honor to be here.
        I think the questions Senator Gregg asked are critically
    important. Rather than follow up on those, however, I just want
    to associate myself with the concerns that he expressed. I
    think these are of critical interest and importance.
        On page 9 of the posture statement that you gave to us, you
    talked about the Chemical Weapons Convention and that relates
    to some of the assessments that you gave us on the charts about
    chemical weapons capability. I want to ask you a question about
    that.
        The Senate must act by April 29 to ratify the treaty or we
    will be shut out of the international monitoring agency, or at
    least we will not have a voice in the control regime, as you
    put it.
        Can you describe for me what we will miss if we don't have
    a voice in the control regime and why is this important.
        General Shalikashvili. The control regime, many aspects of
    it, are still to be set up. We would like to be at the table as
    these procedures are established, so that we can insure that
    our interests are fully protected and that we have systems and
    procedures that give us the greatest assurance that the other
    guys have to be forthcoming, forthcoming about what their
    programs are, in the inspection regimes that are being set up,
    how the inspections will be conducted, that they are so set up
    to meet our requirements to protect our information, our
    industries. On the other hand, they must be intrusive enough so
    that we will be able to find out whether other countries are
    complying with the treaty.
        It is these procedures that I was referring to.
        Senator Dorgan. When you put up the board charts that
    describe various threats and various capabilities, among those
    areas were chemical weapons threats. How would the ratification
    of this treaty and our participation in it decrease the chances
    that our troops in the field might come under the risk of
    chemical attack?
        General Shalikashvili. I think that you have to start out
    with the proposition that we are now a nation that, for all
    practical purposes, does not have chemical weapons.
        We are facing potential adversaries that have nuclear
    weapons. In the first instance----
        Senator Dorgan. Chemical weapons.
        General Shalikashvili. Yes; I'm sorry. Chemical weapons. In
    the first instance, I think it would be to our advantage if, to
    the maximum extent possible that we can, we reduced and
    eliminated chemical weapons stockpiles that are out there that
    our troops might have to face. Also, right now, there is not a
    good way to monitor the chemicals that are necessary to make
    chemical weapons.
        This regime, while not foolproof, gives us a better handle
    on monitoring that traffic. So it reduces the chance and makes
    it more difficult for rogue nations, who will always be there
    and not up to the treaty, it will make it more difficult for
    them to create chemical weapons and become chemical weapons
    states.
        So if you start out with the proposition that right now we
    are the major power that does not have chemical weapons and
    there are plenty of chemical weapons out there, any regime
    that, in fact, reduces the stockpiles out there, that reduces
    the number of chemical weapons that we might have to face in a
    potential conflict--God knows when--I think it is to our
    advantage and it adds to the security of our troops.
        Then the precursor chemicals that I was talking about
    further allow us to restrict at least some of the chemical
    weapons developments among some of the rogue nations,
    recognizing that we will never capture all of them.

                            Ballistic missile threat

        Senator Dorgan. General, thank you. Let me ask one
    additional question.
        You talked also in your chart presentation about various
    threats. You described ballistic missile threats and potential
    ballistic missile capability.
        In your statement you talked about theater missile defense.
    The antiballistic laser program that is now under development
    by the Air Force, can you give us anything that tells us what
    the prospects for that program are? Are you optimistic about
    that?
        General Shalikashvili. We are very optimistic about it. I
    think space-based lasers offer a possibility of being effective
    defensive systems against all kinds of threats from the
    national missile defense aspect, also from the theater aspect.
        So we do want to continue with the R&D program and want to
    see where that can take us. I think it is too early to tell how
    it will pan out. But certainly it is a very promising
    technology and we encourage it.
        Senator Dorgan. But that particular program is not space
    based. Isn't that aircraft based against theater missiles?
        General Shalikashvili. Yes; yes.
        Senator Dorgan. Well, I am interested in that program and
    its possibilities. But I appreciate very much the presentation.
    I thought it was very interesting. It was my first opportunity
    to have a presentation of that type and I thank you very much.
        Senator Stevens. Thank you very much, Senator.
        Senator Bumpers.

                                   Nunn-Lugar

        Senator Bumpers. Mr. Chairman.
        General, Senator Dorgan asked some of the questions I
    wanted to ask on the Chemical Weapons Convention. But I also
    wanted to say there is one additional reason we should ratify
    it, and that is because we want to maintain the moral high
    ground among the nations around the world. But having said
    that, let me ask you about where we are with Nunn-Lugar.
        We have spent $2 billion under Nunn-Lugar. What have we
    gotten for the money?
        General Shalikashvili. I think Nunn-Lugar has been one of
    the more successful programs we have had. The title of
    cooperative threat reduction is, I believe, the right term for
    it.
        We have been able not only to help them develop systems
    that provide a greater assurance of the security of their
    nuclear warheads, but we have been able to help them safeguard
    the warheads with that money in that they have taken off
    launchers and missiles. We have also been able to help move in
    an area of actual demilitarization of nuclear warheads.
        So it is a very small investment considering that the
    alternative is that these weapons would either be running
    around loose, with less control than they have now, or they
    would not be destroyed as rapidly as they might be now. It
    would just pose a further threat to us.
        So I think in all of that, giving them money to destroy
    airplanes that they have taken off alert, money to have the
    equipment to destroy missiles that have been taken off alert--
    and we have all seen pictures of that--it has been an extremely
    successful program. Also, for the United States, dollar for
    dollar, penny for penny, it has been an extremely cost
    effective program.
        Senator Bumpers. How secure is the fissile material that
    they are taking out of those weapons?
        General Shalikashvili. I will not pretend to be able to
    give you a good answer. I think that intelligence folks tell me
    that they are secure but that we ought to continue to worry
    about it, and that we need to continue to work through programs
    like Nunn-Lugar to give them the capability to keep better
    records, keep better procedures, storage facilities, where they
    can store these weapons until they are demilitarized.
        Senator Bumpers. There was a lot made of the fact that both
    countries were taking their missiles off alert, retargeting
    them, and so on. How much of that is accurate?
        Are our missiles still on alert? Are the Russian missiles
    still on alert? Are our bombers still on alert? Are they
    targeted? Is our SIOP the same and are our missiles targeted
    accordingly?
        General Shalikashvili. Our missiles are still on alert. Our
    nuclear submarines are still on alert. Our bombers are not on
    day to day alert.
        The missiles, while we still have a SIOP, the missiles
    themselves, on a day-to-day basis, are not targeted against
    their actual targets. They are targeted at a point in the
    ocean. In this way, if there is a miscalculation or something,
    or if something goes wrong, they will not go and hit whatever
    the target is in Russia, but they will go in the ocean.
        They can be retargeted very quickly. The objective is
    really as a safety measure, that if something were to go wrong,
    that missile would not fly and hit Vladivostok or somewhere,
    but would hit an ocean area.
        The Russians say they have done the same thing. We have not
    indication that they have not. But we have no indication that
    they have. This is not an agreement that was reached based upon
    verification and so on. This was a confidence building measure
    where both countries agreed that we do so and retarget their
    missiles from their actual targets for the safety reason that I
    just outlined.
        Ours I can assure you are not targeted on actual targets.
        Senator Bumpers. Are their missiles as secure from
    accidental launch or even intentional, say a rogue, launch, as
    ours are?
        General Shalikashvili. As far as we know, they are.
        Early on, in a Nunn-Lugar effort, I was on the team that
    traveled to Russia back and forth. We made the first attempts,
    the first contacts with the Russians. So at least the first
    year of that program I spent quite a bit of time with the
    Russians who worked these issues.
        It is fair to say that our system, while not only
    mechanically safe, also relies an awful lot on the reliability
    of human beings--our reliability program. So two men control
    and rely on two reliable individuals.
        The Russians all along knew that they could rely less on
    people and had to rely more on mechanical systems. So they
    actually have more mechanical systems that keep a missile from
    being launched than even we do because of the concern they have
    had all along.
        It manifests itself in such things, for instance, as in the
    past, when we still had tactical nuclear weapons, we would have
    them all the way down to firing units. The Russians never would
    do that because they were not quite sure that they could trust
    people down there.
        So they retained them, the weapon itself, and controlled it
    much higher because of that.
        As far as we know, their mechanical systems for securing
    their weapons and their launch codes are still very secure.
    [Deleted.] We ought not to be surprised by it. I mean, these
    are people who have not been paid. They have to go scavenge for
    food and so on.
        There must be some cracks in that.

                           Ballistic missile defense

        Senator Bumpers. General, do you agree with the three plus
    three ballistic missile defense program? It is two plus three
    now, I guess.
        General Shalikashvili. I believe, first of all, that our
    priorities are right, that the first priority, because the
    threat is there, should be theater ballistic missiles defenses.
    Second it should be the national missile defenses. I believe
    that this Nation requires a national missile defense.
        I do believe that the way Secretary Perry had outlined it
    is about right, that we continue to go to the year 2000, I
    guess, and try to get the best technology, and be ready to go
    into production.
        If the threat has materialized by then, as some say it
    will, then we should go right on and field the best system that
    we can. Scientists tell us it will take about 3 years.
        If on that day the threat has not materialized, as some now
    think it will, then we ought to take the extra year or how many
    we have to continue to improve our technology so that when we
    do field and spend that money, we are buying ourselves the best
    possible system we can.
        There is no doubt in my mind that this Nation needs a
    national missile defense.
        Senator Bumpers. Not just any old missile defense, though.
        General Shalikashvili. Yes.
        Senator Bumpers. But one that we have really carefully
    planned out.
        General Shalikashvili. The best possible that money and
    time will allow us to field.
        Senator Bumpers. General, let me just close with two
    things.
        No. 1, I read an article in the Omaha World Herald dated
    February 20 quoting you as saying that we are being forced to
    maintain more ballistic missiles, more ICBM's than we really
    need to because the Russians have failed to ratify START II. I
    certainly agree with that.
        I don't want to belabor that, but let me say one other
    thing.
        By all the accounts I read, of course, your No. 1 priority
    and the place you think that defense is being hurt most is in
    procurement. I do not have any judgment on that. I accept your
    judgment on it.

                                  F-22 expense

        But I will say this. I cannot for the life of me reach a
    rationale that makes very much sense to me for building the F-
    22 fighter. The plane is prodigiously expensive. The 18E/F will
    be more than adequate to meet any threat between now and the
    year 2015, when the Joint Strike Fighter should be onboard.
        The idea of paying what will ultimately be $180 million per
    copy for 438 airplanes when you are desperate for something a
    lot less exotic and things that we need a lot more than we need
    the F-22 is, well, as I say, I have felt this way for the last
    2 years. We'll take another shot at the F-22 this year on the
    floor of the Senate. We will almost certainly defeat it. But,
    as Uncle Earl Long says, them's my views.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you, sir.
        I am going to yield to Senator Cochran.
        General, I have to go to another meeting at 11:45. I do
    want to thank you again for your courtesy. We have two Senators
    left who want to ask questions.
        I would like to suggest that sometime later in the year we
    come over your way and have a briefing from the individual
    members of your staffs--Army, Navy, Air Force, and Marines--and
    see if we could not go through not a question and answer
    session but just an extension of some of the things that we
    have discussed here so that we will be better informed before
    we mark up the bill.
        General Shalikashvili. Sure. Delighted to.
        Senator Cochran.

                              Russian naval forces

        Senator Cochran. Thank you, Mr. Chairman.
        General, one thing that I notice is missing from the global
    overview is an assessment of the operational naval forces of
    Russia. I think on the chart that you used, chart No. 5, it
    says Navy, [deleted]. The other units, at least the ground
    force and the Army is described and the total force is
    described with Air Force select units, and there is the nuclear
    capability.
        To what extent is Russia maintaining an operational navy
    with combatants that are at sea and conducting missions?
        General Shalikashvili. I think I am correct when I tell you
    that the [deleted].
        Readiness is uneven because selected units get more
    training and that even takes more away from others.
        I, like you, probably have seen all the photographs of
    ships in various ports. Some of it is misleading. You have to
    remember that, for instance, at the height of the cold war,
    they had some [deleted] surface combatants and they are down
    now to about [deleted] number. So what we see and what some
    people characterize as the fleet going to pot is they see those
    that they have not spent money on disassembling. They just sit
    there.
        The other fleet, the other ships are still seaworthy and
    operational. Certainly when you look at [deleted].
        So it is an uneven picture, like it is in the other forces.
    We should never write them off. But we also should recognize
    that they have come down significantly from what they were.
        Senator Cochran. Are they engaged, if you know, in any
    modernization in the Navy? Are they building new ships? Are
    they developing new weapon systems for the ships? Do you know?
        General Shalikashvili. I would have to give you that for
    the record. I know what they do in the submarine business, but
    I don't know for surface combatants. I just don't have that at
    my fingertips.
        [The information follows:]

        The Russian Navy remains in a critical period. The
    continued [deleted]. Naval leaders are counting on [deleted].
    Over the past 5 years, there have been limited attempts to
    [deleted]. However, most of these [deleted] to the order of
    battle. The most successful aspects of [deleted] has been in
    the area of [deleted].
        Russian surface warship construction is [deleted]. Since
    1991, there have been [deleted]. It is unlikely that any of the
    remaining SOVREMENNYY Class destroyers currently under
    construction will be finished. [Deleted.]
        Regarding long-term construction plans for future units,
    [deleted].
        The incomplete carrier VARYAG has been sold for scrap and
    is currently being stripped of electronics and weapons. The
    KUZNETSOV, Russia's only operational aircraft carrier, is
    [deleted]. Naval aviation procurement is [deleted].
        No further [deleted] is projected through [deleted]. We
    expect the first unit of [deleted] to begin sea trials circa
    [deleted]. The first units of a new series of [deleted]
    projected to initiate trials in [deleted] is expected each
    year, with construction [deleted].

                               Naval procurement

        Senator Cochran. In India, I know that they are involved in
    a navy building program and have plans for amphibious exercises
    and the like that we hear about. I know that there may be other
    countries, though I don't know about China and the extent to
    which they are involved or Iran, purchasing ships from Russia
    or other sources. I am concerned that when you talk about the
    fact that your goals for procurement are being met with a $60
    billion commitment to procurement, in our plans for our Navy,
    it seems that we are going to be building fewer ships over time
    under the procurement plans that we know about. And, instead of
    our being able to deploy a 346 ships Navy, as we have right
    now, we are well on our way toward one-half that as a
    capability in our naval forces.
        Is this an area where we should be concerned? Should we
    argue with the administration, for example, over these
    decisions? I am inclined to think that we should.
        General Shalikashvili. I have been testifying before our
    committees for the last 2 years--this is the third year--that
    we are significantly underfunded for procurement. And this is
    just for the procurement, for the things that we have on the
    books today. This is for the things that we know will break due
    to usage, whether they are marine tents or trucks, or whether
    they are the Navy ships.
        The $60 billion that I say is the procurement you need to
    buy what you are wearing out and to buy the programs that we
    now all testify before you about. We testified before you that
    we do not have a ship building program that will sustain the
    kind of Navy you just mentioned.
        So this all comes on top of that.
        I was talking that it takes $60 billion to buy those things
    that I just mentioned. Certainly the Navy is a concern to me.
    The ``Quadriennial Defense Review'' is going to be the vehicle
    by which we, the Chiefs, will try to make clear what
    adjustments we need first of all in the way we manage to free
    up some money--and some of it can be done--what changes we need
    to make in some programs, which can be done, in order to buy
    the things we cannot buy. But we need to buy two things,
    Senator Cochran.
        We have the force today. The ``Quadriennial Defense
    Review'' is just a few years out there, in 2005. Then we need
    to concentrate on the force out there, in 2010, 2015, 2020, the
    kind of force that we need. We have to make sure that, as we
    pass through the eye of the needle that is the ``Quadriennial
    Defense Review,'' we are getting actually to the force we want
    to get.
        Why is this important? Because the things we are now
    talking about buying are today's technology. We need to be sure
    that 10, 15 years from now, 20 years from now, when we once
    again will have perhaps another peer competitor, we have now
    invested in technologies and things and we must have a force
    that can still be the best force in the world.
        So it is not good enough to just look here. We really need
    to look beyond it. For that, we need to be able to do business
    much more efficiently than we do now, not only to recapitalize
    our Navy but also to begin to buy the technologies for
    tomorrow.
        If we don't, if we just solve the ``Quadriennial Defense
    Review'' problem here, we will just have moved the problem from
    here to there.

                         ``Quadrennial Defense Review''

        Senator Cochran. It seems that the President's budget,
    which, of course, is a proposal for multiyear spending, is
    going to be the policy while you are going through this QDR
    exercise. I don't know how you are going to catch up and try to
    undo what is being done now with the defense budget unless the
    Congress asserts itself and tries to be an influence in that
    regard.
        We would like to have the QDR right now so that we could be
    guided. What we are guided by is the annual testimony from
    military leaders and others, who can give us information about
    this. It puts an enormous responsibility on this committee, as
    I see it. So many of us are taking this very seriously.
        For instance, I wonder if we shouldn't start now making
    some decisions about changes in policy, such as the deployment
    of such huge numbers of personnel in so-called permanent
    positions overseas--your charts were showing the 40,000 who are
    over there around the world in special operations. Of course,
    that is just a very small part of our overseas commitment.
        Visiting, as we have, the Middle East, we see the permanent
    base being established. It looks permanent. Well, not right
    now, it doesn't. But they are building permanent things in
    Saudi Arabia and in Aviano. They are increasing the commitments
    there for construction.
        You mentioned Qatar and some other places in your overview.
    Then you look at Okinawa, where we are changing the
    configuration there, trying to map out plans for more or less a
    permanent deployment position there. In South Korea, everything
    is hardened stuff. It looks like we're there forever.
        In Germany, I have not been there recently to look at those
    facilities and bases, but I don't see any change. Everything
    that I see going on is for more and bigger, more expensive, and
    for longer duration. There is nothing temporary about these
    things.
        How in the world are we going to add money to procurement
    or to deal with the problem of downsizing the Navy forces when
    the global overview shows that we are going to need more forces
    that can move around quickly and not fewer.
        I am very concerned about this. We see these other
    countries, many of them, being very adventuresome, particularly
    in the missile area. And here we are, negotiating a demarcation
    on ABM to limit the effectiveness of our theater missile
    defense--over your objection, I assume. I know that in past
    reports you have argued against making any further concessions
    in that area and even to roll back proposals that we have made
    to the Russians. But here our negotiators are over there
    continuing to negotiate. What are they negotiating?
        That is just another factor that bothers me right now, and
    very seriously because this goes to the heart of our capability
    to protect the security of our Nation.
        This administration is off on these rabbit hunts. They are
    chasing rabbits. I don't understand it.
        What is your reaction to the last thing, the negotiations
    on demarcation?

                                   ABM talks

        General Shalikashvili. You are correct. I have been of the
    view that there was a period of time, probably 2 years ago now,
    when we had gone further than we should have. I then wrote a
    letter and said that we not only should stop and not go any
    further, but that if the opportunity presents itself, to roll
    it back.
        Well, the opportunity presented itself and we rolled it
    back. So we were all right.
        Since that time, I have maintained that, and that is one of
    the reasons that to this day we don't have a theater missile
    defense [TMD] demarcation agreement, because our position is
    such that, at least so far, the Russians have not been willing
    to accept it.
        I meet with the Chiefs frequently on this subject, have met
    within the last 2 weeks on that subject, and we make it very
    clear what our red lines are on that issue.
        Now, obviously, ultimately it is the decision of the
    President to do what he wants to. But I also have firm views
    that we must not allow an agreement to limit the technologies
    that we can offer for the protection of our troops.
        Senator Cochran. How about our citizens as well.
        General Shalikashvili. Yes; and our citizens.
        So I feel very strongly that any offer that limits, that
    puts a gate on the technology, is not the right thing.
        It is perfectly all right if you want to talk about what we
    will test it against. But don't ask us to put Governors on a
    missile, or whatever.
        May I address the fact that you say it looks all permanent
    outside, like it is growing? Overseas we have significantly
    reduced our presence. When I was SACEUR and Commander in
    Europe, we had 345,000 Americans stationed in Europe. We have
    100,000 stationed now. So it is not that we have not gone back.
        In the Middle East, you saw us on a permanent base. That is
    not our base. We don't own a piece of it. It is the Saudis'
    base. They have been building it. We said while you're building
    it and while we're still there can we live there because it is
    safer than where you had us before. It's the same with the
    housing area. We didn't pay a penny for it. They pay for it.
    It's their housing area and they let us move into it.
        So it is permanent but it is not permanent because of us.
        I know that there were some unfortunate things said to you
    that we are there until hell freezes over or such. I will tell
    you that I think it is fair to say we are there as long as
    Saddam Hussein presents a threat to our interests, the oil
    fields in that area. If Saddam Hussein were to be replaced
    tomorrow by someone who is not, we would be out of there in a
    flash other than for our prepositioned equipment. We have no
    interest in staying there.
        I think that is fair for the administration to say and it
    is certainly fair for this guy, sitting here and testifying
    before you, to say.
        Senator Cochran. I can understand that threat and our
    security interests in that area a lot better than I can in
    Korea right now, for example.
        Does it seem to you that there are any likely places where,
    even in the QDR, we are to expect some policy changes about
    these deployments?
        General Shalikashvili. The QDR is a difficult vehicle to
    get at that. We are there because the Presidential policy says
    we are going to be there. It is not a military issue and the
    QDR deals with military issues.
        So the QDR is not the right vehicle to get us out of an
    overseas deployment. What the QDR will tell you is
    recommendations on how to fight the forces, what size forces
    should be, what programs we should have, how we should train
    them, recruit them, and so on. Also it's how we should manage
    ourselves, how many bases we need on which to station, how do
    we procure things. We have made some great advances in
    procurement, but we still have some awful stories where to buy
    a $12 part you need $250 in paperwork. That's nonsense.
        Senator Cochran [presiding]. Right. That needs to be
    changed.
        Thank you very much, General.
        Senator Hutchison.
        Senator Hutchison. Thank you.
        General, I have several areas that I want to ask you about.
    The first one is Mexico.
        There is no CINC real responsibility for Mexico. Do you
    think with what we are seeing in the drug situation, the
    corruption, and the destabilization of the economy, that that
    should be something SOUTHCOM should actually have
    responsibility for? Should we have more of an interest there?
        General Shalikashvili. I am of the view, Senator Hutchison,
    that it would be best if we had a regional CINC responsible for
    Mexico. Mexico has repeatedly refused to go along with that
    because they feel that if Mexico were to be responding to a
    regional CINC, they would lose their direct contact with
    Washington. They feel they have a special status with
    Washington because they do not report to a CINC. They report
    directly to Washington.
        So from a military point of view, I agree with you fully. I
    just cannot be that sure that we can make that happen.
        If enough of us who think like that talked up the issue and
    convinced the Mexicans that they would really benefit by it as
    well--because they would have a CINC who would visit, work the
    military to military issues with them and help them--that would
    be useful. Certainly Gen. Wes Clark would be delighted to do
    that, and Barry McCaffrey before him wanted to do that. We were
    just unsuccessful.
        Senator Hutchison. It also seems that we might have the
    ability--and God knows we need every piece of help we can get
    in this drug issue--and it could be that maybe there could be
    more cooperation if we had more direct contact at any and every
    level between our two countries. They have military people in
    their drug enforcement.
        I am just becoming increasingly concerned about Mexico. The
    recent things that have happened in the drug area are just
    scary. I truly believe the President is trying, and I think the
    Attorney General is trying. But I think the corruption is so
    deep and so embedded that, well, I hope it is not hopeless. But
    it's just not enough.
        General Shalikashvili. Yes; we need to keep pushing that, I
    think. I will take that up again.
        Senator Hutchison. If you could, I think it would be
    certainly something that will put it more on a front burner.
    Then perhaps we might make some progress there.
        General Shalikashvili. OK.

                            Nuclear weapons testing

        Senator Hutchison. Second, I am always interested in the
    Department of Energy's role in the maintenance and storage of
    our nuclear stockpile. I would like to ask you a general
    question.
        Are you confident that they are doing everything that you
    think is prudent in maintaining and storing our weapons? Do you
    think we are maintaining and storing enough? And do you think
    we can rely on a safe and reliable nuclear stockpile when we
    have banned any testing?
        General Shalikashvili. The answer is yes, and let me tell
    you what I base this on.
        I think it is 2 years ago that the President established a
    system where each year the Secretary of Defense, the Secretary
    of Energy, and the Commander of our Strategic Forces, now
    General Habiger in Omaha, have to certify that the stockpile is
    safe and reliable. The system is such that if any one of them
    reports that it is not so, then the President has to consult
    with Congress on that issue.
        Senator Hutchison. How do they tell when you cannot
    actually test? Do you think the computer modeling is
    sufficient? Do you think the testing is sufficient when you
    can't test?
        General Shalikashvili. The Energy Department has proposed
    and the Secretary of Defense has agreed with the establishment
    of a science-based stockpile verification program. It is a very
    costly program. To stand it up--and I might have my number off
    but not by much--it is about $4 billion a year, to establish
    the laboratories, the computer suites, and all of that, to
    establish it.
        What I monitor is whether--this year, for instance, in the
    energy budget there is approximately $4 billion toward the
    science-based stockpile verification program. Just 10 days ago
    I was in Omaha to get a briefing from General Habiger on how he
    is coming along on making the judgment that this year the
    stockpile is still safe and reliable.
        Not only is he in constant communications with the nuclear
    laboratory directors who work that issue, he also has a panel
    of prominent experts on the subject who report to him. Based
    upon his observations, because he monitors what is on the
    missiles and so on, his discussions with the labs and the
    report that he gets from the panel that is established just to
    answer that question, last year, for the first time, he made
    the judgment that it was safe. He tells me that, unless
    something comes up before he reports again, he is going to
    again certify this year.
        With each year that goes by and we are further and further
    away from having done the last test, it will become more and
    more difficult. That is why it is very important that we do not
    allow the energy budget to slip, but continue working on this
    science-based stockpile verification program and that we get
    this thing operating.
        But even then, Senator, we won't know whether that will be
    sufficient not to have to test. What we are talking about is
    the best judgment by scientists that they will be able to
    determine the reliability through these technical methods.
        Senator Hutchison. Do you think we should have some time at
    which we would do some testing just to see if all of these
    great assumptions are, in fact, true?
        How can we just sit here and say gee, we really hope this
    works and then be in a situation of dire emergency and have
    them fizzle?
        General Shalikashvili. I don't know. I won't pretend to
    understand the physics of this enough. But I did meet with the
    nuclear laboratory directors and we talked about this at great
    length.
        They are all convinced that you can do that. But when I ask
    them for a guarantee, they cannot give it to you until all of
    the pieces are stood up. Obviously, if we stand it up, and we
    cannot do that, then we will have to go back to the President
    and say we will have to test.
        Hopefully, it will work out. But we are still a number of
    years away before we will have that all put together so that we
    can tell you for sure whether it will work or not.
        Senator Hutchison. Well, mark one Senator down as
    skeptical.
        General Shalikashvili. Mark one Chairman of the Joint
    Chiefs of Staff joining you in that skepticism. I just don't
    know.
        But I know that if you do not help us to make sure that
    energy puts that money against it and does not siphon it off
    for something else, then I can assure you we won't get there
    from here.
        Senator Hutchison. Please do everything you can to keep the
    warning flag up, because there are some areas in which we
    cannot afford to make a mistake. This seems to me to be one of
    them.

                                Missile defenses

        Along the same line, the missile defense system, why not
    deploy now?
        General Shalikashvili. What would you do different if you
    deployed now is the question that I ask myself. I think if we
    made the decision to deploy now, then we would still do for the
    next 2\1/2\ years or however long the same things and then go
    into deployment. We would then in essence go to the technology
    that we now have. If we make the decision 2\1/2\ years from now
    that no, we have to deploy, then we have not lost anything. If
    we say no, we have an extra year or two, then we have bought
    ourselves 2 more years to continue to improve it.
        That is the only difference.
        Senator Hutchison. Well, you cannot realistically say that
    we are not going to be under threat 2 years from now from rogue
    nations with ballistic missile capabilities.
        General Shalikashvili. I can only point out to you that
    about 2 years ago, I think, or so, there were statements made
    that the [deleted].
        But if there is, then we haven't lost anything. We just go
    on and go into production.
        Senator Hutchison. I do not understand why we would wait. I
    mean, particularly, I think one of those countries that you
    mentioned could become hostile. I hope not. I hope that we do
    everything possible to avoid that. But I just don't understand,
    knowing that we are talking about a range that would reach this
    country, but we are also talking theater missile defense. I
    mean, why not deploy now? The ultimate leverage is intercepting
    in the upward trajectory. Why not deploy now? Why not do
    everything we can to get that defense and then we will not have
    to worry about that issue?
        General Shalikashvili. Part of the reason is because we are
    pushing technologies. THAAD is the tactical ballistic missile
    system that the Army is developing. That is a perfect example.
        We are behind. Why are we behind? It's because we have not
    figured out yet how to hit the incoming missile with THAAD.
    That is our problem.
        We were going to have another test today, but it has been
    postponed again. I understand now it is going to be tomorrow,
    and I pray we hit the damn target missile.
        But if we don't, I don't know where we are going to go. And
    that is my highest priority, to get that kind of system.
        Senator Hutchison. It seems that if we would begin in
    earnest with the technological advances, waiting to see if
    perhaps there won't be any need for it, which seems like pie in
    the sky for me--why wouldn't we go in full force? We have our
    men and women in the field right now. We have borders that
    basically can walk across in our country. You could have a
    missile come in to Mexico from somebody, some terrorist
    organization.
        So I don't understand why we don't go full throttle on this
    issue. I just don't understand it.
        General Shalikashvili. I share with you going full throttle
    on the development of the thing. I think once you accept that
    this Nation needs a missile defense, it isn't a question of
    trying to hide it or trying to get around it or something. This
    Nation needs a missile defense.
        Senator Hutchison. Is there any question in your mind on
    that question?
        General Shalikashvili. No; no.
        Senator Hutchison. So we do need one?
        General Shalikashvili. We need a missile defense.
        Senator Hutchison. OK. Now what's the next step?
        General Shalikashvili. We need then the best missile
    defense at the time that we need it. Right now, I think we have
    the requirement to go full speed to develop the best possible
    system. If 3 years from now--or I guess now 2\1/2\ years from
    now--the threat is there, as you indicate and others indicate
    it will be there, then we ought to, without stopping to pause
    at all, just go on and start the fielding so that 3 years later
    we actually have a system. But you know that that system will
    not be the best technology that we can have.
        Scientists will tell you that, that if we can buy another
    year or two, we can get a better system.
        Right now, this is the first time we are putting this
    together. It's not like we have a long experience of defeating
    missiles in space. This is the first thing we are doing.
        So the more we can be sure that we have it right, the
    better it is. Again, I just go back on the one hand to what is
    happening to the threat because the [deleted].
        We, too, are having problems and THAAD is just an example
    of it.
        Senator Hutchison [presiding]. Well, you have more than
    just nuclear capabilities out there. You've got roughly 30
    countries with ballistic missile capabilities. Many of those
    don't have nuclear, but they have chemical and biological. So I
    don't know why there should be any question. Most certainly I
    think we have to be armed regardless of what the threat of the
    moment might be in the year 2000.
        We know China is a potential always, and I think we just
    have to be realistic if we are going to remain the superpower
    of the world.
        I don't understand why we wouldn't go full force and why
    there is any hesitancy on anyone's part in this administration
    about doing that. Of course, that is a fundamental difference
    we have.
        It seems to me that we are dreaming if we think in 2 years
    we are going to say well, there is no need for a missile
    defense system.

                       Humanitarian/peacekeeping missions

        Let me move on to one other area.
        I am really open on this subject, now, unlike the other
    questions I have asked you, in which my mind is already made
    up. The question I am going to ask you is really a question of
    should it be a consideration that we would have a section of
    the armed forces, particularly the Army, in which people would
    sign up and agree that they wanted to do humanitarian/
    peacekeeping type of missions.
        You know some of the concerns that we hear are that a lot
    of people do not feel like they signed up to capture war lords
    or do missions like Haiti, even Bosnia, and we know the
    training is different for being a warrior that is going to
    fight versus someone who is going to feed hungry children, or
    build runways, or fight fires, or even keep warring factions
    apart with the mission of not getting involved.
        Is there a place for that or is that just not realistic?
        General Shalikashvili. I have been asked that question very
    often. My answer has always been that I would prefer we not do
    that. I say this for a couple of reasons.
        I think we maintain armed forces first and foremost to
    fight and win our nation's wars. We should not set aside a
    piece of our armed forces and say you guys are peacekeepers.
        First of all, they will quickly become second-class
    citizens within the culture of the military. Second, to be a
    good peacekeeper I think you, first and foremost, have to be
    trained in your military specialty. So if you are an engineer,
    you need to be the best combat engineer. If you are an
    infantryman, you need to be the best infantryman in the world,
    and so on. We have seen that in many places.
        In my experience in northern Iraq, when I came out of the
    Operation Provide Comfort to bring the Kurds out of the
    mountains and back into Iraq, it was clear that what I needed
    most were the combat soldiers that understood their jobs. First
    of all, they will protect themselves properly. When they run
    into a warlord or someone, they will know what to do. They'll
    know how to respond and so on. And you won't have the sort of
    mistreatment of peacekeepers and the national shame, almost,
    like you saw in UNPROFOR in Bosnia, where someone captures
    peacekeepers and chains them down.
        If those soldiers had been trained properly, led properly,
    and had had the right rules of engagement, you would not have
    seen that. So it is not fair to them.
        Finally, we are now so small that to carve out 20,000 or
    whatever and say you guys go to the Bosnias and the Haitis from
    now on and the rest of them will get ready in case there is a
    real conflict, we just don't have that flexibility any longer.
    We need everyone now to be hitting at 150 percent and on all
    cylinders.
        I believe the Americans, surprisingly enough, are the best
    keepers because we are, first and foremost, the best soldiers
    in the world. And look at what happened in Bosnia. When NATO
    under our leadership moved in and we moved in an Army division,
    it turned around overnight. No one challenged us. Why--because
    we were the meanest looking guys and girls around and everyone
    knew that if they fooled around with them, some tanks were
    going to run over them.
        So I think that is the kind of peacekeeping you need. So I
    would ask you to let's train them first to be the best military
    and then let's give them the right kind of orientations and
    training before we send them into peacekeeping operations.
    Then, when they come back, let's reorient them again to be the
    best airmen, soldiers, marines, and sailors.
        Senator Hutchison. Do you find morale problems when you
    send people to build runways and feed starving children?
        General Shalikashvili. I don't think so. It depends on how
    long you keep them there. You know, there are two phenomena at
    play here. First of all, a young 18 or 19 year old seldom signs
    up to spend his tour at Fort Hood or Fort Riley or whatever. He
    really wants to get out to see the world and do exciting
    things, or he wouldn't have come into the military--he or she.
    So when you say that tomorrow you are going to a place you
    didn't even know about, it is exciting for most of them--not
    for all, but for the vast majority.
        If you go there and you tell him specifically what he needs
    to do and so on, and take care of him, and don't let him stay
    there too long, and then bring him back, he is all right then.
        I have talked to God knows how many who went and who came
    out of Haiti, out of Rwanda, out of Bosnia. I know you travel a
    lot. Next time you are in Germany, go to the place and talk to
    the folks who have been in Bosnia and see what they will tell
    you. Most of them tell me that they stayed there too long and
    they should not have stayed there that long. But they would not
    trade it because for them, that is the action today and they
    wanted to be there where the action was.
        Senator Hutchison. What seems to be the optimum amount of
    time that they can be in one of those operations and come back
    without a morale problem?
        General Shalikashvili. I think when you balance how long
    they should go for, what the cost is of moving them back and
    forth, and how long they can be gone--for instance, if he is a
    tanker, without shooting his tank gun so that he loses his
    proficiency--probably it is around 6 months.
        When we went to Bosnia the first year, we sent them there
    for 1 year. We did that because we wanted to save money. We did
    not want to have this huge force of 20,000 going home and
    coming all the time. It worked out well.
        But from the standpoint of the answer to your question, it
    was longer than it should have been. So now we have corrected
    that and we've sent this next batch in for 6 months. I think as
    long as I am chairman I am going to argue that 6 months is the
    right period.
        Senator Hutchison. I thank you very much.
        I am interested in the views on the peacekeeping. I
    certainly would not press it if it weren't something that you
    didn't think of as well.

                         Additional committee questions

        General Shalikashvili. I think you and many. And some
    countries do that. I just am against it.
        Senator Hutchison. All right.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                         Additional Committee Questions
                         u.s. direct enlargement costs
        Question. General Shalikashvili, can you explain how the Department
    arrived at its estimate of $150 to $200 million a year for NATO direct
    enlargement costs? How do current expenditures for NATO support these
    costs?
        Answer. The Administration, in its Report to Congress, developed
    illustrative cost estimates based on a set of assumptions that included
    admitting a small group of Central European countries to the Alliance
    in the first round of enlargement. Under these assumptions, DOD
    estimated that the total direct enlargement costs (those costs that are
    directly and exclusively tied to enlargement) would be approximately $9
    to $12 billion between 1997 and 2009.
        DOD further assumed that new members would essentially pay for
    their own direct enlargement costs, unless there was evidence of likely
    assistance from other sources or the enhancement would qualify for
    common funding (e.g., improvements to reception facilities). This means
    that new members would pay about $3 to $4.5 billion of the total direct
    enlargement cost. (This amounts to about 5 percent of their total
    projected defense budgets.)
        U.S. and current Allies would pay for the remainder of the direct
    enlargement costs largely based on our respective obligations to the
    NATO common budget. Under this criteria, our Allies would pay for $4.5
    to $5.5 billion (about 0.2 percent of their collective defense budgets)
    and the U.S. would pay for the remaining $1.5 to $2 billion (about 0.07
    percent of our defense budget). As NATO does not incur the majority of
    these direct enlargement costs until after the new members join the
    Alliance in 1999, it was estimated that U.S. direct enlargement costs
    would average $150 to $200 million per year for the ten year period
    following enlargement.
        No decision has been reached by the U.S. or NATO on the extent to
    which these direct enlargement costs will be additive or reprogrammed
    within current budgets.
                            new member requirements
        Question. Is it the intention of NATO or the Administration to wait
    until 1999 to admit new members? Is there a time line that outlines
    requirements for prospective members?
        Answer. President Clinton set the U.S. goal to admit new members to
    the Alliance by 1999--NATO's 50th anniversary and ten years after the
    fall of the Berlin Wall. NATO has adopted this goal and planning is
    well underway to meet this goal.
        The NATO military staffs will focus on those countries invited to
    join the Alliance after the July Summit in Madrid. NATO will build on
    the experience these countries have gained through the Partnership for
    Peace program. The intent is to begin to outline military force
    requirements for each of these countries later this year, and to begin
    developing force proposals and goals by mid-1998 so that the new member
    requirements can be fully integrated in NATO's defense planning process
    when they join the Alliance in 1999.
                           southwest asia operations
        Question. General Shalikashvili, can you provide us with an
    explanation for why operations in Southwest Asia, which have been
    treated as contingency operations in the past, are now considered to be
    a permanent part of the DOD requirement?
        Answer. I do not consider our forward presence in Southwest Asia a
    permanent part of the DOD requirement, regardless of Service budget
    submissions. Our forces are there as deterrent forces responding to
    serious Iraqi and Iranian threats to our vital interests and those of
    our allies and regional partners. They also enforce U.N. Security
    Council resolutions against Iraq, and are prepared to respond to
    threatening actions by Saddam Hussein. We provide this deterrent force
    by rotational deployments of air and naval assets, frequent combined
    exercises with Gulf countries, and an interim PATRIOT air defense
    deployment. We expect this deterrence mission to continue because the
    threats we face there are not expected to be reduced in the near term.
        Question. During the Committee's recent visit to Kuwait and Saudi
    Arabia, we saw many indications that point towards a permanent presence
    of U.S. forces in the Persian Gulf region, even though Congress has not
    been consulted on this significant change. What is your assessment?
    What sort of constraints do you place on the CINC's regarding
    expenditures prior to execution, particularly in these sort of
    peacekeeping operations?
        Answer. As I previously indicated, our force presence in the Gulf
    is not permanent but is there to deter threats to our interests and
    those of our regional partners. This mission is accomplished using
    rotational deployments that can be and are adjusted as contingencies
    demand. Recent force protection measures, such as consolidating U.S.
    military presence in Saudi Arabia at Prince Sultan Air Base, require
    extensive construction efforts to build secure, efficient, and
    reasonably comfortable facilities for our forces. The Saudis are paying
    for this construction. Such construction activities are efforts to
    improve the security of our forces and do not reflect a change in U.S.
    policy or the basis on which our forces are present in the region.
        There are constraints placed on CINC's' expenditures prior to
    execution. The costs of known contingency operations are estimated and
    budgeted by the Services and approved by OSD in the annual DOD budget
    process. For quickly emerging contingency operations that fall outside
    the PPBS cycle, other mechanisms are in effect. CINC's develop
    operational plans which are reviewed by DOD senior leadership before
    execution. As a part of the review process, OSD, the Joint Staff, and
    Services collaborate to develop a preliminary cost estimate of the
    operation. This estimate is provided to the SECDEF and CJCS for
    consideration during review and decision making. Where costs appear
    excessive, CINC's are directed to relook and modify the plan as needed.
    Additionally, after approval of the operational plan, cost estimates
    are developed for every modification order and deployment order, and
    provided to senior leaders for consideration during the order approval
    process. This measure was implemented in May of this year to ensure
    that costs are considered prior to execution. Other DOD initiatives are
    underway to further enhance contingency cost awareness and management,
    including oversight of contingency costs via the DEPSECDEF's Senior
    Readiness Oversight Committee, and oversight of process enhancements by
    a DOD senior steering committee.

                              subcommittee recess

        Senator Hutchison. I thank you very much and I think that
    does it for today.
        General Shalikashvili. Thank you very much.
        [Whereupon, at 12:15 p.m., Wednesday, March 5, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                           WEDNESDAY, MARCH 12, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Inouye, and Dorgan.

                             DEPARTMENT OF DEFENSE

                     Ballistic Missile Defense Organization

    STATEMENT OF LT. GEN. LESTER L. LYLES, USAF, DIRECTOR

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning, General. We do have some
    conflicts this morning. I have several hearings taking place at
    the same time.
        I am delighted to have a chance to have you present your
    statement today. I think it is one of the most difficult
    problems we will face in this committee this year, is how to
    handle funding for your organization.
        Our cochairman has had another subcommittee and will be
    along later, but I would like to proceed now. If you would, I
    would be pleased to hear your statement.
        General Lyles. Yes, sir, Mr. Chairman. It is a pleasure to
    be here. I do have a formal statement that I will submit for
    the record and a few brief remarks, if you do not mind, that I
    would like to read right now, if I could.
        Senator Stevens. Please.

                               opening statement

        General Lyles. It is a privilege to appear before you, Mr.
    Chairman and other members of the committee, to represent the
    Department's ballistic missile defense program. What I would
    like to do is to focus on the significant progress that we have
    made in all three areas of our ballistic missile defense
    activities over the past year.
        Mr. Chairman, when I joined the Ballistic Missile Defense
    Organization [BMDO] 6 months ago, I immediately appreciated the
    high level of support and strong commitment that this program
    enjoys both within the Department of Defense and certainly
    within Congress. It is clear to me that Secretary Cohen and
    obviously Secretary Perry before him, Deputy Secretary White,
    and Dr. Kaminski all strongly support this program.
        They are absolutely committed, as they have conveyed to me
    personally, to successfully fielding improved missile defenses
    for our warfighters, and as I have had the opportunity to meet
    with you and Members of Congress and staff, again, I am
    extremely pleased and obviously very much impressed with the
    strong support that we have for this very, very important
    mission from Congress.
        Mr. Chairman, as you know, missile defense is a critical
    element of the Department's and the country's overall
    counterproliferation strategy preventing, deterring, and
    defending against missile threats. Diplomacy and arms control
    obviously represent our first line of defense against ballistic
    missiles and weapons of mass destruction by preventing and
    reducing the threat.
        Deterrence represents our second layer of defense against
    ballistic missiles and weapons of mass destruction, and to the
    extent that these first two elements, threat reduction and
    deterrence, are not fully successful, we must be prepared to
    defend directly against a threat, and my job is to ensure that
    those defense elements are available, effective, and capable of
    meeting the warfighters' requirements for missile defense.
        When I was nominated to be the Director of BMDO, I was
    charged by both Dr. Kaminski and Dr. White to bring my 28 years
    of acquisition experience to bear on what I consider to be two
    very critical elements. First, to ensure that our acquisition
    programs are executable, the existing programs, and that we are
    trying to get rubber on the ramp as quickly and as
    expeditiously as possible.
        And second, restructuring our technology programs with an
    acquisition focus, making sure that they are tuned and really
    focused on getting into weapon systems.
        I consider this to be my personal charter, and a very, very
    important one, and, therefore, as I have noted to my people
    many times, Mr. Chairman, my management approach for our
    ballistic missile defense [BMD] programs can be described
    succinctly in three words: execute, execute, execute.
        In that light, I am very pleased to announce to you that we
    are aggressively moving out to protect our deployed forces with
    improved theater missile defense systems and to protect the
    U.S. homeland with a national missile defense system.

                            Theater missile defense

        Notwithstanding our recent failure, intercept failure with
    the THAAD program, the theater high altitude area defense
    system, which I will address shortly, over the last year we
    have had several significant and in some cases first-time
    successes in our theater missile defense program. This includes
    successful intercept tests by the Army's Patriot system, the
    Navy's area defense system, and even the Marine Corps' HAWK
    system. Mr. Chairman, these intercepts move us closer to our
    mutual goal of fielding highly effective theater missile
    defense systems.
        I would like to just briefly list and talk about some of
    those successes that we have enjoyed over the last several
    months. Recent combined systems tests involving Patriot, THAAD,
    Navy air, and HAWK, have provided us with the kind of
    information and data and operations of how to integrate battle
    management, the key glue for all of our missile defense
    systems, and that is, in fact, a major role of BMDO, to ensure
    that all of our systems operate as a family of systems, and
    that they can work and fight together.
        The Patriot air and missile defense system we are fielding
    today is much more capable than its gulf war predecessor. As an
    example, we recently completed fielding the first of three
    improvements that are part of the Patriot advance capabilities
    3, PAC-3, as we call it, for the Patriot system.
        We are scheduled to field the final phase, which consists
    of a full configuration 3 system, in fiscal year 1999. This
    will include the very critical hit-to-kill capability that we
    must have with PAC-3.
        Compared to the Patriot system in the gulf war, these
    improvements will provide a significant increase, almost an
    eightfold increase in defended area coverage, and, Mr.
    Chairman, I think we have in front of you a folder that shows a
    chart that illustrates the improvements that we have in the
    capabilities for Patriot versus what we had during the gulf
    war.
        As dramatic proof of our improved capabilities, on February
    8 last month an operational unit of Patriot warfighters,
    soldiers from the field, with PAC-3 configuration 2, both
    hardware and modifications, successfully engaged at Kwajalein
    missile range a Scud missile. This was a target missile that
    was fired toward Kwajalein.
        This was the first multiple engagement of Patriot which
    used both a PAC-2 and a guidance-enhanced missile to give us
    the capability to counter the threat. It was the first long-
    range intercept that we have done with the new, improved
    Patriot. The target was actually fired from some 320 kilometers
    away, and the first intercept of the PAC-2 against this
    configuration and model of Scud.
        I can talk about the actual model, because that information
    is now unclassified. This was an actual firing against an
    actual Scud, and I think this dramatically improves, or it
    shows the improved capabilities that we now have.
        We have a test upcoming, a different flight profile that is
    coming Monday, also at Kwajalein, a second of these series of
    tests involving another actual Scud, which will be fired and we
    will allow our Patriot system to intercept it.
        Likewise, Mr. Chairman, in the Marine Corps we have begun
    to field upgrades to the HAWK system. This follows a highly
    successful operational test series that was concluded last
    August, August 1996. The HAWK missile and the upgraded radar
    successfully engaged and destroyed multiple Lance targets and
    air-breathing drones, drones which are surrogates for cruise
    missiles. They have also demonstrated a very impressive kill
    rate.
        I think the next chart that is in your folder shows a
    picture of an actual intercept of one of the HAWK's against
    multiple engagements of Lance targets at White Sands, and we
    are now starting to deploy 1,000 lethality-enhanced missiles
    that will be fielded over the next 2 years to give us the kind
    of HAWK capability we need to have for our warfighters.
        On January 24, the Navy area defense program also
    successfully had an intercept. They intercepted a Lance missile
    at White Sands missile range; the standard missile block IV-A
    intercepted the target using its internal infrared terminal
    guidance system. The color photograph you have in your folder
    shows an actual photo from the telemetry and shows the very
    last scene that was picked up by the standard missile before
    the warhead destroyed the target.
        Mr. Chairman, within BMDO one of our most significant roles
    is to ensure that each of our theater missile defense systems
    are interoperable, that they can work not just alone but work
    with each other. We have been conducting several complex live
    tests to demonstrate this interoperability. We call these tests
    systems integrations tests, or SIT tests.
        The most recent one was held on February 21, and during
    this test, in addition to a Patriot radar, we also used a THAAD
    radar system, we had an aegis destroyer tracking the targets,
    we had them passing information and target cues to the Patriot
    system, we also had the joint tactical air-to-ground system, or
    JTAGS, passing on satellite information also to the Patriot
    radar and the Patriot battery. This test was a complete
    success.

                            National missile defense

        Mr. Chairman, if I could for a few minutes, let me turn to
    our national missile defense program. In the past, when we have
    talked about BMDO, we talked about the priorities of our
    organization. First, theater missile defense systems, second,
    national missile defense systems, and third, technology. Today,
    it is clear to me that BMDO really has two top priorities:
    obviously to field highly effective theater defense missile
    systems, but hand-in-glove with that is to develop and deploy
    and start deploying planning for a highly effective national
    missile defense.
        We are now up and running, Mr. Chairman, to do that, and I
    think we have made substantive progress in our total program.
    We are committed to developing a system that we can deploy
    rapidly, so we are already starting to focus our efforts over
    the last several months to not only firmly define the national
    missile defense system, but to actively engage in preliminary
    deployment planning to look at where we might do sites for our
    national missile defense system and to start the early process
    of planning for the deployment phase that will be so critical.
        Nonetheless, Mr. Chairman, I think I owe it to you, to the
    members of the committee, and to the rest of the Congress, to
    tell you that I characterize our three plus three national
    missile defense strategy as being very high risk, not so much
    in terms of technology, not so much in terms of cost, but
    specifically in terms of the schedule that we are trying to
    engage.
        I think this is critically illustrated by our recent test
    failure that we had. We were attempting to do a sensitive fly-
    by test of the EKV, the exoatmospheric kill vehicle, in a
    seeker test. This is a major test to allow us to down-select
    and determine eventually who should be the contractor that
    builds the EKV for our national missile defense system.
        BMDO and the Army planned to launch the EKV a little over 1
    month ago. We wanted to use that test with some targets coming
    out of Vandenberg Air Force Base to characterize and understand
    in a sensor fly-by exactly the kind of performance we had in
    this one design of EKV.
        We were able to successfully launch the target. We launched
    the target from Vandenberg Air Force Base. We deployed the
    target generators that we had on the system. We had the targets
    in space. Unfortunately, we were unable to deploy the booster
    carrying the EKV.
        It turns out that it was a simple human error that caused
    an electrical failure and did not allow us to successfully
    launch the booster with the EKV.
        This was and is, it turned out, Mr. Chairman, a one-of-a-
    kind target vehicle, the one we launched from Vandenberg Air
    Force Base. We did not have backup targets, did not have backup
    target scenarios to be able to pull together and do another
    test in a very, very rapid manner.
        As a result of that, the single string failure, and I think
    we have lots of them in our very aggressive NMD program, we now
    are experiencing some serious delays in our ability to complete
    the EKV sensor test flights. We are now delayed until next
    January before we can repeat the exact test we tried to do this
    past January. We will be testing the second variant of this
    series of tests in the May timeframe, but we specifically lost
    time and incurred some dollar losses as a result of this
    particular situation.
        This illustrates to me the kind of single string, single
    failure mechanisms that we have potentially in the NMD program,
    and the reason why I characterize it as being very high risk.
        I want to reemphasize, however, Mr. Chairman, to you and
    the other Members of Congress, that I fully support the
    administration's three plus three NMD strategy. To me, it is
    the right one to do. It makes sense.
        We need to aggressively try to develop the capability as
    quickly as we possibly can. We need to get into an integrated
    test as quickly as we possibly can to be able then to make a
    deployment decision based on the threat, but as you can see
    from the illustration I gave you, the program has its risk
    elements, and I want to be very honest and open and tell you
    that it is high risk.

                               Support technology

        Let me shift to one last topic, Mr. Chairman. It is the
    subject of technology. The history of BMDO and its predecessor,
    SDIO, clearly demonstrates the strength and the importance of
    our technology investments. Like my predecessor, I consider
    that to be a strategic investment for the future.
        Yesterday's technology programs are the ones that are
    allowing us and giving us the potential opportunity to be able
    to do the things we are doing today in theater missile defense
    and also the things we are going to do for national missile
    defense.
        I would like to give you one specific example of how
    technology has already started to pay off. In April of last
    year, we launched the MSX program, the mid-course space
    experiment, a satellite to give us the capability to
    characterize ballistic missile signatures during the very, very
    critical mid-course phase of flight.
        Now, I think we all understand and we demonstrated that we
    can detect and pick up the launch of a ballistic missile threat
    with our current overhead sensors. What we are not able to do
    is to characterize exactly what happens when the postboost
    phase is over with. When the threat and the enemies have
    deployed either decoys or RV's, we need to be able to
    characterize and discriminate and understand what is the actual
    RV and what are chaff, penetration aids, or decoys.
        The mid-course space experiment, or MSX, was designed to
    give us exactly that kind of information, and during its
    lifetime, since we launched it last April and started gathering
    data last summer, we have already gathered billions of bits of
    data that are helping us to determine exactly the kind of
    information we need to be able to detect, track, and
    disseminate realistic targets against the background of the
    Earth and certainly the space background.
        The information we are getting out of MSX is illustrated in
    the photos in the chart that you have. The photo on the left-
    hand side shows an actual photo some 2,000 kilometers away,
    taken by one of the sensors on MSX.
        What you are looking at is a string of targets from a
    specific dedicated launch vehicle. There is an actual RV in
    there, and there are also lots of details and calibration
    objects. We were able, through this particular sensor on MSX,
    to be able to characterize exactly what is the RV and what are
    the decoys and calibration objects.
        This information will allow us to then develop algorithms
    so we can put them in our sensors so we can do this in a
    realistic operational scenario.
        The photo on the right-hand side is another photo of an RV
    taken against the background of the Earth's limb. The
    contrasting background of the warm atmosphere of the Earth
    resists the cold atmosphere of space. It is a very, very
    critical one, and we have illustrated in this particular photo
    that we can pick up and determine what the RV is, what the
    actual target RV is in this kind of scenario.
        The information for our space and missile-tracking system,
    as an example, SMTS, is going to benefit from MSX and the
    technology that we have demonstrated in those photos. We will
    continue doing this kind of test, and it will be very, very
    critical to the kind of capability we must have for the future.
        The bottom line of which is that we still need to continue
    to protect our technology program. It is a strategic investment
    both for today and certainly an investment for tomorrow.

                            THAAD test investigation

        Mr. Chairman, before I wrap up my statement, I need to talk
    a little bit about the failed test we had last week on the
    THAAD program. As you know, last Thursday we attempted to
    conduct an intercept for the theater high altitude area defense
    system, or the THAAD missile. The target was launched
    successfully at White Sands missile range. We launched the
    actual THAAD missile successfully. The radar and all the
    elements, the BMC\3\, command and control associated with the
    THAAD system, seemed to have worked perfectly.
        Unfortunately, we did not have a successful intercept. We
    have photos showing the very, very last minutes of the end
    game, where we were able to pick up not only the target but the
    intercept vehicle in the same frame. We were very, very close
    to an intercept.
        We think today, based on the latest information, that the
    altitude control system for the THAAD failed to operate
    properly. We had all the other critical elements operating
    perfectly, but we failed to have the altitude control necessary
    to divert the actual interceptor into the target vehicle.
        This is the fourth intercept miss that we have had on the
    THAAD program, and it causes us a lot of concerns. We have
    addressed, I think, most of the critical elements that we must
    have in the THAAD program, but each one of the failures that we
    have had to date have all been in the very, very critical end
    game, and that is where we have had different failure
    mechanisms each time.
        The failure this past Thursday was not like any of the
    other failure mechanisms, and each one of them was also very,
    very unique.
        As a result of that, I have commissioned a failure
    investigation team to be led by Brig. Gen. Dan Montgomery out
    of Huntsville, AL, to look at every element of the THAAD
    program. We are not going to just look at exactly what happened
    on this previous test. We are going to relook at the entire
    design, and design margins and reliability associated with the
    THAAD system. We will also look at other options we may have
    available to us to do the THAAD mission just to make sure we
    really understand what alternatives are ahead of us, and we
    will relook at the critical requirements we are trying to meet.
        This team was constituted as of this week. They are now up
    and running. I expect to have a final report back to me by the
    April timeframe and then we will make critical decisions
    relative to the rest of the THAAD program, and specifically the
    additional tests that are still ahead of us.
        I think it is important to remember, Mr. Chairman, that
    THAAD is still in a demonstration validation phase. We have
    been able to successfully do a lot of things, and I have a
    chart in your folder which I think shows the different
    successes we have had in the THAAD program, and this is exactly
    the kind of timeframe, during demonstration/validation, where
    we need to understand does everything work together perfectly,
    and where are there some things that we still need to do some
    additional testing on.
        I think the design of the THAAD system is still a very
    sound one. We are having engineering problems, the kind of
    engineering problems that we need to find out during the
    demonstration/validation phase, and we will find out exactly
    what is going on so that we will be able to complete a
    successful intercept and get on with this critical capability
    we have to have for our warfighters.

                               prepared statement

        Mr. Chairman, that completes my statement. I would be very
    happy to address any questions you might have on any elements
    of the rest of our missile defense program.
        Thank you very much.
        [The statement follows:]
                 Prepared Statement of Lt. Gen. Lester L. Lyles
        Mr. Chairman and Members of the Committee, it is my privilege to
    appear before you today to present the Department's Ballistic Missile
    Defense (BMD) program and budget for fiscal year 1998. I am
    particularly pleased to be able to report to the Committee significant
    progress in all three areas of the BMD program: Theater Missile
    Defense, National Missile Defense and BMD Technology. I look forward to
    outlining those significant accomplishments in just a few moments.
        At the same time, I think it is equally important that we recognize
    the challenges we still face in developing and fielding ballistic
    missile defenses--in many cases this really is ``rocket science.'' We
    are building highly sophisticated BMD systems, consisting of
    sophisticated sensors and interceptor missiles that incorporate state-
    of-the-art electronics, seekers, communications, avionics and
    propulsion. We are applying the very best talents that government and
    industry have to offer across all BMD programs. We will continue to
    reduce these risks by diligently applying our financial and personnel
    resources to ensure program success.
        My twenty eight years of experience in the United States Air Force,
    all of which has been involved in research, development and
    acquisition, tell me that we have structured the right program to
    address the existing and projected missile threat and that we are
    proceeding as rapidly as possible to field these systems. Where we have
    deployed upgrades to air and missile defense systems, it is clear that
    they are significant improvements over the capabilities our forces had
    in the Gulf War. But we cannot stop with these upgrades because the
    potential missile threat warrants continued development and deployment
    to ensure highly effective defenses.
        The Ballistic Missile Threat.--While the end of the Cold War
    signaled a reduction in the likelihood of global conflict, the threat
    from foreign theater missiles has grown steadily as sophisticated
    missile technology becomes available on a wider scale. The
    proliferation of weapons of mass destruction and the ballistic and
    cruise missiles that could deliver them pose a direct and immediate
    threat to the security of U.S. military forces and assets overseas, as
    well as our allies and friends.
        We have already witnessed the willingness of countries to use
    theater-class ballistic missiles for military purposes. Since 1980,
    ballistic missiles have been used in six regional conflicts. Recently,
    United Nations reports indicate that, in addition to the high explosive
    warheads used during the Gulf War, Iraq was prepared to use theater
    ballistic missiles with chemical and biological warheads. Fortunately,
    it did not do so.
        Strategic ballistic missiles, including intercontinental and
    submarine launched ballistic missiles (ICBM's and SLBM's) exist in
    abundance in the world today. Fortunately, the Intelligence Community
    rates the threat to the U.S. homeland from these existing missiles as
    low. The greater concern, however, stems from the emergence of a Third
    World long range missile threat to the United States.
        Theater Missile Assessment.--I must note that my organization is a
    consumer, not producer, of intelligence analyses on missile threats.
    Therefore, my testimony reflects the unclassified assessments provided
    by the intelligence community. The missile threat to our forward
    deployed forces, allies and friends involves a wide range of systems,
    including theater ballistic missiles and cruise missiles launched from
    sea, air and land platforms. Representative theater threats are
    illustrated in the chart below.

        These missiles represent a continually evolving threat, as
    increasing numbers of countries are acquiring these weapons due to
    their relatively low cost and the comparative ease with which they can
    be constructed. While the threat posed by these missiles is regional in
    nature, the trend is clearly in the direction of systems with
    increasing range, lethality, accuracy and sophistication. At the
    beginning of 1996, there were thousands of theater-class ballistic
    missiles in service in 30 non-NATO countries. In addition, nine of
    these same countries are reported to be developing nearly 20 new
    theater-class ballistic missiles. Even a relatively small number of
    ballistic missiles armed with weapons of mass destruction--chemical,
    biological or nuclear weapons--would dramatically raise the potential
    costs and risks of U.S. or coalition military operations.
        The cruise missile threat is also a growing concern. Currently 77
    nations possess cruise missiles, with 17 countries producing
    approximately 130 different types of cruise missiles. The majority of
    these systems are anti-ship cruise missiles. Land attack cruise
    missiles are being developed by 13 nations, and proliferation of
    advanced land attack cruise missiles is expected in about 10 to 15
    years. Like theater-class ballistic missiles, cruise missiles are
    inexpensive and the technology to build them is relatively easy to
    acquire. Combining these facts with their high degree of accuracy,
    mobility, survivability and multiple roles make cruise missiles an
    attractive weapon for ``rest of world'' nations. The threat posed by
    both ballistic and cruise missiles is likely to continue to evolve.
        The theater missile threat is here and now. It is widely dispersed
    and has to be taken very seriously. Our Theater Missile Defense program
    plays a critical role in the Department's overall Counterproliferation
    strategy to reduce, deter and defend against these and potential future
    threats. Our TMD program is structured to provide a highly effective,
    active defense against missile attacks.
        Strategic Missile Assessment.--In the case of nuclear strategic
    weapons, Russia has a significant capability for delivering these
    weapons with strategic weapon delivery systems--land-based and
    submarine-launched missiles and long range aircraft. China can also
    deliver these weapons with land-based and emerging sea-based ballistic
    missile capabilities. We do not see these systems as posing a threat to
    the United States in the foreseeable future. That is, we do not see an
    intent that goes with the capability. Even if that situation changes,
    we will continue to field a significant U.S. deterrent force.
        We do not see a near-term ballistic missile threat to U.S.
    territory from the so-called rogue nations, but we cannot be complacent
    about this assessment. The threat of long-range missiles from rogue
    nations could emerge in the future. The Intelligence Community
    estimates that this threat would take 15 years to develop, but could be
    accelerated if those nations acquired this capability from beyond their
    borders.
        This no longer makes sense. We cannot take lightly the emerging
    ballistic missile capability of a rogue nation to threaten any part of
    the United States. This is why the Department's three plus three NMD
    program is designed for a possible deployment as early as 2003--well
    ahead of the intelligence community's estimates for a potential Third
    World ICBM deployment. My staff and I are working closely with General
    Estes and his staff at U.S. Space Command to ensure that we develop an
    NMD system that meets the warfighter's requirements. General Estes and
    I want to ensure that the NMD system can be deployed in a timely
    manner, while effective against the identified threat.
        Fiscal Year 1998 Program and Budget.--In order to address the
    missile threat, the Department has structured a sound and affordable
    program for fiscal year 1998. The total fiscal year 1998 budget request
    for the Ballistic Missile Defense Organization is $2.589 billion. This
    includes $1.835 billion for Theater Missile Defense, $504 million for
    National Missile Defense, $250 million for Support Technologies. In
    addition, the Department is requesting $384 million in procurement
    funds for TMD systems, which were realigned to Army and Navy budgets.
    The following chart provides a detailed overview of funding for fiscal
    years 1996 through 1998. Of the total BMD budget request (BMDO and
    Service Procurement funds) for fiscal year 1998, TMD accounts for
    roughly 75 percent, NMD 17 percent and Technology 8 percent.

                 BALLISTIC MISSILE DEFENSE ORGANIZATION FUNDING
                            [TY dollars in millions]
    ------------------------------------------------------------------------
                                                   Fiscal year--
     Program                          --------------------------------------
     element           Program                          1997         1998
                                       1996 actual    estimate     estimate
    ------------------------------------------------------------------------
                   PROCUREMENT

      208863C HAWK Procurement            13.980       14.665  ...........
      208864C TMD BM/C\3\                 27.101       19.696  ...........
               Procurement
      208865C PAC-3 Procurement          285.989      219.413  ...........
      208867C Navy Area Wide              16.276        9.151  ...........
                                    ----------------------------------------
                    Total                343.346      262.925  ...........
                     Procurement
                                    ========================================
                      RDT&E

      602173C Support Technology--        96.092      102.510      101.932
               Applied Research
      603173C Support Technology--       130.611      251.294      147.557
               Advanced Technology
               Development
      603861C THAAD System--dem/val      565.818      341.307      294.647
      603863C HAWK--dem/val               22.819  ...........  ...........
      603864C TMD BM/C\3\--dem/val        27.147  ...........  ...........
      603867C Navy Area Wide--dem/       277.565       59.315  ...........
               val
      603868C Navy Theater Wide--        200.442      304.171      194.898
               dem/val
      603869C MEADS--dem/val (PD-V)       20.123       56.232       47.956
      603870C Boost Phase            ...........       23.276       12.885
               Intercept--dem/val
      603871C NMD--dem/val               730.656      828.864      504.091
      603872C Joint TMD--dem/val         429.137      506.492      542.619
      604861C THAAD System--EMD      ...........      277.508      261.480
      604864C TMD BM/C\3\--EMD            10.118  ...........  ...........
      604865C PAC-3--EMD                 352.547      381.092      206.057
      604866C PAC-3 Risk--EMD             23.358  ...........  ...........
      604867C Navy Area Wide--EMD    ...........      241.330      267.822
      605218C Management                 158.748  ...........  ...........
                                    ----------------------------------------
                    Total RDT&E        3,045.181    3,373.391    2,581.944
                                    ========================================
                      MILCON

      603865C PAC-3                        1.349  ...........  ...........
      603871C National Missile       ...........  ...........         .540
               Defense
      603872C Joint Theater Missile        1.642        1.404        1.965
               Defense
      604861C THAAD System                13.104  ...........        4.565
                                    ----------------------------------------
                    Total MILCON          16.095        1.404        7.070
                                    ----------------------------------------
                    Total BMDO         3,404.622    3,637.720    2,589.014
                     Program
    ------------------------------------------------------------------------
              Source: PB 98/99 CPS.

        TMD Procurement Funds.--The fiscal year 1998 budget request marks a
    significant change from previous budgets in that procurement funds for
    BMD programs reside in the Military Service budgets. For fiscal year
    1998, the Department is requesting $349 million for PAC-3 and $20
    million for TMD BMC\3\ in the Army budget, and $15.4 million for the
    Navy Area Defense in the Navy procurement budget.
        The Department shifted BMD procurement funds to the Services over
    the Future Year Defense Plan (FYDP) in recognition that our TMD
    programs will soon be transitioning to the procurement phase. For
    example, the THAAD system will transition to the EMD phase of the
    acquisition process in less than a year and the PAC-3 program is
    scheduled for a milestone III decision in 1999. Recently, the Under
    Secretary of Defense for Acquisition and Technology gave BMDO and the
    Navy permission to proceed into the EMD phase for Navy Area Defense. As
    these programs mature, it is important that increasing attention be
    placed on operational and logistical matters. These are the appropriate
    responsibilities of the Military Departments. By moving the procurement
    funding to the Services that will actually field and operate these
    systems, Service planning for deployment and operation can be more
    easily combined with manpower and force structure considerations.
        BMDO will continue to serve as the central DOD manager and
    integrator of the BMD mission, and will develop and maintain BMD
    architectures and ensure interoperability among systems. The Director
    of BMDO remains the Department's BMD Acquisition Executive. 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.
    Finally, procedures are being developed which will ensure that BMDO
    will review any proposed Service reprogramming, realignment or transfer
    of BMD program funds within the Services. As the BMD Acquisition
    Executive, I will have the opportunity to concur or non-concur with
    Service funding proposals that impact BMD programs. If I disagree with
    a Service proposal, I will work with that Service and the Department's
    senior leadership to ensure BMD programs are appropriately funded.
        Theater Missile Defense Programs.--Since the theater ballistic
    missile threat is diverse with respect to range and capability, and the
    assets we must protect are similarly diverse--from military forces,
    their assets and points of debarkation to population centers and
    regions--no single system can perform the entire TMD mission. This
    leads us to a ``family of systems'' approach to successfully defeat the
    theater missile threat. The family of systems approach will ensure a
    defense in depth, utilizing both lower-tier--those systems that
    intercept at relatively low altitudes within the atmosphere--and upper-
    tier systems--those that intercept missile targets outside the
    atmosphere and at longer ranges--to fully engage the theater threat and
    ensure highly effective defenses. Lower-tier programs include the
    Patriot Advanced Capability-3 (PAC-3), Navy Area Defense, and Medium
    Extended Air Defense System (MEADS). Theater High Altitude Area Defense
    (THAAD) and Navy Theater Wide systems comprise our upper-tier
    development efforts. In addition, the Air Force, in coordination with
    BMDO, is developing a boost-phase intercept system called the Airborne
    Laser (ABL). Finally, BMDO is developing the command and control
    mechanisms that will ensure these systems are interoperable.
    Lower Tier TMD Systems
        PAC-3.--The PATRIOT Advanced Capability-3 system builds on the
    existing PATRIOT air and missile defense infrastructure. Since the Gulf
    War, BMDO and the Army have significantly increased the effectiveness
    of the PATRIOT system. In the last few years we have fielded the PAC-2
    Guidance Enhanced Missile (GEM) to improve PATRIOT's accuracy against
    short-range ballistic missiles. In addition, the PAC-3 Configuration 1
    Air and Missile Defense System will be completely fielded and we have
    begun to field the PAC-3 Configuration 2, which uses both PAC-2 and GEM
    interceptors. It also incorporates modifications to the radar,
    communications system, remote launch capability, and other system
    improvements.
        On February 8, 1997, the PAC-3 Configuration 2 system, utilizing
    both PAC-2 and GEM interceptors, successfully engaged a theater-class
    ballistic missile to demonstrate system performance. The target missile
    was launched from Bigen Island toward the U.S. Army Kwajalein Atoll
    (USAKA) in the Central Pacific. The PATRIOT missile was launched from
    Meck Island within USAKA and intercepted the target over the broad
    ocean area. The objective of this mission was to obtain sensor data on
    the target and to demonstrate the effectiveness of the improved PATRIOT
    system against ballistic missiles.
        PAC-3 is a smaller interceptor which results in increased firepower
    (16 PAC-3 missiles per fire unit vice four PAC-2) and improved
    lethality (hit-to-kill intercepts). The new interceptors, when combined
    with other improvements to the system, will allow the PATRIOT air and
    missile defense system to increase its battlespace and range. Later
    this year, BMDO and the Army will begin flight tests of the PAC-3
    missile, leading up to a low rate initial production decision by the
    end of the calendar year. We are planning a First Unit Equipped (FUE)
    date for the fourth quarter of fiscal year 1999.
        Navy Area Defense.--This program represents a critical TMD
    capability that can take advantage of the strength and presence of our
    naval forces, and build upon the existing AEGIS/Standard Missile
    infrastructure. Naval vessels that are routinely deployed worldwide are
    currently in potential threat areas or can be rapidly redirected or
    repositioned. A Naval TMD capability can therefore be in place within a
    region of conflict to provide TMD protection for nearby land-based
    assets before hostilities erupt or before land-based defenses can be
    transported into the theater. Equally significant, Navy Area Defense
    can provide protection to critical points of debarkation, such as
    seaports and coastal airfields. Our Naval Area Defense program focuses
    on modifications to enable tactical ballistic missile detection,
    tracking and engagement with the AEGIS Weapon System and a modified
    Standard Missile II, Block IV.
        On January 24, 1997, the Navy Area Defense program successfully
    intercepted a Lance missile at White Sands Missile Range, New Mexico.
    The Standard Missile Block IVA intercepted the target using its
    infrared terminal guidance, and its blast fragmentation warhead
    completely destroyed the Lance missile. This test, which is required by
    the exit criteria for a milestone II decision, completed the
    demonstration of all the criteria needed for Navy Area Defense to
    proceed to the Engineering and Manufacturing Development phase of the
    acquisition process. As I noted a moment ago, the Under Secretary of
    Defense for Acquisition and Technology permitted BMDO and the Navy to
    proceed into the EMD phase based on this important accomplishment.
        User Operational Evaluation System (UOES) software will be
    available for testing and crew training in fiscal year 1998. UOES
    flight hardware will be available in 1999. UOES at sea testing will
    commence in 2000 after we complete EMD development flight testing at
    the White Sands Missile Range. BMDO and the Navy plan to field a UOES
    system for continued testing and training, as well as an emergency
    warfighting capability, upon the successful completion of the UOES
    testing in fiscal year 2000. The Navy Area Defense program will equip
    its first unit (FUE) in fiscal year 2002. The Navy has designated the
    U.S.S. Lake Erie (CG-70) and the U.S.S. Port Royal (CG-73) as the Aegis
    cruisers to support the Navy Area Defense UOES system.
        Medium Extended Air Defense System.--Operationally and tactically,
    our forces will likely fight on less dense battlefields, over greater
    expanses of land and with large gaps between friendly forces. Ground
    force commanders will incur risks as they constitute forces in major
    unit assembly areas upon arrival to a theater of operations. MEADS will
    play a key role in reducing these risks in future Army and Marine Corps
    operations because it is the only TMD system under consideration that
    can provide maneuver forces with 360 degree defense protection against
    short-range tactical ballistic missiles, cruise missiles and unmanned
    aerial vehicles.
        Both the Army and Marine Corps have requirements for such a system
    that can provide defense of vital corps and division assets associated
    with their maneuver forces. As such, this system must provide 360
    degree defense against multiple and simultaneous attacks. In addition,
    it must be available for immediate deployment for early entry
    operations within a theater, using C-141 transport aircraft. MEADS must
    also be transportable aboard C-130 aircraft and standard amphibious
    landing craft. Finally, it must be able to move rapidly and protect the
    maneuver force during offensive operations. MEADS is designed to
    perform these critical air and missile defense functions.
        In 1993 an Army/BMDO RDT&E cost estimate for a U.S.-only Corps SAM
    new start program was $3.1 billion. The use of technology leveraging
    from DOD investments in the TMD mission area and multi-national burden
    sharing by the U.S., Germany, and Italy have reduced cost estimates.
    Burden sharing with Germany and Italy have reduced the current RDT&E
    cost estimate to $1.9 billion. Current schedule will achieve FUE in
    fiscal year 2005.
    Upper Tier TMD Systems
        Theater High Altitude Area Defense.--Last year the Department
    restructured the THAAD program by concentrating on militarizing the
    User Operational Evaluation System design with low risk enhancements to
    a ``UOES plus'' configuration. This program, termed the new THAAD
    objective system, retains significant capabilities to meet the most
    critical THAAD requirements while reducing overall program risk. It
    concentrates on militarizing the UOES design and upgrading certain
    components, such as the infrared seeker, radar and battle-management,
    command, control, communications, computers and intelligence (BM/C\4\I)
    system. Currently, a UOES capability that will include two THAAD
    radars, four launchers, two BM/C\4\I systems, 40 missiles, and 295
    soldiers will be available for developmental testing and contingencies
    by fiscal year 1999. All of the UOES equipment is currently available,
    except the missiles. An option to purchase the UOES missiles will be
    exercised following the successful intercept of its target. In response
    to Congressional direction, the Department has increased THAAD funding
    by $722 million over the FYDP to accelerate fielding the system. This
    move will shift the FUE date for THAAD from fiscal year 2006 to 2004.
        In fiscal year 1998, the THAAD program will conclude its program
    definition and risk reduction flight tests. These tests are designed to
    resolve technical issues and demonstrate the system's capabilities. So
    far, BMDO and the Army have conducted seven flight tests.
        The first three THAAD flight tests--which by plan did not include
    intercept opportunities--successfully demonstrated several basic
    missile functions, including missile launch, booster separation, and
    kill vehicle closed loop navigation. On the next three missions, the
    THAAD system was unsuccessful in its attempts to intercept the target.
    On flight test four, for instance, the seeker obtained a solid lock-on
    the target, but the missile did not achieve an intercept because an
    errant midcourse maneuver caused the kill vehicle to deplete its fuel
    supply prior to achieving intercept. On flight test five, a malfunction
    occurred during booster separation causing a loss of command functions
    on-board the kill vehicle. Therefore, the kill vehicle did not respond
    to navigation commands and did not acquire the target. On flight test,
    number six, a seeker malfunction occurred following target acquisition
    which prevented the interceptor from locking-on the target. The post-
    flight investigation indicated that the failure was most likely due to
    small particle contamination which caused an electrical short in the
    seeker.
        On March 6th, we attempted--but failed--to intercept a ballistic
    missile target with the THAAD interceptor at White Sands Missile Range.
    We did not hit the target. We are currently reviewing the flight data
    to determine the reason for the miss. Initial indications--and I must
    stress they are preliminary--are that the THAAD interceptor missed the
    target because the THAAD missile failed to divert to the target during
    the critical ``end game.'' At this point in time, I cannot say how
    close we came to an intercept.
        The corrective measures for the failures on flight tests four and
    five were verified during flight test six. Although the previous three
    missions were not successful in achieving intercepts, several key test
    objectives were met. Ultimately, the program gained valuable data
    needed for modeling and simulation validation. The program also
    successfully integrated the command and control element and the launch
    platform into the test configuration. The THAAD radar, which
    successfully operated in the ``shadow'' mode during the previous
    missions, was the primary sensor for flight test seven and worked as
    predicted. These accomplishments are noteworthy in that they have
    demonstrated critical overall THAAD system capabilities. However, BMDO
    and the Army fully recognize that the system's ultimate performance is
    linked to the successful intercept of the target missile.
        As a result of flight test seven's results, I have directed that we
    stand up a failure investigation team immediately. I am in the process
    of selecting team members with the right experience for this important
    investigation. Personally, I have experience with these teams, having
    served on them many times throughout my Air Force career. I want you
    and the members of the Committee to know that I will personally see to
    it that this investigation is conducted properly and that we fully
    assess the technical issues associated with THAAD.
        I remain confident that the THAAD system is a critical element of
    our TMD ``Family of Systems.'' THAAD addresses critical warfighter
    requirements to intercept longer-range theater-class ballistic missiles
    at high altitudes and further downrange from the intended target.
        Lastly, it is important to remember that THAAD is in the
    demonstration/validation phase of its testing. This is exactly the
    timeframe during which we want to work out such engineering and
    technical issues, and ultimately prove the system can work.
        Navy Theater Wide.--The Navy Theater Wide program continues to
    build upon the modifications we are making for the Navy Area Defense
    system to AEGIS ships and to the modified Standard missile. The Navy
    Theater Wide system will further modify the missile for ascent,
    midcourse, and descent phase exo-atmospheric intercepts. In addition,
    we will work with the Navy to modify the AEGIS Weapon System to support
    the increased battle space required for the improved, longer-range
    interceptor.
        Last year the Under Secretary of Defense for Acquisition and
    Technology, Dr. Kaminski, designated the Navy Theater Wide program as
    part of the ``core'' TMD program. Navy Theater Wide has also been
    designated a pre-Major Defense Acquisition Program (pre-MDAP), a
    program that may eventually become an MDAP. Therefore, BMDO and the
    Navy have begun the steps necessary to establish NTW as an acquisition
    program under the Department's 5000 series regulations.
        These important steps, along with increased resources, allow the
    Navy Theater Wide program to accelerate its development. Congressional
    funding increases, and the Department's increase of $254 million over
    the FYDP, have allowed the Navy to modestly accelerate the initial
    intercept date. Most notable, however, is that increased resources have
    allowed program managers to reduce program risk and increase the number
    of flight demonstration program flight tests from five to eight.
    Finally, we have been able to procure additional backup hardware
    specifically to reduce the risk of a single hardware failure slowing
    down the program.
        Later this year, Navy Theater Wide will conduct its first flight
    under the flight demonstration program. This flight test will use a
    Standard Missile II, Block IV and help us understand the performance of
    the Standard Missile autopilot at high altitudes up to the third stage
    injection (or stage separation) point. In addition, the BMDO-Navy team
    will continue engineering and ground-test activities to support the
    first controlled test vehicle flight test in fiscal year 1999, as well
    as continuing risk reduction activities.
    Remaining TMD Efforts
        Joint TMD Program Element.--The activities we collect within this
    program element represent programs and tasks that are vital to the
    execution of joint TMD programs. These activities have been grouped
    together because most of them provide direct support across BMD
    acquisition programs which could not be executed without this important
    support. (Activities such as the Arrow Deployability Program are an
    exception, but are funded within this program element.) Therefore, we
    introduce greater efficiency into the programs because they accomplish
    an effort that otherwise would have to be separately accomplished for
    each Service element.
        I would like to outline just a few critical activities that are
    funded in the Joint TMD account. Interoperability in BMC\3\I is
    essential for joint TMD operations. Accordingly, BMDO takes an
    aggressive lead to establish an architecture that all the Services can
    build upon and is actively pursuing three thrusts to ensure an
    effective and joint BMC\3\I for TMD. These three thrusts are: improving
    early warning and dissemination, ensuring communications
    interoperability, and upgrading command and control centers for TMD
    functions.
        The primary goal is to provide the warfighter with an integrated
    TMD capability by building-in the interoperability and flexibility to
    satisfy a wide-range of threats and scenarios. From its joint
    perspective, BMDO oversees the various independent weapon systems
    development and provides guidance, standards, equipment and system
    integration and analysis to integrate the multitude of sensors,
    interceptors, and tactical command centers into a joint theater-wide
    TMD architecture. While these activities may not seem to be as exciting
    as building new and improved TMD interceptors, it is absolutely
    critical to the success of the overall U.S. TMD system. It is the glue
    that holds the architecture together and will ensure that the whole is
    greater than the sum of its parts. To ensure these important activities
    are built-in to the TMD systems, I have recently realigned my
    organization to emphasize Architecture/Engineering to ensure
    interoperability.
        In addition to BMC\3\I, the other activities in this program
    element strongly support the TMD system and key acquisition programs.
    BMDO test and evaluation responsibilities include: oversight of major
    defense acquisition program (MDAP) testing; sponsoring and conducting
    TMD family of systems integration and interoperability tests;
    development of common targets; and providing for range upgrades. These
    activities are key to the success of all our core programs. System
    integration tests will enable us to assess end-to-end system
    interoperability and performance of the TMD architectures in the
    presence of live targets. Furthermore, BMDO's consolidated targets
    program has facilitated improved management of target requirements;
    verification, validation, and accreditation processes; and acquisition
    of expendable and support systems.
        This program element also funds modeling and simulation support.
    Because of the large number of variables, safety concerns, and the high
    costs associated with ``live'' testing, integrating models and
    simulations into all BMDO programs is a must. As a result, the BMD
    community has developed an extensive array of computer models,
    simulations, wargames, and system exercisers. The network of modeling
    and simulation facilities includes the Joint National Test Facility
    (JNTF) at Falcon AFB, Colorado and the Advanced Research/Simulation
    Center (ARC) at Huntsville, Alabama. The JNTF provides the BMD
    community access to a world class facility where real-time simulations,
    threat models and wargaming are performed to evaluate BMD weapon
    systems across Service boundaries. The JNTF is the BMDO's joint missile
    defense modeling, simulation, and test center of excellence whose focus
    is the joint inter-service, interoperability, and integration aspects
    of missile defense system acquisition. It is staffed by all the
    Services. As such, the JNTF allows BMDO to present a level playing
    field for the resolution of missile defense issues which cut across
    Service interfaces.
        The JNTF conducts man-in-the-loop missile defense wargaming for
    concept of operations (CONOPS) exploration and development. All of the
    NMD program's BMC\3\ work will be conducted at the JNTF. Test planning
    and analysis for both NMD and TMD are conducted at the facility as
    well. BMD system level analysis of missile defense issues are also
    conducted there. Finally, the JNTF also provides inter-Service
    computational capabilities and wide area network communication networks
    with Service facilities. In fiscal year 1997, BMDO began a
    modernization program to improve the computation suite, including
    hardware upgrades and developing improved models and simulations to
    support the program.
        Our interaction and responsiveness to the needs of the warfighter
    is a key element in the BMDO mission. The Joint TMD program element
    funds a critical series of interactions with the warfighting CINC's.
    Our CINC's TMD Assessment program consists of operational exercises,
    wargames, and Warfare Analysis Laboratory Exercises (WALEX). These
    activities provide an opportunity for the material developer to have
    direct contact with the user. This is the CINC's vehicle for refining
    and articulating TMD concepts of operation, doctrine and TMD
    requirements. Our assessments provide the BMD community with
    operational data--something that is absolutely invaluable to the
    material developer.
        Of special interest in the Joint TMD Program Element is the U.S.-
    Israeli Arrow Deployability Project. The U.S. derives considerable
    benefits from its participation in this project--primarily gains in
    technology and technical information that will reduce risks in U.S. TMD
    development programs. Of course the U.S. also benefits from the
    eventual presence of a missile defense system in Israel, which will
    help deter future TBM conflicts in that region and will be
    interoperable with U.S TMD systems.
        In response to Congressional direction, BMDO has increased funding
    for Cooperative Engagement Capability (CEC) analysis. CEC is a program
    run by the Navy to distribute sensor and weapons data, using existing
    systems, but in a new manner. The data is filtered and combined to
    create a common ``air picture'' or composite track. BMDO's Joint
    Composite Tracking Network (JCTN) is a real-time network, based on the
    CEC program, that directly links sensors and shooters within a theater
    to maximize synergy of multiple systems.
        Congress also directed that we provide funds for upgrade of the
    Kauai Test Facility at the Pacific Missile Range Facility (PMRF). I am
    happy to say that the capital improvements to instrumentation,
    resources, and sites will soon begin. Improvements include precision
    optics, radars, telemetry, global positioning system (GPS),
    communication, range safety, and range command and control. With these
    important improvements, PMRF will be able to meet the Navy's
    requirement to support the Aegis Weapon System's multi-mission warfare
    capability, and provide hit-to-kill efficiency and miss distance
    information.
        The Joint TMD program element has sustained significant reductions,
    which limits our ability to support the core TMD acquisition programs.
    This program element should be recognized as a collection of critical
    engineering and support for all our Core TMD programs, as well as
    important projects like Arrow. JTMD provides a cost-effective approach
    to acquisition support using centralized management and decentralized
    execution. The JTMD product is a true example of synergy--where the
    total benefit really is greater than the sum of the individual
    elements. As I stated before, it really is the glue that holds the
    architecture together.
        National Missile Defense.--During the last year, the NMD program
    has witnessed perhaps the most significant change of all BMD efforts.
    Last year, Secretary Perry transitioned the NMD program from a
    Technology Readiness Program to a Deployment Readiness Program and
    defined the Department's ``3 plus 3'' program that could achieve an
    operational system by the year 2003. Dr. Kaminski designated the NMD
    program as a major defense acquisition program to ensure it receives
    the appropriate level of management attention and oversight. The
    Congress authorized and appropriated a substantial funding increase for
    the NMD program. Within the past few weeks, the Department released to
    industry a request for proposals for the lead system integrator, who
    will act as ``prime'' contractor for the NMD system. Finally, the
    Department selected Brigadier General Joseph Cosumano, United States
    Army, to be the Program Manager for NMD. He will report directly to me.
    Each of these significant steps move us closer to developing for
    deployment an effective National Missile Defense system that can
    protect the United States against the emerging ballistic missile
    capabilities of rogue nations.
        The ``3 plus 3'' program was designed to conduct three years of
    development and test activities, leading up to an integrated system
    test of the NMD elements in fiscal year 1999. If the threat at the time
    warrants, a decision to deploy could be made in 2000. With additional
    funding, the system could then achieve operational capability in
    another three years, i.e., by the end of 2003. If, because the threat
    has not emerged, we do not need to deploy an NMD system in the near-
    term, then we could continue to enhance the technology of each element
    and the concomitant capability of the NMD system that could be fielded
    on a later deployment schedule. The overarching goal of the ``3 plus
    3'' program was to remain within a three year window of deployment so
    that we can effectively respond to an emerging threat.
        As Secretary Perry outlined last year, the development program that
    we execute will be compliant with the ABM Treaty as it exists today.
    Again, as the Secretary asserted, the system that is ultimately fielded
    might comply with the current Treaty, or it might require modifications
    to the Treaty depending upon what the threat situation requires.
        NMD Architecture.--Based on the BMD Program Review concluded a year
    ago, the Department is pursuing a fixed, land-based architecture for
    the National Missile Defense program. The NMD system we plan to
    demonstrate in an integrated system test includes six fundamental
    building blocks: the interceptor; ground-based radar; upgraded early
    warning radars; forward-based X-band radars; Space-based Infrared
    System (SBIRS); and battle management, command, control and
    communications (BMC\3\). Depending on the threat to which we are
    responding when a deployment is required, an NMD system consisting of
    these elements could be deployed in a Treaty compliant configuration or
    in a configuration that may require some amendment to the ABM Treaty.
    Nonetheless, the system elements have remained fairly consistent over
    time and throughout several architecture analyses.
        The Ground-based Interceptor (GBI) is the weapon element of the NMD
    system. It consists of an exoatmospheric kill vehicle (EKV) launched by
    a fixed, land-based booster. We have made significant progress over the
    past few years to develop an EKV which can perform hit-to-kill
    intercepts of strategic reentry vehicles in the midcourse phase of
    their trajectory. As a result of the changed focus of NMD toward
    deployment readiness, and the increased funds authorized and
    appropriated by Congress, we have made some changes in the EKV program.
    The program has been structured to accommodate the more stressing
    nature of a deployment program. Moreover, the program is a competitive
    effort and we had planned to down-select to a single contractor about
    18 months ago. Instead, we have continued this competition. This
    significantly reduces the technical risk, but does require additional
    test resources. Rockwell/Boeing and Hughes are under contract to
    develop and test competing EKV designs which will be evaluated in a
    series of flight tests. I will address our first flight test attempt in
    just a few moments. Following intercept flights in 1998, a single
    contractor will be selected for the initial system. The EKV flights
    will be conducted using a payload launch vehicle as a surrogate for a
    dedicated GBI booster.
        Several booster options are being examined for the GBI, including
    the Minuteman missile, and other modified, off-the-shelf boosters. My
    intention, is to foster a ``level playing field'' and ensure that all
    booster options are fairly evaluated. The bottom-line must be the use
    of the most effective and affordable booster option available.
        The NMD Ground-based Radar is an X-band, phased array radar that
    strongly leverages off developments achieved by the THAAD radar
    program. By taking advantage of the work already completed in the TMD
    arena, BMDO and the Army have been able to reduce the expected
    development cost of the GBR. Before the ``3 plus 3'' program shifted
    program focus, the GBR program was a technology effort. We have
    subsequently changed the design to make it directly traceable to the
    deployment configuration and accelerated the development. We are in the
    process of building a prototype at the U.S. Army Kwajalein Atoll test
    range to support the integrated system test for NMD.
        The Upgraded Early Warning Radar (UEWR) program is designed to
    answer fundamental questions concerning how UEWR's can contribute to
    NMD while completing the initial development work. Working with the
    U.S. Air Force, we have already completed two years of successful
    demonstrations, showing how software modifications can increase the
    radars' detection range, sensitivity, and accuracy. We will continue
    this work and prepare specifications for the early warning radars'
    upgrades necessary if there is a decision to deploy an NMD system
    before the Space and Missile Tracking System is available.
        Forward-based X-band Radars would place the radar where it can
    obtain accurate high-resolution data from the early phases of an ICBM's
    trajectory. These radar attributes provide for early and accurate
    target tracking and signature data, permitting earlier launch of
    defense interceptors and a greater battle space within which they can
    operate. The overall system's defense performance would consequently be
    enhanced. Several X-band radars are under consideration and will
    continue to be explored under the program.
        The NMD BMC\3\ program provides the capability for the designated
    operational commander to plan, coordinate, direct, and control NMD
    weapons and sensors. BMC\3\ has always been identified as one of the
    most difficult issues associated with an NMD system. Unlike the other
    elements, this is not primarily a hardware issue, but rather a software
    development challenge. With the additional funds authorized and
    appropriated by Congress, we have established an active development
    program that is working with the user to address this complex issue.
    Using a ``build-a-little, test-a-little'' philosophy, we have already
    been able to deliver a core BMC\3\ capability to the user for
    assessment. We are also conducting numerous exercises and wargames to
    validate BMC\3\ concepts and exercising the evolving BMC\3\ system
    during every test.
        Deployment Readiness Activities.--While no decision to deploy has
    been made, BMDO has begun several activities to support the deployment
    readiness program. These activities are absolutely critical to begin in
    order to field the NMD system within three years of a decision to
    deploy. Many of these efforts, incidentally, are a result of the
    Congressional funding increase during the past year.
        In particular, the shift in program emphasis to deployment
    readiness led us to increase our NMD Systems Engineering efforts. This
    has allowed us to increase our activity in developing: operational
    requirements documents; NMD System and NMD Element Cost Analysis
    Requirements Documents (CARDS); Deployment Planning and Documentation
    Requirements; Test and Evaluation Requirements; and other critical
    acquisition documentation. Finally, the emphasis on deployment
    readiness allowed us to establish formal review processes for the NMD
    program, such as the Systems Requirements Review, which greatly
    increases our understanding of the system's requirements as well as its
    performance and costs. In addition, these efforts include developing an
    Integrated Deployment Plan for the deployment of the NMD system that
    includes all the system elements; and beginning or expanding Site
    Activation Plans and Site Surveys for the North Dakota Region; Site
    Development and Environmental Planning; NMD Industrial Base
    Assessments; and Logistics and Deployment Planning. While these efforts
    represent modest funds, their importance far outweigh their financial
    costs. For example, site surveys and environmental planning today can
    preclude lengthy delays down the road.
        NMD Program Execution.--Several fact of life issues have
    potentially impacted our ability to execute the ``3 plus 3'' program
    along the timelines the Department has previously outlined. While the
    ``3 plus 3'' program approach remains an absolutely valid strategy,
    recent events have highlighted the very high risk associated with the
    program schedule. Our inability to establish the management team,
    embark on our acquisition strategy by establishing a prime contractor,
    and most significantly the recent failure of the EKV seeker flight test
    together have left us well ``behind the power curve'' in executing the
    program.
        Earlier this year BMDO and the Army attempted the first test of the
    GBI EKV sensor. We planned to launch an EKV seeker from the U.S. Army
    facility at the Kwajalein Atoll in the Pacific Ocean to observe a set
    of targets launched aboard a Minuteman missile from Vandenberg AFB,
    California. While the targets were successfully launched and deployed,
    the payload launch vehicle which carries the EKV for testing failed to
    launch. The problem has been traced to a human procedural error and
    corrective procedures have been implemented. Working with the Army, we
    are in the process of recovering from this failure. We are assessing
    schedule and cost options to reattempt the test. Our next opportunity
    is in May 1997, with the second of two EKV seeker flight tests now
    likely delayed until January 1998. This delay is due to the time
    required to program, fabricate, assemble and test a new target set and
    target launch vehicle. This simple human procedural error clearly
    highlights the very high level of schedule risk associated with the NMD
    program. Since we do not have backup test hardware we are essentially
    delayed eight months because a technician failed to turn a switch to
    the correct power current level. It is also important to note that
    since we have not yet demonstrated EKV seeker performance, we still
    have high technical risk associated with the EKV seekers.
        We have not made any final assessments on the overall ``3 plus 3''
    schedule, but will continue to assess our ability to execute the
    program over the next few months. But I assure you, we will continue to
    work to develop an NMD system that could be deployed as early as 2003,
    should the threat warrant. As we select our prime contractor
    candidates, we will benefit directly from industry involvement. They
    will assist us in identifying program and schedule risks, technical
    long-poles, and can help develop efforts that can help mitigate these
    risks and challenges.
        Space and Missile Tracking System.--In addition to the elements
    being developed by BMDO, future NMD systems will be significantly
    enhanced by the sensing and tracking capability of the Space and
    Missile Tracking System, also known as SBIRS Low. The U.S. Air Force's
    SBIRS-Low (SMTS) program has been allocated those mission requirements
    that are best met by a low-altitude system with long-wavelength
    infrared sensors, primarily the ballistic missile defense mission. The
    unique orbit and sensors on SBIRS-Low (SMTS) will also provide valuable
    technical intelligence and battlespace characterization data.
        The SBIRS-Low (SMTS) constellation of sensor satellites will
    acquire and track ballistic missiles throughout their trajectories.
    Unlike DSP or SBIRS High satellites, SBIRS-Low (SMTS) will be able to
    continue tracking the warheads after the missile booster stages all
    burn out and the warheads are deployed. This information provides the
    earliest possible trajectory estimate of sufficient quality to launch
    interceptors for a midcourse intercept. By providing this over-the-
    horizon precision tracking data to the NMD system, the interceptors can
    be fired before the missiles come within range of the ground-based
    radars at the defense site. This maximization of their battlespace:
    increases the probability of defeating the threat by providing the
    maximum number of opportunities to shoot at each incoming warhead;
    maximizes the area that can be defended for any given interceptor
    deployment by permitting the interceptors to travel the farthest from
    the deployment sites; and allows the warheads to be destroyed as far as
    possible from the defended area.
        Each SBIRS-Low (SMTS) satellite will carry a suite of passive
    sensors that will provide surveillance, tracking and discrimination
    data, including short-, medium-, and long-wavelength infrared sensors,
    which detect objects by their heat emissions, and visible light sensors
    that use scattered sunlight. These sensors, which can be instructed to
    look in different directions independently of each other, will provide
    global (below the horizon and above the horizon) coverage of ballistic
    missile targets in their boost, post-boost, and midcourse phases.
    SBIRS-Low (SMTS) can detect and track objects at very long distances by
    observing them against the cold background of space.
        The SBIRS-Low (SMTS) program consists of two competing contractor
    teams. Hughes/TRW is developing a two-satellite Flight Demonstration
    System (FDS); Rockwell/Lockheed-Martin is developing a single satellite
    Flight Experiment. Both programs will launch in late fiscal year 1999.
    These risk-reduction satellites will serve as a ``bridge'' to a fully
    operational SBIRS-Low (SMTS) early in the next decade. The Department
    has accelerated the schedule for an EMD phase of SBIRS-Low (SMTS),
    which results in a first launch in fiscal year 2004.
        BMD Support Technology Programs.--As the BMD program has adapted to
    the demands of the strategic environment, we have dramatically shifted
    our program and its allocation of resources from technology development
    in the mid- to late-1980's to acquiring and fielding missile defense
    programs. The fact that we allocate about 70 percent to TMD systems and
    20 percent to the NMD program necessarily limits our investments in
    technology. I do not advocate that we not field highly effective
    defenses. Instead, I want to remind everyone interested in missile
    defense of the importance of technology investment. Our past
    investments in technology allow us to build into today's interceptors,
    sensors, and radars the capability to counter existing and emerging
    missile threats. For example, our LEAP technology program which began
    in 1986 under the SDI program, now forms the basis for Navy Theater
    Wide. PAC-3's hit-to-kill technology is derived from the ERINT program,
    which was preceded by the Flexible Lightweight Agile Guidance
    Experiments (FLAGE) under SDI in the mid-1980's. More recently, we
    demonstrated twenty three different component technologies on our
    Clementine satellite that orbited the Moon. Some of those technologies
    are now being inserted into the THAAD system and the Space and Missile
    Tracking System. Currently, the Midcourse Space Experiment (MSX) is
    demonstrating the function of midcourse missile target tracking that
    will feed directly into the Space and Missile Tracking System.
        The importance of technology investments is clear. In order to
    ensure that we efficiently use those limited resources, BMDO's
    technology program has five main thrusts:
      --Advanced sensor technology (focal plane arrays, laser radar, image
            processing algorithms) to help us detect and track missiles
            better.
      --Advanced interceptor technology (improved sensor windows,
            projectile structures, guidance and control, and seekers) to
            vastly improve our hit-to-kill capabilities.
      --Directed energy (chemical laser) to provide us an option of space-
            based, global coverage with a powerful boost-phase intercept
            defense capability.
      --Phenomenology and missile plume signature measurements to assist in
            readily identifying and tracking missile threats.
      --Innovative science and technology (IST) programs to explore novel,
            albeit high-risk, options in technology to enable quantum leaps
            in missile defense capability.
        Our technology investment strategy is straightforward. We
    anticipate the future missile threat and push our own technologies in
    relevant areas in response. We leverage other Federal and industry
    research and development investments where appropriate to aid missile
    defense. We integrate and demonstrate emerging technologies in modest
    systems demonstrations that seek to identify their merits. Finally, the
    BMDO technology staff works closely with acquisition staff to expedite
    the insertion of the newest technology into BMD systems. With this
    approach, we ensure that our five technology thrusts help develop near-
    term improvements or technology insertions to our current acquisition
    programs, or provide an advanced BMD capability to address evolving
    missile threats.
        Our accomplishments in fiscal years 1996 and 1997 continue to
    directly support our theater and national missile defense programs.
    While the entire technology program is important, I would like to
    highlight two of our recent accomplishments. The MSX experiment I just
    noted, launched in 1996, is the first technology demonstration in space
    to characterize ballistic missile signatures during the important
    ``midcourse'' phase of flight between booster burnout and missile
    reentry. During its lifetime, MSX will detect, track, and discriminate
    realistic targets against earth, earth-limb, and celestial backgrounds.
    To date, MSX has collected literally billions of bits of data on
    numerous missile targets and backgrounds. MSX is capable of
    observations over a wide-range of wavelengths, from the very-long
    infrared to the far-ultraviolet. It represents a pioneering use of
    hyperspectral imaging technology in space. The spacecraft incorporates
    five primary instruments consisting of eleven optical sensors. All
    sensors are precisely aligned so that simultaneous observations with
    multiple sensors can be made. This is essential for scenes or targets
    that change rapidly. MSX will allow us to collect a complete book of
    knowledge on what we can expect our sensors to see during future
    missile engagements leading to intercept. The performance of the MSX
    long-wave infrared (LWIR) sensor is feeding directly into the
    development of the Air Force's Space and Missile Tracking System's LWIR
    sensors by the contractor teams.
        Similarly, we recently successfully tested the key components of
    the space-based chemical laser program in a ground-test at the
    Capistrano Test Site, California. On February 20th, BMDO conducted a
    high-power test integrating the Alpha high energy laser and LAMP
    telescope. This was the first time that the high energy laser beam has
    been propagated through a representative SBL beam control system using
    the four meter LAMP telescope. This experiment demonstrates precise
    pointing, jitter control, and wavefront measurement. Initial review of
    the results indicate all test objectives were met. Detailed analysis of
    the test data will continue for several more weeks. The test will lead
    to two additional high power tests of the beam control system later
    this year. The objective is to demonstrate proof-of-principle end-to-
    end operation of the SBL system in our ground test facility.
        Conclusion.--Mr. Chairman, I appreciate the opportunity to appear
    before this Committee and share my views about the BMD program. While I
    have only been on board as the Director of BMDO for roughly a half
    year, I can assure you the program is sound. It is strongly supported
    by Secretary Cohen, Deputy Secretary White and my immediate boss, Dr.
    Kaminski. My interactions with the user community and the Joint Staff
    similarly indicates strong support for both the mission of missile
    defense and the program we have structured to ensure we field those
    systems as soon as possible.
        My twenty eight years of research, development and acquisition
    experience tells me that we have our challenges and some aspects of the
    program are relatively high-risk, but I am reminded that nothing
    worthwhile is ever easy. And, when the issue is the threat of missile
    attack, potentially carrying weapons of mass destruction, those program
    risks may be acceptable if they allow us to field our defenses more
    rapidly.
        I am particularly impressed with the combined Government-industry
    team that is working to develop and field highly effective missile
    defenses for the warfighter. The talent, experience and dedication
    across the spectrum is tremendous. When combined with strong support
    inside the Department and here in Congress, this talented team can
    deliver on the promise to make missile defenses a reality.
        Thank you, Mr. Chairman. I look forward to working with all the
    Members of the Committee on this important program. Mr. Chairman, that
    completes my statement. I look forward to addressing the Committee's
    questions.
                                     ______

                Biographical Sketch of Lt. Gen. Lester L. Lyles
        Lieutenant General Lester L. Lyles is the Director of the Ballistic
    Missile Defense Organization (BMDO), Department of Defense, Pentagon,
    Washington, D.C. As director, General Lyles is the Acquisition
    Executive for all Ballistic Missile Defense systems and programs
    throughout the Department of Defense.
        Prior to his appointment as Director BMDO in August 1996, General
    Lyles served as the Commander of the Space and Missile Systems Center,
    Air Force Materiel Command, Los Angeles Air Force Base, Calif. He has
    served in a variety of assignments, including Vice Commander and
    Commander of Ogden Air Logistics Center, Hill Air Force Base, Utah; the
    Air Force System Command's (AFSC) Assistant Deputy Chief of Staff and
    Deputy Chief of Staff for Requirements; the Director of Tactical
    Aircraft Systems for AFSC; and Director of the Medium Launch Vehicles
    Program and Space Launch Systems Offices. The general has had
    assignments as the Avionics Division Chief in the F-16 Systems Program
    Office; special assistant and aide-de-camp to the commander of Air
    Force Systems Command; and Program Element Monitor of the short-range
    attack missile, Headquarters U.S. Air Force, Washington, D.C.
        General Lyles was promoted to the rank of lieutenant general
    November 16, 1994.
        The general entered the Air Force as a second lieutenant in 1968
    after receiving his bachelor of science degree in mechanical
    engineering from Howard University and completion of Howard's Air Force
    Reserve Officer Training Corps program as a distinguished graduate. In
    1969 he earned his master of science degree in mechanical and nuclear
    engineering through the Air Force Institute of Technology, New Mexico
    State University, Las Cruces, N.M. His professional military education
    includes: Armed Forces Staff College; National War College; the Defense
    Systems Management College; and National and International Security
    Management Course, Harvard University, Mass.
        His military awards and decorations include the Distinguished
    Service Medal, Legion of Merit with oak leaf cluster, Meritorious
    Service Medal with two oak leaf clusters, Air Force Commendation Medal,
    Senior Missileman Badge and Space Badge. General Lyles was awarded the
    Astronautics Engineer of the Year by the National Space Club in 1990.
    In 1994 he earned the Roy Wilkins Renown Service Award in recognition
    of outstanding contributions to military equal opportunity policies and
    programs by the NAACP.
        General Lyles and his wife, Mina, are both from Washington, D.C.
    They have a son and three daughters: Rene, Phillip, Leslie and Lauren.

        Senator Stevens. Thank you very much, General.
        Gentleman, I did not make an opening statement. Does anyone
    have an opening statement they want to make at this time?
        [No response.]

                                Arrow intercept

        Senator Stevens. General, the Defense Daily reports this
    morning that the Arrow program had a successful intercept
    yesterday but its warhead did not detonate, but it had a direct
    hit. Are we working closely enough with the Israelis to know
    what they are doing and how they are solving some of these
    problems?
        General Lyles. Mr. Chairman, yes, we are. As you might
    recall, this is a joint development program. We share the
    resources and share the development with the Israelis. We have
    put about 36 percent of our money, U.S. money, into that
    particular effort. About 64 percent during the development
    phase is Israeli money.
        We are doing this joint development to make sure we clearly
    understand what their needs are and how we support them, but
    more importantly that we understand how some of the
    technologies might also benefit our particular efforts.
        It is critical I think, in terms of where we are going with
    our THAAD program, that the seeker, or at least parts of the
    seeker, the focal plane array parts of the seeker for the Arrow
    program are identical to the seeker material that we plan to
    use in THAAD. It is an indium antimonide seeker that we must
    have on our THAAD program.
        We are now understanding and working closely with them to
    understand not only exactly their successes, but also
    understand any problems they have and how that might address
    any of our needs within our THAAD and other theater missile
    defense activities.
        We will learn from their particular test successes and what
    happened yesterday, and be able to apply any lessons learned to
    our particular efforts.
        Senator Stevens. Well, we visited the Arrow program in
    January. Let me back up by saying staff tells me that we have
    had some 10,000 computer simulations of THAAD and in those
    simulations THAAD successfully hit the target almost every
    time.
        In ERINT, we had computer validation of the systems and the
    approach, but that failed in its early test flight.

                                 System testing

        Now, I was impressed when I was in Israel that they seemed
    to be testing portions of their systems before they really go
    out and test the whole system in actual full operation. Are we
    doing that? Are you testing the systems separately, portions of
    the system?
        General Lyles. Yes, Mr. Chairman, we do that.
        Senator Stevens. The last one that failed, have you tested
    it separately? You have concluded one particular part of the
    THAAD failed.
        General Lyles. The front end end game seems to be where we
    are having the problems in all the failed intercepts that we
    have conducted to date, and yes, Mr. Chairman, we do do similar
    sort of testing with the same sort of rigors that I think you
    saw during your trip to Israel.
        We do testing of the various components separately. We do
    simulations. We do hardware in the loop simulations. We do
    actual hardware testing as much as we possibly can, but I think
    ultimately the critical decision and the critical answers come
    to tests where we bring everything together and we do an actual
    flight test.
        I might mention, Mr. Chairman, that all the simulations we
    have done on THAAD, not all of them have been successful. Most
    of them have. Mostly we are trying to verify the software, that
    all the various software and signals are getting from one
    subsystem to another, that the timing, the critical timing on
    all that software is exactly correct, that the algorithms are
    exactly correct.
        The one thing we cannot test in some of the simulations
    that we do is, how will they operate as an integrated system in
    flight, and the failures we have had to date on the THAAD
    system, none of them were the types that we would have picked
    up in a simulation at all.

                               THAAD procurement

        Senator Stevens. Well, I think we are about ready to buy 40
    THAAD missiles based on that test. Are you still going to buy
    them?
        General Lyles. No, sir; part of the critical exit criteria
    for making the decision to commit the money for that user
    operational evaluation system, as we call it, UOES, 40 missile
    buy, hardware and software, and radar was dependent on
    successfully completing not only that intercept test, but also
    successfully completing lots of hardware in a loop test and
    some other different elements. Because of that failure, we will
    not exercise that option. And we still have to make that exit
    criteria a reality. We have to have an actual intercept and
    also the other elements before we will commit the money to buy
    those 40 missiles.
        Senator Stevens. I am also informed, though, that that
    seeker in the missiles you were to buy would have been
    different than the one that was actually tested. Now why is
    that?
        General Lyles. We have had some problems with the previous
    seekers that we had and the seeker that was actually used last
    week. The material was called platinum silicide. We have had
    some concerns about the platinum silicide--one of the key ones
    being, Mr. Chairman, produceability. It is expensive and harder
    to produce than the seeker that we think we need to go to for
    the THAAD system.
        Senator Stevens. Are you going to test the one that is in
    the missiles you are going to buy before you buy them?
        General Lyles. Yes, sir, we are. Our very next test of the
    THAAD will have the indium antimonide material for the seeker
    in it, for the focal plane array.
        As I mentioned to you earlier, this is one of the side
    benefits we are getting from the Arrow program. Arrow has gone
    to the indium antimonide seeker material from the very, very
    beginning. And all of their tests have been with that. And we
    have done lots of other tests, both at the component level,
    material level, and certainly the upcoming flight test will be
    with the indium antimonide before we make that final decision.

               prepared statements of senators shelby and dorgan

        Senator Stevens. Senator Shelby intended to be here. He is
    conducting a hearing over in intelligence. I am going to put
    his statement in the record, along with a statement from
    Senator Dorgan, and ask you to respond to his questions.
        But I understand some of them pertain to what is going on
    at Huntsville. Obviously, he will be very interested in that.
        [The statements follow:]

                Prepared Statement of Senator Richard C. Shelby

        Mr. Chairman, the ballistic missile threat is real. Not
    only are forward deployed American troops vulnerable to missile
    attack but, to the surprise of most Americans, the United
    States is also vulnerable. Our exposure to missile attacks is
    growing as new threats emerge with the proliferation of
    ballistic missiles and weapons of mass destruction. Developing
    and deploying theater missile defense and national missile
    defense systems are daunting tasks. But I am confident that we
    have the technological base and proficient, motivated workforce
    to produce highly effective missile defense systems.
        I am concerned, however, by the President's budget request
    for ballistic missile defense (BMD). The administration has
    repeatedly scaled back funding for missile defense and delayed
    development schedules. The fiscal year 1998 budget request is
    no different. The President's budget reduces BMD funding by
    approximately $504 million. The administration significantly
    decreases National Missile Defense (NMD) funding by $829
    million, revealing the administration's lack of commitment to
    NMD. In addition, programs previously funded in the Services'
    budget have been transferred into the BMD budget, including
    programs such as the Airborne Laser and the Space and Missile
    Tracking System. Once again, the administration is telling the
    military, ``do more with less.''
        In addition to these budgetary problems, I am deeply
    troubled by the Ballistic Missile Defense Organization's (BMDO)
    management of NMD. BMDO recently released a Request for
    Proposal (RFP) for a Lead System Integrator (LSI) for the NMD.
    General Lyles, the Director of BMDO, states that the LSI is no
    different than any other prime contractor. In fact, the LSI is
    very different. The LSI would centralize traditional Service
    roles within the Office of the Secretary of Defense (OSD).
    Centralizing a program of this size within OSD is
    unprecedented. The reach of this power grab by BMDO is still
    being determined. We know, however, that the LSI RFP prohibits
    the Services from ``directing the contractor in any manner.''
    Congress should be suspect of an approach that excludes the
    Services from management and oversight of defense systems.
        In the past, many of us on the Committee have voiced
    concerns about the size of BMDO's bureaucracy. I believe these
    concerns will be magnified by this new NMD development
    approach. BMDO will add an additional 70 positions when it
    stands up the NMD Joint Program Office (JPO). Also, the number
    of contractors supporting BMDO will increase once the LSI
    contract is awarded. I am told that the number of contract
    personnel could return to the amount supporting the more
    ambitious Strategic Defense Initiative. Furthermore, the
    bloated bureaucracy created by the JPO and LSI will duplicate
    current efforts to develop and integrate the NMD elements.
    Finally, NMD funding will shift away from hardware development.
    As a result, money that would otherwise be available to conduct
    additional tests on the Exoatmospheric Kill Vehicle (EKV) or
    develop the Ground-Based Interceptor (GBI) booster will pay for
    program overhead.
        The establishment of the JPO and LSI contractor bureaucracy
    will significantly and unnecessarily delay the fielding of a
    NMD system. The LSI contract intentionally delays the
    development and testing of the NMD elements by at least one
    year. For example, General Lyles recently stated that the ``3
    plus 3'' clock does not begin until the LSI contractor is in
    place later this year. I believe all of us on the Committee
    thought the three years of development began when former
    Secretary Perry announced the ``3 plus 3'' deployment readiness
    program last year. Also, BMDO will not permit the Army to issue
    a contract proposal for the integration of the GBI, which is a
    significant milestone for integrated flight tests. Finally, the
    shifting of funds from hardware development to the JPO and LSI
    bureaucracy will lead to additional delays.
        Mr. Chairman, the LSI approach privatizes the defense of
    the United States from ballistic missiles. It is our duty to
    carefully scrutinize this proposal. I commend your leadership
    in holding this hearing and thank you for allowing me time to
    make this statement.
                                    ------

                 Prepared Statement of Senator Byron L. Dorgan

        This morning the Defense Subcommittee hears testimony from
    Lieutenant General Lester Lyles, USAF, the Director of the
    Ballistic Missile Defense Organization, on missile defense
    programs. I am pleased the subcommittee is holding this
    hearing, and I thank the Chairman for devoting a hearing solely
    to the issue of missile defense. This is an important issue in
    which I have had a long-standing interest.
        The preliminary point that I would like to make this
    morning is that I think the Administration's missile defense
    policy is right on target, even if some of our development
    programs recently have not been.
        The Administration's missile defense budget request focuses
    our resources where they should be--on defending our soldiers,
    sailors and airmen against the short-range ballistic missile
    threat. Of the Administration's total budget for the Ballistic
    Missile Defense Organization of $2.6 billion, $1.8 billion
    would go to theater missile defense programs. I believe this
    allocation is entirely appropriate.
        On the national missile defense (NMD) side, the
    Administration has a robust program to develop NMD technology
    to enable us to deploy an NMD system if the intercontinental
    ballistic missile threat warrants it. The ``3+3'' program would
    enable policymakers to decide in 2000 whether the threat
    justifies deployment of an NMD system. The Administration's
    policy would also enable the Defense Department to field an NMD
    system in 2003, although I note from General Lyles's prepared
    statement that the recent failure of an Exoatmospheric Kill
    Vehicle test may leave us ``behind the power curve'' in this
    program.
        I would close, Mr. Chairman, by saying that the recent
    failure also of the seventh THAAD test only underscores in my
    mind the ambition and sophistication of these missile defense
    programs. It is a fallacy to suggest that the United States
    right now has the technology to hit a bullet with a bullet,
    which is essentially what missile defense is all about. I look
    forward to this morning's discussion of how we can best advance
    our efforts to gain that technology in the future.

        Senator Stevens. There have been some delays now in the
    national missile defense acquisition strategies. What are we
    going to do to see about straightening that out?
        I get the impression from what you said that you believe
    that the three plus three is at risk. Many of us thought that
    we ought to concentrate a little bit more on development and
    accelerate that development. Are you telling us that we are
    pressing you too hard with money?

                            NMD acquisition strategy

        General Lyles. No, sir, Mr. Chairman. What I am saying is
    that we are committed to the three plus three strategy. And I
    think the heart of that strategy, the first 3 years, is to
    rapidly develop the capability, do testing to give us
    confidence that we understand what we have and that we could
    potentially deploy that capability. But as I think all of you
    understand, the rigors of the testing that we have to do or
    will do in this three plus three program are no way normally
    the types of rigors of testing we would do for normal
    acquisition things.
        I think the risk and our clear desire to be able to meet
    the threat to rapidly deploy a capability has embarked us on a
    strategy where we know we have to take a high-risk approach.
    And I just sort of reinforce that it is very high risk. We have
    single strings. We only have minimal tests. But we think that
    is a prudent approach. And we have to try to do that if we are
    going to be able to rapidly deploy a national missile defense
    system.
        As far as the acquisition strategy--excuse me a second, Mr.
    Chairman, to answer your question, or Senator Shelby's
    question, about acquisition strategy--that acquisition strategy
    is now blessed, and we are now up and running with the strategy
    that we think is the appropriate one for our national missile
    defense system.
        Senator Stevens. Have you decided to go ahead with this
    lead systems integrator, LSI, concept?
        General Lyles. That is part of our strategy. And I would
    like to sort of clarify. I was hoping I would get the
    opportunity to have the dialog with Senator Shelby, because I
    think the title, lead systems integrator, perhaps has been a
    misnomer to people. What I would like to give you an analogy on
    is, every other major program we have in the Department of
    Defense, from Navy programs to Air Force programs, and even to
    Army programs run down at Huntsville, like the THAAD program as
    an example, all of our programs employ a prime contractor, a
    key contractor, who works for the program office, the program
    director, to provide us the capability to bring together all
    the elements, all the critical elements that are needed to have
    a successful and very effective system.
        Now, we gave the name to this prime contractor for NMD. We
    gave it the title lead systems integrator. And I think somehow
    that has given people the wrong impression.
        Senator Stevens. Well, you are right. Because my time is
    running out, let me ask you some specific questions. Are you
    going to flow all the funds that are associated with the
    national missile defense through the LSI?
        General Lyles. No, sir; they will all flow through the
    program office. The LSI is just one of the contractual tools.
        Senator Stevens. You are not answering me. Do all the
    requests and all the allocations have to go through LSI first?
        General Lyles. No, sir, they do not.
        Senator Stevens. Who are they going to go through?
        General Lyles. They go through the program office. And the
    program office will flow them down to the executing elements.
        Senator Stevens. Is that in Huntsville?
        General Lyles. Some of the executing elements are at
    Huntsville, Mr. Chairman.
        Senator Stevens. Where is the program office?
        General Lyles. The program office will reside here. A very
    small element of it will reside here in Washington. The program
    director that the Secretary of Defense has named is sitting
    right behind me, Army Brig. Gen. Joe Cosumano. He will have a
    small staff here in what I call a federated approach. The bulk
    of the program office team will be at Huntsville, AL.
        Senator Stevens. Well, is not the Army Space and Strategic
    Defense Command still in Huntsville?
        General Lyles. Yes, sir, it is.
        Senator Stevens. Well, why are you splitting it? Why are
    you bringing the people who have the money and the control of
    the money up here and leaving the workers down there?
        General Lyles. Mr. Chairman, the approach we have of this
    joint program office, or federated approach that we have, I
    think it is the right strategy to manage this program. This is
    not an Army national missile defense system. It is a U.S.
    national missile defense system. It has Army elements. It has
    Air Force elements. It even has BMDO elements. And potentially
    it could even have a naval or nautical element in the future.
        The program office and the lead of the program office will
    be here in Washington, but most of the team will be down at
    Huntsville and then at other places around the country.
        Senator Stevens. My time is up, but I do want to go into
    this. I just do not understand why we have now, at the time
    when we are trying to accelerate the activity, why we have to
    confuse the administration of this program by bringing in more
    offices and more people before you actually get to the people
    who are going to be doing the work.
        Senator Cochran.

                                NMD program risk

        Senator Cochran. Thank you, Mr. Chairman.
        You used the phrase, General, ``high risk'' to describe the
    three plus three program. I am concerned about that, because it
    seems to have a negative connotation. What is at risk? Why are
    you describing it as high risk?
        General Lyles. Senator Cochran, I think that the key
    element of risk here is in schedule risk. As I mentioned
    earlier, we made a conscious effort to lay out a program that
    is very, very aggressive in both the deployment and the amount
    of testing that we are going to do. It is very single string.
    If we have an anomaly like we had with that one EKV sensor fly-
    by test I described in my opening statement, it jeopardizes our
    ability to be able to meet the full schedule for the program.
        Senator Cochran. Well, does this affect the three plus
    three goal? You talked about the time lines the Department has
    outlined in your statement. You say several fact-of-life issues
    have potentially impacted our ability to execute the three plus
    three program. Does this mean that previous promises or claims
    that the administration will have a system capable of being
    deployed by 2003 are now in doubt? Is that the risk?
        General Lyles. The risk is in the schedule, Senator
    Cochran. And I think the previous characterizations were that
    this was a high-risk program and a very fragile one in terms of
    schedule and the testing and elements we had ahead of us. So I
    think we are now beginning to get evidence of that.

                             ABM Treaty provisions

        Senator Cochran. Let me ask you this about the negotiations
    that are going on with the Russians on the ABM Treaty
    provisions and whether or not they apply to some of our theater
    missile defense [TMD] programs. Do you feel restricted by any
    interpretation this administration is giving to ABM Treaty
    provisions with respect to your testing program of TMD systems?
        General Lyles. Senator Cochran, to date, we do not have any
    restrictions either to our theater programs or our national
    program as we are currently laying them out.
        Senator Cochran. There is some concern that if these
    negotiations produce an agreement, it may restrict our ability
    to deploy TMD systems that we are now testing. Is that a
    concern of yours as well?
        General Lyles. Yes, sir; it is a concern. I sort of echo
    the comment I think the Congress heard recently from General
    Fogleman from the Air Force. You probably will hear that same
    thing from CINCSPACE, General Estes. There is concern about
    what might happen relative to those discussions.
        Senator Cochran. I did read the article that I think was in
    the Washington Times, quoting General Fogleman, I suppose, in
    an interview with a reporter at the Washington Times about the
    fact that this is a concern that is shared by all of the
    chiefs. It seems to me that if we pursue these negotiations for
    the purpose of reaching an agreement to further restrict us
    that we are going to put the whole program in jeopardy, not
    only TMD but certainly the national system as well. Do you
    agree with that?
        General Lyles. Senator Cochran, yes, we are concerned. At
    least since we do not know exactly what the final outcome is,
    we are concerned about anything that limits our ability to
    field an effective capability.
        Senator Cochran. The ABM Treaty allows for the deployment
    of 100 interceptors at a single site in Grand Forks, ND. The
    Senator from North Dakota was here, and I thought he might ask
    a question about this. But has BMDO done an analysis on the
    question of whether 100 interceptors at a single site can
    protect the entire United States from a limited ballistic
    missile attack? And if so, what does your analysis show?
        General Lyles. Senator Cochran, we are doing that analysis
    right now. We have done some parts of the analysis. And we are
    looking at various potential single sites, including Grand
    Forks as an obvious one.
        Our analysis to date is still in process. We do not have
    the final answers. And we are looking at all the various
    options. The preliminary information is that for some threats
    that are out there, a single site would be sufficient to
    protect the 50 United States. For some other threats, we have
    some question marks about that. And we are examining all those
    options currently.
        Senator Cochran. With regard to the threat posed by
    theater-range ballistic missiles, on page 3 of your statement,
    you mention a continually evolving threat. And you go on to say
    that the trend is clearly in the direction of systems with
    increasing range, lethality, accuracy, and sophistication. If
    this is as you say--and I am confident it is--toward greater
    sophistication in these theater-range missiles, is it
    reasonable to expect that at some point in the future, instead
    of facing single warhead theater-range missiles, we could be
    faced with multiple independent reentry vehicles [MIRV]
    theater-range missiles?
        General Lyles. Senator Cochran, that certainly is a
    possibility. We do not have any indications of that to date.
    But certainly, given evolution potential for things like that,
    that certainly is a possibility.
        Senator Cochran. And that would have a negative effect on
    our TMD systems, in terms of our future capability to test our
    systems, if we are restricted under ABM Treaty interpretations
    from testing against MIRVed theater-range missiles?
        General Lyles. And we would be very concerned about that,
    yes, sir.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Senator Inouye.

                                 Arrow program

        Senator Inouye. Thank you.
        If I may, I would like to follow up where the chairman left
    off on Arrow.
        General Lyles. Yes, sir.
        Senator Inouye. Apparently, the tests have been very
    successful. You report that there was a successful test
    yesterday. In our visit to Israel, it was made known to us that
    the Israelis would desire very much to accelerate the program
    because of their concern about the threat from Iran and Iraq
    and the 500 or so Scuds that Syria has. Do you have any
    position on accelerating this program?
        General Lyles. Senator, we are working very closely with
    the Israelis, as I think you noted and learned during your trip
    there. They are looking at ways to accelerate the program. I
    think the pace that they are currently on for development is
    already an accelerated one. And given their successful
    intercept yesterday and the previous one they had in August, I
    think they are on track to be able to make their deployment
    decisions and continue with the pace that they currently have.
        One area that, as a part of acceleration, I know they are
    interested in is potentially buying more systems. And we are
    obviously talking to them about that. Though that is an issue
    that they would have to decide upon themselves.
        Senator Inouye. So you have not made your views known on
    the additional unit, the battery that they had been requesting?
        General Lyles. Not yet. We have had some preliminary
    discussions. General Biran from the Israeli Government was
    visiting here last week. We are looking at some options on what
    could be done.
        I think what is key in this particular area, Senator
    Inouye, is that our memorandum of agreement with the Israeli
    Government requires that we not procure hardware for them, but
    also that we work very closely to ensure interoperability of
    their missile defense systems with potentially our systems,
    which may be in the same theater. So we are looking at ways
    that perhaps we can continue additional interoperability
    activities, testing, et cetera, beyond the current schedule for
    the memorandum of agreement we have with them. And we will be
    discussing that with the Israeli Government members as they
    come back into our country.

                         Pacific missile range facility

        Senator Inouye. If I may, I would like to touch upon the
    Pacific missile range facility upgrades. Last year, we were
    told that testing for the Navy's areawide defense would begin
    at this facility during fiscal year 1998, and that significant
    facility and instrumentation upgrades would begin also during
    that fiscal year. We have also been told that the facility
    wants about $100 million for upgrades. And yet, this budget
    does not show any upgrades.
        However, your statement says that ``I am happy to say that
    the capital improvements to instrumentation resources and sites
    will soon begin. Improvements include precision optics, radar,
    telemetry, global positioning systems, communications, range
    safety, range command and control.'' Is this backed up with
    dollars?
        General Lyles. Senator, it is to some extent. And we are
    currently in negotiations with the Navy to ensure that we are
    supporting and splitting the costs associated with the upgrades
    to the Pacific missile range facility, the PMRF. Some of the
    upgrades that are necessary for that range support more than
    just ballistic missile tests. And what we are in negotiations
    with, with the Navy is how much do we in BMDO help support that
    goal toward the improvements for just ballistic missile testing
    and how much the Navy needs to put in, on their own resources,
    to support other tests that are conducted out at that range.
        I think we are going to reach the appropriate medium on
    that. We have not concluded the discussions yet.
        Senator Inouye. When will the upgrades show up in the
    budget?
        General Lyles. Some of the money that we currently have--we
    have some lines in our budget that we call joint theater
    missile defense. And some of the money that we already have in
    our budget is being used to support upgrades to the PMRF. And I
    would like to, if I could, Senator, to provide for the record
    what exact amount we are doing today with our budget, and then
    what we see for the future.
        Senator Inouye. I would appreciate that.
        General Lyles. Yes, sir.
        [The information follows:]

    PMRF Upgrades Funding Profile

                            [TY dollars in millions]

    Fiscal year:
        1997..........................................................  $4.3
        1998..........................................................  11.8
        1999..........................................................  14.1
        2000..........................................................   4.4
        2001..........................................................    .8
                            -----------------------------------------------------------------
                            ________________________________________________

          Total

                                                                        35.4

        Assumes Air Launch (Mobile) Delivery of Targets--Non-Mobile
    Delivery would cause a substantial cost increase.
        Future Evaluation will be Required When Navy Theater-Wide Test
    Program Requirements are Defined.
        BMDO will subsequently realign funds within the TMD program to fund
    these upgrades.

                               Arrow capabilities

        Senator Inouye. Speaking of Arrow, is there any place in
    our inventory for that?
        General Lyles. I do not think so, Senator. The Arrow
    system, as designed, is specifically to meet the requirements
    of the Israeli Government, the country of Israel. It is their
    national missile defense system, obviously. It has neither the
    mobility nor the size that we are looking for, for our theater
    missile defense assets. And nor does it have the ability to do
    what are some things we consider critical in our requirements--
    like hit to kill.
        Their warhead is a blast-fragment warhead, seemingly a very
    effective one, but it does not have what we consider the
    critical hit-to-kill capability to be able to counter some of
    the threats that are out there. So it is limited in terms of
    the threats that we are trying to counter in our requirements.

                                    Patriot

        Senator Inouye. I have been told that the Patriot PAC-3
    testing program is about 3 months behind schedule. Is that
    correct?
        General Lyles. The next test of the Patriot is about 2\1/2\
    to 3 months delayed. So that is correct, Senator.
        Senator Inouye. What is the difference between PAC-2 and
    PAC-3?
        General Lyles. It is primarily enhancements to the
    software, the guidance capabilities. It gives a little bit more
    envelope and ability to counter various threats. One big
    difference, however, in PAC-3 is the hit-to-kill capability.
    The warhead is significantly different for those systems.
        Senator Inouye. Are we purchasing the PAC-3?
        General Lyles. We will plan to purchase the PAC-3. Part of
    our criteria and our schedule is to be able to have PAC-3 in
    the inventory by the years 2000 and 2001.

                               Simulation program

        Senator Inouye. I have been told that flight tests are very
    expensive, so you are now going to computer simulation. From
    your vantage point, how effective is the simulation program?
        General Lyles. Sir, simulations obviously are designed to
    give you some answers--specific answers--about the capability
    of a weapon system. As I addressed to the chairman earlier, you
    can particularly wring out electrical signals, software,
    algorithms, and things of that nature through simulations. So,
    from that standpoint, they are very effective for that
    particular need.
        When it comes to actually testing hardware in an integrated
    sense, you need to have actual flight tests. And that is the
    reason why we try to have a balance of the two--flight tests
    and simulations.
        Senator Inouye. Would you support an action on the part of
    Congress if we urged you to increase flight testing and reduce
    simulation?
        General Lyles. Senator, I certainly would not only enjoy
    that, I would appreciate that. In terms of me being an
    acquisition expert, we always look for additional testing to
    ensure we really understand what it is we have and what its
    capabilities are.
        I would counter, or at least offer, that we do not reduce
    simulations, however, because they are very critical to
    answering some other things. I always think we need to do more
    rigorous actual flight testing. But simulations have their own
    place, and I would not recommend we trade one for the other. If
    anything, we add traditional flight tests and keep the amount
    of simulations where they are.

                             Cruise missile threat

        Senator Inouye. I gather there are 77 nations with cruise
    missiles. Is that number correct?
        General Lyles. Our estimate is that there are at least 77
    nations that have either a cruise missile or the potential of
    putting together a cruise missile, Senator.
        Senator Inouye. Because of your concern and the potential
    threat, is there any move to put the defense for that under
    your command?
        General Lyles. Part of it is, yes, sir. A recent decision
    last December--actually last November--by Dr. Kaminski and the
    Vice Chairman of the Joint Chiefs of Staff, General Ralston, we
    have now stood up what we call a Joint Theater Air and Missile
    Defense Organization in the Joint Staff. That organization will
    develop the operational requirements for not just ballistic
    missiles, as they have currently been doing, but also cruise
    missiles. And our objective is to integrate cruise missile
    defense with our ballistic missile defense programs.
        My organization, BMDO, will work hand in glove with them to
    develop the actual requirements, systems architecture, and lay
    out the integrated program for cruise missile defense with our
    ballistic missile defense activities. That is the long way of
    saying yes, Senator, but I wanted to explain exactly what has
    taken place.
        Senator Inouye. And you would consider cruise missiles as a
    major threat?
        General Lyles. Yes, sir, we do.
        Senator Inouye. I thank you very much, General.
        And I would like to submit, if I may, Mr. Chairman, a few
    other questions.
        General Lyles. Thank you, Senator.
        Senator Stevens. Thank you, Senator.
        Well, General, in the last 2 years, we added funds to
    modify Patriot to deal specifically with the cruise missile
    problem. Have you been in on the use of that money?
        General Lyles. Yes, sir; the money that has been added by
    Congress are going, in part, to address that part of the
    requirement for Patriot. And some of the testing that we have
    done for Patriot is to demonstrate exactly that capability. So,
    yes, sir, we have done that.

                                  Test program

        Senator Stevens. I want to read to Senator Inouye a little
    statement here from the Aviation Week and Space Technology of
    February 24, which staff has provided me a very interesting
    series of articles on missile defense. It says:

        I am used to more testing, more intercepts. And we are
    about to make a major decision about going into the next phase
    for THAAD based upon a successful intercept. I always worry
    about the random successes as opposed to random failure. I am
    worried about that and about what we are really buying. That
    tells me the BMDO, the program offices, and the contractors
    need to make sure we are mitigating risk through modeling and
    simulation or components or other testing to make sure we are
    not completely relying upon a potential random successful
    intercept. I do not think we have the rigor, the robustness, or
    number of tests I would normally expect in a fully builtup
    program. I am concerned about the rigor and the risks
    associated with the planned testing.

        Does that sound familiar to you, General?
        General Lyles. Yes, sir, it does.
        Senator Stevens. That is your statement.
        General Lyles. Yes, sir, it is.
        Senator Stevens. Have you got enough money for those tests?
        General Lyles. We are not sure if we do today have money to
    do the kind of rigorous testing that I would normally like to
    see in a program. I think the answer to that is probably no.
    But I would like to provide you for the record where we think
    we might have some specific shortfalls.
        Senator Stevens. Well, will you do that.
        [The information follows:]

        As a result of the most recent missed intercept, I have
    chartered independent assessment teams to evaluate the missile
    design and overall system requirements. As part of their
    efforts, an examination of future flight test requirements is
    underway. I think, therefore, it would be premature at this
    point to identify any funding shortfalls with respect to our
    future test needs. I would prefer to hear the independent
    assessment team's recommendations and then respond to your
    question.

        Senator Stevens. But also tell me what is going to happen
    to your timetable if you go into more testing. What happens to
    the timetable?
        General Lyles. Senator, that is the sort of balance, as I
    mentioned to you earlier, about the need to get capabilities as
    rapidly as possible, and the willingness to take risks relative
    to schedules and testing to at least give us an opportunity to
    field a capability early. Obviously, if we add more tests, we
    are probably going to impact our schedules. And so we have to
    very carefully look at and try to balance the two.

                                 Risk reduction

        Senator Stevens. Well, we thought if we added money for
    Patriot, so you could upgrade Patriot, you would have an
    interim time to deal with the most pressing problems, which I
    take it, would you agree, are the cruise missiles, right? They
    are the ones that are out there--so many of them?
        General Lyles. Mr. Chairman, that is not the only pressing
    problem. Obviously, cruise missile is one. But somewhat
    sophisticated RV's on short-range ballistic missiles or theater
    missiles are also a very, very stressing requirement. So they
    both are stressing.
        Senator Stevens. Well, is there anything else we could do
    to give you more breathing room on the longer-range program in
    order to cover the gap that exists now? I think we are pushing.
    We were pushing for a quicker program than the three plus
    three, as a matter of fact.
        General Lyles. Mr. Chairman, I think the moneys and plus-
    ups you have given us in the past certainly have been
    appreciated. We have applied those to reduce the risk as much
    as possible. I still think, as I have stated earlier, there are
    high risks. And any additional funds, if we were to get any,
    would be used to mitigate the risk.
        I do not think there is any way we can buy back schedule.
    But it is critical, however, I think, to reduce the risk, to at
    least give us a good chance of being able to make the schedules
    that we are currently trying to address.
        Senator Stevens. This article says, for example, a single
    national missile defense test flight to evaluate seekers runs
    about $50 million, according to your officials, the BMDO
    officials.
        General Lyles. Yes, sir.
        Senator Stevens. Only five such flights are scheduled
    through 1999. Is that right?
        General Lyles. That is correct, Mr. Chairman.
        And, again, we did that and we laid that out in a very
    aggressive manner, taking risk relative to the numbers of
    tests, to at least give us an opportunity, if they were all
    successful, to try to meet that three plus three schedule and
    strategy we have for our national missile defense program.
        Senator Stevens. Well, what is constraining the number of
    tests--money, time, or the systems themselves?
        General Lyles. I would have to say it would be the former
    two, Mr. Chairman--both funding to support the additional
    testing and then the schedule--time. As you add more tests, as
    I answered to Senator Inouye, you obviously are going to
    stretch out the schedule a little bit, particularly if you have
    any kind of anomalies. And we were trying to maximize at least
    the potential of trying to make our three plus three strategy.
    So we took some calculated, very high risk in laying out the
    schedules that we currently have.

                               Minuteman booster

        Senator Stevens. Well, I think that Senator Cochran went
    into this a little bit. But is the Minuteman a viable
    competitor in this area?
        General Lyles. Minuteman is certainly one of the booster
    alternatives that we will examine for our national missile
    defense system. And we have already started to begin to look at
    that, to understand exactly how it meets our requirements. It
    does have some benefits. And we will examine that in terms of
    its capabilities.
        Senator Stevens. When will you start flight testing the
    Minuteman to see whether it can fit into this national missile
    defense program?
        General Lyles. In some respects, Mr. Chairman, we have
    actually started some of that. And let me caveat to make sure I
    am clear when I say that. There are operational tests of
    Minuteman that are done almost monthly, if you will, several
    times throughout the year.
        We are going to work with the Air Force to piggyback off of
    some of those tests to look at various elements of our battle
    management command and control, understand exactly, in some
    cases, the characterizations of Minuteman as a booster. So we
    are already trying to take advantage of what we call targets of
    opportunity, tests of opportunity, to see about some aspects of
    Minuteman, and particularly aspects of battle management
    command and control.

                              use of other Systems

        Senator Stevens. Have you got full freedom to utilize any
    system that is available in the world in your program?
        General Lyles. Any U.S. system, certainly, sir, we
    certainly have.
        Senator Stevens. I did not say that. Can you go out and see
    whether someone else has developed a piece of equipment that
    you can integrate into your system and accelerate it? You are
    looking at the European, you are looking at the total world
    market as far as the development so far?
        General Lyles. The answer to your question, Mr. Chairman, I
    think is yes. To the extent that that knowledge and information
    is available, we have either already or certainly in the case
    of things like THAAD, as I mentioned earlier, we will look at
    all other alternatives to make sure we understand what is
    available and what also might meet our requirements and our
    needs.
        Senator Stevens. We are going into the Eastern Military
    District of Russia in just 2 weeks. Have you inquired from them
    what they have done in this area?
        General Lyles. I think the answer to that question is no,
    Mr. Chairman. I certainly have not personally. And I do not
    think my organization has.
        Senator Stevens. There is a pregnant ``why'' out there in
    my mind. Why? Why have not we done that?
        General Lyles. I think, at least my personal answer, Mr.
    Chairman, is that we did not want to depend on somebody else's
    systems to provide us, particularly, a national missile
    defense, a defense capability to defend our homeland.
        Senator Stevens. It is not depending on their systems, but
    finding out what they have done. Ours is published, almost all
    of it. I do not see much classification left in your systems,
    General.
        General Lyles. No, sir; and there are some things that we
    could learn, perhaps, in discussions. And where we have been
    able to do that, I think we have gained some information.
        Senator Stevens. Now, one subject we have not mentioned
    yet, and I will close with just this. But, I want to go back to
    that other thing, first, though, before I get to that last
    question.

                           NMD lead system integrator

        Staff tells me that all national missile defense dollars
    flow through the program office, then the LSI, and then they
    reach the contractors. Is that your understanding?
        General Lyles. No, sir; that is not my understanding or the
    way we plan to do it. The program office will flow all the
    dollars down. The LSI contractor has the role of helping us to
    integrate all the different pieces. That does not say that
    every dollar has to flow through the LSI contractor to the
    various elements. Some of those dollars will flow directly to
    those various elements.
        Senator Stevens. Well, I urge that you get your staff to
    talk to the committee staff and Senator Shelby's staff to make
    sure we are not misunderstanding what you are doing. We just do
    not want to add more redtape to this program. That is, I think,
    the fear that is there.
        General Lyles. Senator, I can guarantee you we are not
    adding redtape. I would like to at least offer some information
    as an example of how we are not doing that. The strategy we
    have of our prime contractor is exactly, exactly the same
    strategy for prime contractor that the Army and Huntsville use
    on all of their programs. This is not a different acquisition
    strategy. It is exactly the same kind of strategy.
        In terms of management, the Army also have management
    elements of their activities at Huntsville here in the
    Washington area. We are not doing anything different or doing
    anything devious whatsoever. I am very concerned about working
    as a team with Huntsville. To me, that is my key mandate and
    the key mandate I have given to our Program Director, General
    Cosumano.

                                Countermeasures

        Senator Stevens. My last subject is countermeasures. Am I
    correct in my understanding that your organization is in charge
    of and puts about 3 percent of your budget into the threat--the
    basic threat that is out there, including countermeasures,
    jammers, chaff, or whatever that might be? Is that right?
        General Lyles. That is correct, Mr. Chairman. We think that
    is very, very critical for us to understand what types of
    countermeasures might be available out there and, more
    importantly, how do we counter those countermeasures.
        Senator Stevens. Well, in the days gone by, I guess we can
    talk about it now, we had different organizations that
    developed sort of the red team concept, to go out and test what
    we were doing. Do you think you ought to be testing what you
    are doing or trying to determine what would be the
    countermeasure to what you are doing? Or should not there be a
    separate organization looking at that?
        General Lyles. In all honesty, Mr. Chairman, we do have a
    red team effort within BMDO. We keep them separate from our
    development activity. They happen to be people who work for me.
    But they operate just like a red team. They are independent.
    They go off and do things independently. In some cases, one
    element of that team, which is out at Kirtland Air Force Base
    in Albuquerque, NM, actually has people who use literature
    available to the free world to try to determine how you might
    counter some of our various threats.
        So we use rigors of that same process. Even though the
    people who are part of that red team are people who work for
    me, they are independent from the development activities.
        Senator Stevens. Are you putting enough money into that?
        General Lyles. I think we are, Mr. Chairman.
        Senator Stevens. As the countermeasures evolve, you will
    have to evolve your systems, will you not?
        General Lyles. We certainly will, Mr. Chairman.
        Senator Stevens. You are putting 97 percent into evolving a
    new system and 3 percent into what might counter it.
        General Lyles. I think the way we are doing that and the
    breakout of the money is sort of a fair way of doing it. The
    information available for various countermeasures is, in some
    cases, very, very limited. And we can, with that 3 percent of
    the money, do the right kind of testing, the right kind of what
    ifs, the right kind of counters, if you will, to see if our
    systems are going to be effective.
        I would love to have the opportunity, Mr. Chairman, to come
    back and show you and some of the other members the results of
    some of those red team countermeasure efforts, and to show you
    how effective they have been in helping us to get answers.
        Senator Stevens. Well, we just may travel out to New Mexico
    and see what they are doing.
        General Lyles. We would love for you to do that.
        Senator Stevens. I have the feeling that there ought to be
    more emphasis on that as you evolve the systems, because if you
    suddenly find, as you finally mature the system, that there is
    already an effective countermeasure to it that is not too good
    a program.
        General Lyles. We are very concerned about that, and we
    will always continuously look at that and make sure we have the
    right amount of dollars.
        Senator Stevens. Senator Cochran.

                              Test determinations

        Senator Cochran. I am concerned about your description of
    the pressure that is being put on the success of any single
    test as a condition to authorizing a buy for interceptors. I
    think that was a response you made to Senator Stevens'
    question. Do you think too much pressure is being put on the
    THAAD program specifically, making any single successful test
    determine the future of the program?
        General Lyles. Senator Cochran, I would not describe it as
    pressures, even though I used that word. Or at least I would
    characterize the pressure as really an internal one. Our
    pressure and our desires to field a capability as rapidly as
    possible in the theater missile defense area, which THAAD is
    obviously intended to counter, we know the threat exists today.
    We have already lost some 27 lives in Desert Storm. So the
    pressure is really an internal one to field a capability
    rapidly. And we have laid out very aggressive schedules, and in
    some cases, high-risk schedules, at least to try to get a
    capability early.

                              Procurement funding

        Senator Cochran. In talking with Senator Stevens about the
    management configuration that you have now with Huntsville, you
    use the illustration that this is not really an Army program
    and not an Air Force program, it is a BMDO program. Why is it
    that we are going in the opposite direction, then, in the
    allocation of TMD procurement responsibilities and putting TMD
    procurement funds under the control of individual services now
    rather than BMDO? Does that worry you?
        General Lyles. Senator, I think the word I used is it
    really is a national program for national missile defense. It
    is not Army or Navy or Air Force. It really is a national and
    joint program. So our management approach is specifically to
    ensure that we have a joint program office and we are working
    jointly with all the various elements.
        The issue that you just brought up about procurement
    dollars was a conscious decision to ensure that the
    organizations who are going to have to field and operate these
    various systems--the Army, the Navy, the Air Force--had the
    responsibility for making decisions on where their procurement
    dollars go for those various systems. It is a different
    approach than what we have had in BMDO. I will be honest, it
    takes away some of the clout that we have had in the past. But,
    in some respects, I think it is an appropriate one.
        The Secretaries of the services are going to have to decide
    in the future, with limited dollars, do they spend it on
    planes, tanks and boats, or do they also allocate some to
    missile defense? That is going to be a tough decision. But in
    our fiscally constrained environment, I think they need to be
    the ones to help make that decision. And that is why
    procurement dollars have now been put in their budget lines.

                      Israeli boost-phase intercept system

        Senator Cochran. There was some discussion about the Arrow
    program. I think Senator Inouye talked in more detail about
    that with you. There is also another program that we are
    working on with the Israeli Government. I wonder if you could
    discuss the boost-phase intercept research that is being done?
        General Lyles. Yes, Senator Cochran. We call it--or they
    call it--IBIS, Israeli boost-phase intercept system [IBIS]. We
    are also working with them cooperatively on that program, in
    terms of sharing dollars and development dollars. We are trying
    to help them to develop a boost-phase intercept capability. And
    I think we all clearly understand that if we can counter and
    shoot down theater missile system, threats against us, in the
    boost phase, it is not only an effective way of doing things,
    it offers a little bit of a deterrence, with the systems
    falling on their homeland.
        This program is--we look at it as a hedge in some respects,
    in case our Airborne Laser Program, which will have boost-phase
    intercept capability, does not work. So we are working with the
    Israelis in trying to determine exactly what they do in that
    program, and sharing some of the development with them.
        Senator Cochran. Does that offer the hope to us in our
    ability to develop the same kind of system for our use? Do we
    have similar interests in developing this program as they do?
        General Lyles. Yes, sir; and as I just stated, our interest
    primarily is focused on the Airborne Laser Program, the Air
    Force's Airborne Laser Program. While that program is fully and
    totally within the Air Force's budget line, it is part of our
    missile defense architecture. That is our primary boost-phase
    intercept program for the Department of Defense.
        We look at the Israeli IBIS program as a potential hedge in
    case airborne laser does not work. We perhaps can learn from
    and take some of the technology and capabilities from their
    program to give us a boost-phase intercept capability if
    airborne laser is not successful.

                            Test range availability

        Senator Inouye. General Lyles, reports indicate that every
    test delay or postponement costs millions. The latest
    statistics suggest that the range availability is 92 percent at
    the Pacific missile range, the highest amongst all the ranges.
    Do you take that into consideration in assigning missions?
        General Lyles. Senator, in assigning test areas and test
    locations, we do take that into consideration. However, what we
    try to do is to ensure that we have a balance of capabilities
    for doing our missile defense testing. One area where we
    obviously focus our testing today is White Sands missile range.
    It is range limited in some respects, from a safety standpoint.
    And so we cannot do all testing, long-range testing, there. So
    the Pacific missile range offers some clear advantages in that
    area.
        And as I think you are aware, we are at least looking at
    the possibility too of seeing how the Eglin Air Force Base
    range in Florida, in the gulf, could also potentially aid our
    missile defense testing in the future.
        Senator Inouye. Thank you very much, sir.
        Senator Stevens. Any further questions, Senator?
        Senator Cochran. No, sir.

                          Three plus three test costs

        Senator Stevens. I hope in the information you are going to
    give us, General, you will give us--we all understand that you
    are a good officer and you are subject to the Commander-in-
    Chief's direction and some OMB directions, but you are also a
    witness before us and we are asking a specific question now.
        General Lyles. Yes, sir.
        Senator Stevens. What will it cost to do the tests that
    must be done to maintain the three plus three at least? What is
    the money that you need now in terms of the complications that
    may come out of this unfortunate test to maintain the schedule
    that you have? And is it possible to accelerate that test
    schedule at all? Is it possible to accelerate an interim
    solution, such as upgrading the Patriot even quicker?
        We want you to give us your best judgment now, as our
    really most informed witness on this subject, what can we do to
    maintain this schedule and improve it?
        General Lyles. Mr. Chairman, I can tell you I will always,
    always be completely open and honest in my testimony and
    discussions with Congress.
        Senator Stevens. And there is no implication you might not
    be, but you might be constrained by some people who live
    downtown in answering my questions unless I am very specific.
    And in years gone by, I sat at the table and some Senators told
    me, now, listen, son--and you are not a son to me--but let me
    tell you, he said, no matter what they tell you downtown, you
    answer my question. And that is what I am respectfully saying
    to you. No matter what anyone tells you, we want the answers to
    those three questions.
        General Lyles. Yes, sir, Mr. Chairman. We will provide that
    for the record.
        Senator Stevens. Thank you very much.
        Senator Inouye. He is not a downtown man.
        Senator Stevens. No; he is not a downtown man.
        General Lyles. I am from Washington, DC, downtown, though,
    sir, born and raised. [Laughter.]
        [The information follows:]

        These questions need to be answered in reverse order.
    First, let's address only the first ``3'' of the 3+3 since that
    culminates in our system demonstration in fiscal year 1999 and
    postures us for a deployment decision. With just over two years
    left before this test, the lead-times involved in procuring
    hardware obviate any schedule acceleration or added flight
    tests. In other words, we can't buy schedule at this point. We
    believe by an upgrade to the PATRIOT you are really referring
    to the upgrading of our Payload Launch Vehicle (PLV), which is
    currently the NMD intercept test booster. We looked at this
    earlier in the year and determined the time and dollars
    required for this upgrade did not outweigh the time and dollars
    needed, or performance gained, by either an off-the-shelf or
    Minuteman booster development. Again, we can't buy schedule at
    this point. However, we can buy back scheduled activities such
    as the failed flight test. We've estimated this to cost us
    about $60 million in fiscal year 1998. This accounts for the
    procurement of another target and contractor (Boeing, Hughes
    and Lockheed) costs associated with the delays. Funding only of
    this shortfall, however, only gets us back to the high risk
    program we've had and does not provide any cost margin to
    mitigate further delays or failures, nor apply further risk
    mitigation efforts. We've recently completed a detailed cost
    estimate as part of the Defense Acquisition Board process that
    does include this type of cost risk margin. This life cycle
    cost estimate indicates a need for $464 million (fiscal year
    1997 dollars) more in fiscal year 1998 than what was submitted
    in the President's Budget. This estimate is currently under
    review as part of the Department's Quadrennial Defense Review
    and the Defense Acquisition Board processes.

                         Additional committee questions

        Senator Stevens. If there are any additional questions from
    other Senators, they will be supplied to you for your response.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                Questions Submitted by Senator Pete V. Domenici
                           ballistic missile defense
        Question. General Lyles, compared to last year, the 1998 request
    for ``Ballistic Missile Defense'' includes items not counted last year,
    and some procurement activities are apparently being transferred from
    BMDO to the military services. Using an ``apples to apples'' comparison
    and including all missile defense activities, please compare last
    year's actual funding to this year's request.
        Answer. Please see attached chart.

    ----------------------------------------------------------------------------------------------------------------
                                                                    Requested                              Requested
                                                                     fiscal    Appropriated                 fiscal
                                                                    year 1997   fiscal year                year 1998
                                                                    in fiscal     1997 in      Variance    in fiscal
                                                                    year 1997   fiscal year                year 1998
                                                                       PB         1997 PB                     PB
    ----------------------------------------------------------------------------------------------------------------
    Programs managed by BMDO:
        Procurement:
            THAAD System.........................................  ..........      ( \1\ )   ...........  ..........
            HAWK.................................................      19.379   \1\ 19.379   ...........  ..........
            TMD-BM/C\3\..........................................      19.256   \1\ 19.256   ...........      20.200
            PAC3.................................................     215.378  \1\ 215.378   ...........     350.700
            Navy Area Wide.......................................       9.160    \1\ 9.160   ...........      15.500
                                                                  --------------------------------------------------
              Total Procurement..................................     263.173      263.173   ...........     386.400
                                                                  ==================================================
        RDT&E:
            Support Tech.........................................     226.342      366.342      140.000      249.489
            THAAD System.........................................     481.798      621.798      140.000      556.127
            Navy Theater Wide....................................      58.171      304.171      246.000      194.898
            CORPS SAM/MEADS......................................      56.232       30.000      (26.232)      47.956
            BPI--DEM/VAL.........................................  ..........       24.300       24.300       12.885
            National Missile Defense.............................     508.437      833.437      325.000      504.091
            Joint Theater Missile Defense........................     520.111      525.511        5.400      542.619
            PAC3--EMD............................................     381.509      381.509   ...........     206.057
            Navy Area Wide.......................................     301.582      301.582   ...........     267.822
                                                                  --------------------------------------------------
              Total RDT&E........................................   2,534.182    3,388.650      854.468    2,581.944
                                                                  ==================================================
        MILCON:
            National Missile Defense.............................  ..........  ............  ...........        .540
            Joint Theater Missile Defense........................       1.404        1.404   ...........       1.965
            THAAD System.........................................  ..........  ............  ...........       4.565
                                                                  --------------------------------------------------
              Total MILCON.......................................       1.404        1.404   ...........       7.070
                                                                  ==================================================
              Total BMDO Program.................................   2,798.759    3,653.227      854.468    2,589.014
                                                                  ==================================================
    Programs funded outside of BMDO:
        Procurement:
            JTAMDO (JCS).........................................  ..........  ............  ...........       1.200
            PAC-3--(Army) Included above.........................  ..........  ............  ...........  ..........
            BMC\4\I (Army) Included above........................  ..........  ............  ...........  ..........
            Navy Area TBMD (Navy) Included above.................  ..........  ............  ...........  ..........
                                                                  --------------------------------------------------
              Total procurement..................................  ..........  ............  ...........       1.200
                                                                  ==================================================
        RDT&E:
            Joint Aerostat (Army)................................      38.900       26.900      (12.000)      86.200
            SMTS/SBIRS Low (A/F).................................     113.251      242.250      128.999       86.200
            Airborne Laser (A/F).................................      56.800       56.800   ...........     219.441
            Theater Missile Defense (A/F)........................      22.285       31.295        9.010      157.100
            JTAMDO (JCS).........................................  ..........  ............  ...........      23.100
                                                                  --------------------------------------------------
              Total RDT&E........................................     231.236      357.245      126.009      515.023
                                                                  ==================================================
              Total ballistic missile defense:
                  Procurement....................................     263.173      263.173   ...........     387.600
                  RDT&E..........................................   2,765.418    3,745.895      980.477    3,096.967
                  Milcon.........................................       1.404        1.404   ...........       7.070
                                                                  --------------------------------------------------
                    Grand total..................................   3,029.995    4,010.472      980.477    3,491.637
    ----------------------------------------------------------------------------------------------------------------
    \1\ Procurement Funding has been transferred to the services. These figures are displayed here for information
      only.

        Question. Much of the testing that BMDO apparently envisions for
    missile defense systems employs computer simulations to help cut costs.
        Did any computer models or simulations anticipate any of the four
    failures in THAAD testing to hit and destroy the test targets? If so,
    why was the test held? If not, what level of confidence do you
    realistically expect you can have in test results if a significant
    portion of the results is based on models and simulation? Will the use
    of simulations lessen the confidence you can have in actual
    performance?
        Answer. Simulations did not predict the failure mechanisms in the
    four most recent THAAD tests. This is not unexpected since simulations
    cannot be expected to identify reliability or random failures, such as
    those the program has experienced. Following the FT07 failure, BMDO
    chartered two independent review teams to look at the THAAD missile
    design margin and reliability and ways to reduce overall programmatic
    risk.
        We, and the test community in general, are convinced that
    simulation plays an important role in risk reduction and confidence in
    the THAAD flight test program. Simulations have predicted, and flight
    tests have verified, overall THAAD flight performance except for the
    final endgame intercept. The THAAD flight test hardware and software
    undergoes extensive hardware in the loop testing and hundreds of
    simulation runs to prepare for a mission. This process has been
    successful in identifying potential flight problems prior to conducting
    actual flight tests. For example, simulation testing conducted at
    Lockheed Martin Missiles and Space Software Integration Laboratory
    prior to FT07, identified a firmware problem in the missile's inertial
    measurement unit, that could have prevented the seeker from acquiring
    the target.
        THAAD is in the Program Definition/Risk Reduction phase of
    development, and is still in the process of verifying, validating and
    accrediting (VV&A) system performance models. Data collected during the
    flight test program is being used to address known modeling
    uncertainties, that will allow the THAAD Project Office (TPO) to
    complete the VV&A process. These flight tests will serve to
    substantiate program definition and to reduce risk for the next phase
    of development--Engineering Manufacturing Development (EMD).
        Question. What would be the cost to test a production
    representative THAAD in the most realistic settings possible in a
    number of live tests that are statistically adequate for a 90 percent
    level of confidence that the results are valid?
        Answer. The THAAD Project Office is already planning to move their
    flight test program from White Sands Missile Range to Kwajalein Missile
    Range (KMR) during EMD, in order to fully exercise the system against
    longer range threats with realistic trajectories. However, assuming a
    standard normal distribution, anywhere from 75 to 175 flight tests
    (depending on the results of early flight test) would need to be
    conducted in order to achieve a 90 percent confidence level. Rough
    order of magnitude (ROM) cost estimates to conduct 100 missions at KMR,
    exceed $2.6 billion.
        Question. The 1998 request transfers procurement activities away
    from BMDO to the Military Services. This contradicts the rationale for
    BMDO--in part--which was to protect missile defense procurement funds
    from competition with conventional systems and their inevitable cost
    overruns.
        Why was this decision made?
        Answer. The Department shifted BMD procurement funds to the
    Services over the FYDP in recognition that our TMD programs will soon
    transition to the procurement phase, requiring increased attention to
    operational and logistics matters. The THAAD system will transition to
    the EMD phase in less than a year, Navy Area Defense entered Milestone
    II, and PAC-3 is scheduled for a Milestone III decision in 1999. As
    these programs move into the latter stages of the acquisition process,
    it is important that increasing attention be placed on operational and
    logistics matters. The Services, not BMDO are chiefly responsible for
    integration of the operational and logistical concerns for BMD systems
    with their other missions. Moreover, having the Services directly
    budgeting and managing these BMD resources facilitates Service planning
    for the deployment and operation of these systems with manpower and
    force structure considerations.
        Question. What are your personal views about it?
        Answer. I would like to highlight several points. First, in a
    February 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. 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.
        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 program 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.
        What I have described above are potential problems but, clearly, to
    be forewarned is to be forearmed. So I do not view this situation as a
    problem as so much as a challenge.
        Question. What guarantee can you provide that missile defense funds
    will not be compromised to help conventional systems, and what promise
    can you provide that the reverse will not happen?
        Answer. I can provide no guarantee. The Secretary of Defense has
    always had the authority to move funds in and out of BMD programs based
    on Department priorities. I will continue to prepare program plans
    covering the entire spectrum of BMD programs with the purpose of
    optimizing performance against the total threat and satisfying all user
    requirements in the most cost-effective manner. I will present these
    plans to the Department and trust the Secretary to make choices which
    produce the best balance for the Department when all requirements are
    considered.
        Question. When he was a Senator, Secretary Cohen was a supporter of
    National Missile Defense and was one of the architects of the
    compromise that was achieved with the Administration. Have you had an
    opportunity to discuss these issues with Secretary Cohen? Has he begun
    to effect any changes on Administration policy on these issues?
        Answer. Yes, I have had the privilege of discussing the NMD program
    with the Secretary. While he must obviously balance a great many
    competing priorities I found him fully supportive of our program. He
    clearly understands and supports the rationale for the ``3 plus 3''
    program.
                                     ______

                Questions Submitted by Senator Richard C. Shelby
                           ballistic missile defense
        Question. At last year's missile defense hearings, Lt. Gen. O'Neill
    testified that the administration's ``3 plus 3'' approach was a high
    risk development program. To reduce that program risk, Congress
    increased funding for national missile defense. With that in mind, what
    specific actions have you taken to reduce the risk of the development
    phase of the ``3 plus 3'' strategy? How has BMDO allocated the
    additional funding to reduce risk? Why are you testifying this year
    that the risk has increased even though Congress provided additional
    funds to meet the needs as defined by the former BMDO director?
        Answer. We've used increased funding to reduce the technical risks
    of integration and limited flight testing by beginning the selection of
    a Lead System Integrator and significantly increasing our ground
    hardware in the loop capability. We've also put funds into NMD
    piggyback testing on other missile flight tests such as Minuteman and
    Peacekeeper. We've moved to mitigate schedule risk with the purchase of
    spare kill vehicle and radar hardware, increasing our system
    engineering and deployment planning efforts and, again, by selecting a
    Lead System Integrator to ensure we can deploy within the second ``3''.
        Despite the risk reduction activities described above, the NMD ``3
    plus 3'' program continues to be a high risk development from
    technical, schedule and cost perspectives. Technical integration
    continues to be a challenge until a Lead System Integrator is fully on-
    board and we successfully accomplish an intercept. Schedule risk has
    been extremely high and recent delays in awarding a Lead System
    Integrator concept development contract (which includes selection of
    our booster), standing up a Joint Program Office, and accomplishing our
    first kill vehicle sensor flights have only put more pressure on an
    already tight schedule. Finally, funding level continues to affect both
    our program strategy and schedule. We've had no funding margin to
    absorb the above delays. Therefore, program content, schedule or both
    must change as delays and failures occur. Hence, overall program risk
    remains high.
        Question. How much of the $833 million authorized and appropriated
    by Congress for fiscal year 1997 have you allocated to purchasing
    additional hardware, conduct additional flight tests, and the GBI
    booster development?
        Answer. We used the additional $325 million provided by Congress in
    fiscal year 1997 to address technical, schedule and cost risk areas
    across the NMD program over the fiscal year 1997/98 time frame.
    Technical risk was addressed primarily through increases in systems
    engineering, integration, and hardware testing. Schedule risk was
    addressed primarily with additional hardware procurements and adoption
    of a Lead System Integrator concept to ensure we could achieve a
    deployment within ``3'' years of a decision. Cost risk was addressed by
    increased funding to elements experiencing cost growth or requiring
    better definition of their needs. We identified these issues and their
    funding requirements in late fiscal year 1996, prioritized them to best
    reduce overall program risk, and distributed all funds soon after they
    were received from OSD. Specific to the above question, we allocated an
    additional $84 million over fiscal year 1997/98 for hardware. This
    hardware includes a spare EKV and EKV ground test units, spare radar
    components, ground test hardware-in-the-loop components, spare target
    front end and development of and hardware for the In-Flight Interceptor
    Communications System and GBI communications transceiver. We allocated
    $105 million over fiscal year 1997/98 for the GBI booster/Lead System
    Integrator. The GBI booster funding is split between booster
    development, which we currently have in our EKV/GBI element and the
    Lead System Integrator, who will select the booster, write the
    specification, and integrate the kill vehicle to the booster to
    complete the GBI. We did not specifically add flight tests but we did
    significantly increase or testing capability at the element and system
    levels. We allocated an additional $119 million over fiscal year 1997/
    98 for test activities. These activities include GBI hardness and
    lethality testing, further development of hardware in the loop
    capability, an increased use of NMD piggyback testing on other missile
    tests such as Minuteman and Peacekeeper, and development of a high
    fidelity system simulator to verify performance requirements.
        Question. Is the administration's fiscal year 1997-99 budget plans
    sufficient to execute the first three years of the ``3 plus 3'' NMD
    program?
        Answer. The NMD ``3 plus 3'' program was initiated in February 1996
    and subsequently designated a Major Defense Acquisition Program. The
    program was deemed very high risk from a cost, schedule and technical
    perspective. At the time, coupled with a proposed Congressional plus-up
    in fiscal year 1997, we felt if all were successful, we could achieve
    an integrated system test by the end of fiscal year 1999. Since that
    time, and after the fiscal year 1998 President's Budget was submitted,
    we've experienced several test and program delays, as well as a flight
    test failure. These costly events will necessitate both schedule and
    program content adjustments over the next several years; thus
    potentially impacting execution of our original ``3 plus 3'' program.
    Additionally, we are completing a detailed ``3 plus 3'' life cycle cost
    estimate. This estimate is based on a more moderate costing/funding
    approach to the NMD program and also indicates program execution issues
    within the current President's Budget. We are currently reconciling
    these issues within OSD via the Defense Acquisition Board and
    Quadrennial Review processes.
        Question. General Lyles, would you agree that past investment in
    the NMD elements, system, and architecture has produced significant
    accomplishments? Could the LSI cause another NMD program restart? If
    so, please detail all prior spending that will not be used? If not, why
    is the LSI needed to continue the progress that has already been made
    without an LSI?
        Please calculate the total amount allocated to BMDO NMD SE&I
    efforts, system architecture studies, SETA's, Tiger Teams, and so
    forth. Considering how much has been invested, why is it necessary for
    the LSI to conduct another concept definition before work can begin?
        Answer. Our past efforts in both TMD and NMD have yielded some very
    significant results. The LSI effort builds on these accomplishments.
    Without them, we could not pursue the current NMD or LSI program. These
    existing programs address the technology within the elements, such as
    sensors, weapons and BM/C\3\. To meet our 3+3 program objectives, we
    must now address how to integrate and field NMD at the system level.
    This is not a program restart, but is instead a logical continuation of
    the existing effort, and a necessary step to be ready to deploy the
    system. Although the LSI contractors have not yet provided us their NMD
    plans, we envision that it will leverage the existing investment
    similar to the Government developed NMD planning. You are correct in
    stating that we have performed many architecture studies, however the
    study the LSI will be conducting is not so much an architectural
    concept development, but is instead developing a plan for the
    management and integration of the NMD. The LSI Concept Definition (CD)
    contractors will be developing the approach and program they will use
    to integrate, and potentially produce and deploy the NMD system. Our
    previous efforts have generally addressed ``what'' would be in an
    architecture, now we are addressing ``how'' it would be integrated and
    deployed.
        Since the NMD program has become an Major Defense Acquisition
    Program the total allocated for SE&I, SETA and LSI (for fiscal year
    1996 through fiscal year 1998) is as follows:

                                                                 In millions

    SE&I..............................................................  $129
    SETA..............................................................    45

    LSI

                                                                          52

        Question. Last February, former Secretary William Perry announced
    that the administration would pursue the so-called ``3 plus 3''
    deployment readiness program for NMD. I believe that everyone
    understood that the clock started ticking last year. You have stated
    however on several recent occasions, including testimony to the SASC
    last month, that the development program of the ``3 plus 3'' strategy
    will not begin until the LSI contractor has been selected later this
    year.
        General Lyles, if the LSI is critical to the three years of NMD
    development, why wasn't the LSI mentioned when Secretary Perry and Dr.
    Kaminski announced the ``3 plus 3'' program?
        Do your recent statements mean that the demonstration of the
    elements of the NMD system will be delayed by one year? Isn't it more
    accurate to describe the administration's NMD program as ``4 plus 3''
    or ``5 plus 3?''
        Answer. The ``3 plus 3'' program that was announced by Secretary
    Perry was a statement of the overarching policy that the Administration
    intends to follow for National Missile Defense. It was designed to make
    maximum use of the technology development efforts on-going at the time
    but was clearly a more comprehensive program than the technology
    readiness program implemented following the Bottom-up Review. The ``3
    plus 3'' program, as defined by Secretary Perry, required a system
    demonstration by 1999 and the capability to deploy within 3 years
    following that demonstration. These two objectives could only be fully
    accomplished by providing an integrating contractor that would take the
    excellent work being done on individual elements and mold it into the
    system of systems that is necessary for a deployable NMD. This
    contractor must be in place during the first three years of the ``3
    plus 3'' in order to be prepared to execute the second three. If not,
    there is a very low possibility that the second three year deployment
    could be accomplished.
        Question. My understanding is that the Army prepared a Request for
    Proposal (RFP) for the GBI almost eighteen months ago so that a booster
    would be ready for integrated testing in 1999. Is that correct? Why did
    BMDO stay the release of the RFP? Please tell us what actions have been
    taken to develop the GBI booster.
        Answer. Yes, the Army prepared a GBI RFP about 18 months ago. The
    RFP was never released because the requisite funding was not available
    in the GBI budget and all options concerning booster development had
    not been appropriately qualified and considered. To date, very little
    has been done reference the development of an integrated GBI. The Lead
    System Integrator contractor will be tasked to design and develop a
    cost effective GBI which leverages NMD system-level trades associated
    with cost, performance, schedule and risk.
        Question. General Lyles, your written statement mentions that the
    failure of the EKV seeker flight test illustrates the high risk
    associated with the ``3+3'' schedule. Didn't Congress authorize and
    appropriate additional funding specifically for ``the acquisition of
    additional kill vehicles and test booster hardware?'' If extra targets
    had been available for the EKV flight test, how long would it have
    taken to conduct another test after the failure in January? How much
    would BMDO have saved if you were able to conduct a second test within
    a few days instead of six months or more? Would you agree that
    acquiring additional test equipment, as directed by Congress, reduces
    the schedule risk you have mentioned today?
        Answer. Congress did provide additional funding for additional kill
    vehicles and test booster hardware. In order to reduce technical risk,
    BMDO has continued to fund two competing EKV contractors. Additional
    funding has been applied to purchasing kill vehicles and test boosters
    to support flight testing by the second contractor. If an extra target
    had been available for the first EKV sensor flight test, the test could
    have been rescheduled in approximately one month. The exact delay would
    have depended on the amount of time required to identify and correct
    the cause of the failure, and on test range availability. If we had
    been able to conduct the test within one month rather than several
    months, we would have saved approximately $35 million. I would
    certainly agree that acquiring additional test equipment reduces
    schedule risk.
        Question. General Lyles, do you agree that it is now common
    practice to solicit the input of the war fighter during program
    development? Doesn't this process provide feedback so that program
    managers can respond to the needs of the war fighter? Are there any
    provisions in the LSI RFP to ensure that the Services can direct the
    LSI contractor in the elements of the system that they will ultimately
    field and operate as war fighters? Are there any efforts to seek the
    input of the CINC's?
        Answer. In developing the NMD, we are fortunate in having all of
    our War Fighting requirements developed by a single unified command,
    the U.S. Space Command. This command includes elements of the Army,
    Navy and Air Force. Requirements for the NMD are provided by this using
    command to BMDO, via the Joint Requirements Oversight Council (JROC).
    BMDO will remain responsible for meeting these requirements, and we
    plan to continue our extensive interaction with the user. The LSI will
    respond to these requirements, as directed by BMDO. There will be no
    change in these relationships.
        Question. General Lyles, why do you believe that another
    integration contractor--the LSI--is needed at this time? Don't you have
    to demonstrate the elements in the first three years before they can be
    integrated and deployed? Don't you need to focus your funding on
    demonstrating the elements so that they can be integrated?
        Doesn't BMDO have in place the NMD SE&I contract to develop the
    integrated system requirements and BM/C\3\ element which is supposed to
    ensure an integrated system? If so, please tell the committee why this
    SE&I effort for an integrated and deployable system is inadequate to
    accomplish the demonstration of the elements in fiscal year 1999?
        Answer. In order to be ready to deploy and field a system within
    three years, we must demonstrate not only that each of the elements
    functions and performs independently, but that they can be integrated
    into a system and work together to meet the user's mission
    requirements. BMDO does not believe these issues are secondary to the
    element technology, nor do we believe they can be deferred until the
    element development is completed. BMDO believes that integration of the
    NMD is a critical developmental challenge that must be started now to
    ensure we could be able to deploy in 2003.
        First, we need to provide a design for the NMD system at the
    Deployment Readiness Review (DRR). Our current development is focused
    on developing an element tool kit that could support deployment against
    a wide range of threats. This is important, but it is by no means
    sufficient. We must develop an NMD design that would use these
    elements, determine its performance, and plan for its integration,
    deployment and support. Second, we know from past experience that
    integration of weapons systems is a critical phase. We do not believe
    we can defer this effort and perform it, along with all of the
    challenges that will have to be met, during the very schedule
    constrained three year deployment period. Lastly, we proposed to do a
    system demonstration. A system demonstration implies that we will
    provide more than just a set of standalone elements; we need to
    demonstrate an NMD system that is reasonably similar to the one we
    would deploy.
        The current SE&I contract is a significant resource in this effort,
    but it was not developed to fulfill this role. The contract was
    originally written for the Technology Readiness Program (TRP), which
    did not envision a 3+3 program. We have significantly modified this
    contract, but it does not have the scope to provide for physical design
    of the NMD and performance responsibility. It was oriented around
    standalone element programs. As we move to implement the Joint Program
    Office (JPO) we will be integrating our management so that we are not
    executing the NMD program through a large number of separate contracts,
    but through one integrated prime contract that will ensure integration
    of our system and element development. This would not have been
    possible through the existing SE&I contract.
        Question. Will the LSI be responsible for testing the NMD elements
    in the integrated systems test in fiscal year 1999?
        Answer. We have provided the LSI with flexibility in proposing a
    role for the fiscal year 1999 test. This reflects the long lead time
    for the acquisition of test articles, launch vehicle integration, and
    test facility planning. The Government has been performing the planning
    for this test, and our current LSI Statement of Objectives (SOO) allows
    the LSI to leverage this investment. We will need to work with our
    contractors to develop approaches to achieving the best mix of LSI and
    Government responsibility for this test.
        Question. Your written statement asserts that the SBIRS Low, or
    SMTS, is a critical element of the NMD system. Why wasn't the SBIRS Low
    placed under the direction of the JPO and included as an element of the
    LSI?
        Answer. While SBIRS Low is a critical element of the NMD system, it
    is an integrated component of the overall SBIRS architecture. This
    architecture, approved by Dr. Kaminski (USD (A&T)) in 1994, encompasses
    more than ballistic missile defense support. SBIRS must also support
    missile warning, technical intelligence, and battlespace
    characterization. The Department of Defense appointed the Air Force
    steward of the SBIRS Low program based on recommendations from the 1994
    OSD SBIRS Summer Study. A single manager for the entire SBIRS
    architecture was determined to be the most efficient and effective way
    to ensure the High and Low programs will synergistically support all
    missions.
        In compliance with Fiscal Year 1997 National Defense Authorization
    Act direction for a management review of the SBIRS Low program, the Air
    Force, BMDO, and DUSD (Space) have reviewed the current management of
    the SBIRS program. BMDO agrees that the multi-mission nature of the
    program and the synergistic effects of designing complementary high-
    and low-systems require a single manager. Dividing responsibilities for
    the SBIRS Low program from the remainder of the system will likely
    result in unnecessary duplication, complicated interfaces, increased
    cost, and loss of overall mission capability. Furthermore, transfer of
    management would destabilize progress towards meeting the SBIRS Low
    2004 initial deployment schedule.
        Currently, BMDO is closely involved with the Air Force on the SBIRS
    program, and has played a key role in the development of the overall
    DOD SBIRS program. The BMDO team works within the SBIRS integrated
    product team (IPT) structure to define the requirements and interfaces
    for SBIRS Low to meet ballistic missile defense requirements. BMDO is a
    member of the AFSPC Requirements Review Group (RRG) and DUSD (Space)
    Independent Technical Review Board for SBIRS. BMDO and the SBIRS
    program office jointly chair an Integration Control Working Group
    (ICWG) to resolve issues between the NMD and SBIRS programs. The SBIRS
    program office personnel also participate in NMD IPT's. Finally, BMDO
    and the Air Force have a Memorandum of Agreement on the acquisition
    management of the SBIRS Low program. This agreement ensures that the
    entire SBIRS architecture is responsive to ballistic missile defense
    needs. Overall, this extensive involvement of BMDO in the SBIRS program
    ensures the connectivity of SBIRS with the missile defense programs.
        Question. In your written statement, you mention that ``past
    investments in technology allow us to build into today's interceptors,
    sensors, radars the capability to counter existing and emerging missile
    threats.'' Dr. Kaminski has provided similar testimony, commenting on
    the importance of BMD support technology programs to block upgrades.
        Would you agree that next technology upgrades to our current core
    acquisition systems require the same level of development and
    demonstration as required for implementing system upgrades? What
    specific technology programs in BMDO are being developed to support
    block upgrades?
        Answer. We understand your question to be: ``Will the technology
    programs to affect future system block upgrades be as expensive as our
    initial technology programs that made today's acquisition programs
    possible. The answer is no. In the past, the technology investment from
    SDIO/BMDO ran over $1.5 billion per year. To adequately sponsor R&D and
    demonstrations for implementing system upgrades will require between
    $450-$600 million of technology investment per year.
        Today the existing technology programs supporting block upgrades
    are: Advanced Sensor Technology Program (ASTP); Discriminating
    Interceptor Technology Program (DITP); Structural Materials; Radar
    Technology; Power Technology; Atmospheric Interceptor Technology (AIT);
    and Innovative Science and Technology (various 6.2 programs on power,
    communications, electronics, seekers, propulsion and propellants, and
    sensors).
        Question. Congress appropriated an additional $140 million in BMDO
    Support Technology funding in fiscal year 1997. General Lyles, please
    explain why BMDO redirected the Support Technology program funds to
    other projects. How does BMDO determine which Support Technology
    program funds are redirected? Do the Services have any input in the
    decision to redirect such funds? If so, please explain this process to
    the committee. If not, why are the Services not allowed to participate
    in this process?
        Answer. Contrary to the question, BMDO has not redirected any
    Support Technology program funds to other projects, with the exception
    of a few percent in taxes which were necessary to fund the Small
    Business Innovation Research (SBIR) program mandated by law, MEADS
    (which was Congressionally directed and under funded), as well as
    Support Technology's fair share of minor undistributed cuts.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                           ballistic missile defense
        Question. General Lyles, you will recall that Section 245 of the
    Defense Authorization Act for Fiscal Year 1997 requires that the
    Secretary of Defense report to the Congress on the Air Force's National
    Missile Defense Plan. I cosponsored the floor amendment requiring this
    report. The report is specifically supposed to discuss the cost and
    effectiveness of the Air Force's plan, its arms control implications
    (if any), and its potential for future growth. The law required that
    report to have been submitted 6 weeks ago. When will the Congress see
    this report?
        Answer. The report is final coordination and should be provided in
    the very near future.
        Question. General Lyles, on page 17 of your prepared remarks (for
    the SAC Defense Hearing of Mar. 12, 1997) you state that: ``Several
    booster options are being examined for the Ground-Based Interceptor,
    including the Minuteman missile, and other modified, off-the-shelf
    boosters. My intention is to foster a ``level playing field'' and
    ensure that all booster options are fairly evaluated. The bottom line
    must be the use of the most effective and affordable booster option
    available.
        General, has the Air Force told you that it could contribute enough
    boosters for a 100-interceptor system, including spares and test
    boosters, without affecting its own required 500-missile Minuteman 3
    deterrent force?
        It's my understanding that a commercial off-the-shelf booster may
    not be able to absorb the shock and vibrations of a silo launch. Do you
    have a cost estimate for a thoroughly tested, off-the-shelf booster
    capable of a silo environment?
        Don't you agree that using existing silo infrastructure would be
    smarter and cheaper than digging new silos? Wouldn't this avoid the
    environmental impacts of digging new silos?
        Wouldn't existing command and control systems in place at either
    Grand Forks AFB or Minot AFB enable more economical deployment of an
    NMD system?
        Answer. There are a number of technical issues for the NMD booster
    that we have not decided, since we wish to provide the LSI contractors
    the maximum flexibility in developing their approaches. We have the Air
    Force letter stating that they can provide the 100 Minuteman boosters,
    and will be providing that to the LSI's.
        We are not constraining our LSI contractors to a silo-based
    configuration. They are free to select basing to achieve performance
    and cost objectives. Silo environments are one of the many aspects of
    this selection. With support from the Air Force and Army, we will be
    validating the LSI's analysis to make sure that they have considered
    and addressed these issues.
        In the LSI CD contract, the LSI CD contractors are to assume that
    the existing silos are available, for use with either the Minuteman, an
    existing, or a GBI-specific booster. The contractors will be competing
    for the lowest cost to the Government, so we are sure that they will
    leverage any available savings.
        As for existing Command and Control systems, we have asked our LSI
    CD contractors to provide us the most effective, lowest cost system
    they can propose, including BM/C\3\, which includes the command and
    control function. We anticipate that they will exploit existing
    communications systems, and may propose to use these existing command
    and control systems, as well. The requirements for strategic control
    over nuclear weapons, and operation of a non-nuclear defense system are
    different, and we will have to wait and see the engineering analysis
    before we can decide the direction BM/C\3\ development will take.
        Question. General Lyles, I'll be frank with you and say that I'm
    concerned that the Defense Department might develop an NMD architecture
    that violates the ABM Treaty. Perhaps I am reading too much into your
    statement, but on page 16 you say: ``[T]he development program that we
    execute will be compliant with the ABM Treaty as it exists today.
    Again, as Secretary Perry asserted, the system that is ultimately
    fielded might comply with the current Treaty, or it might require
    modifications to the Treaty depending upon what the threat situation
    requires * * * Depending on the threat to which we are responding when
    a deployment is required, an NMD system * * * could be deployed in a
    Treaty complaint configuration or in a configuration that may require
    some amendment to the ABM Treaty.''
        The United States is now a party to the ABM Treaty. That Treaty
    received its constitutionally required Senate approval nearly 25 years
    ago. The Senate approved it because the ABM Treaty removes incentives
    for an expensive and wasteful ballistic missile arms race, a race that
    could well occur if we abandon the limitations on missile defenses that
    the ABM Treaty provides. The ABM Treaty is the foundation upon which we
    have built the succession of strategic arms limitation and then
    reduction treaties. Even during the Cold War, the SALT and START
    treaties and talks gave stability and predictability to the nuclear
    age.
        In my view, increasing the number of interceptors or interceptor
    sites permitted under the ABM Treaty would be major changes to the
    Treaty. Such major changes would in my view require Senate approval.
    Let me assure you that unless the Intelligence Community is completely
    wrong about the intercontinental ballistic missile threat in 2003, I
    will actively oppose amendments to the ABM Treaty.
        Given these views of mine, I am somewhat concerned that the
    Ballistic Missile Defense Organization may be planning NMD
    architectures that violate the Treaty. What controls do you have in
    place to ensure that your NMD program assumes the existence in 2003 and
    later of ABM Treaty requirements that the NMD system field no more than
    100 interceptors at a single site?
        Answer. The development of the NMD system will be conducted in an
    ABM Treaty compliant manner. The Department of Defense has established
    effective controls to ensure ABM Treaty compliance. Under these
    controls, before BMDO takes any action that could reasonably raise an
    issue of ABM Treaty compliance, we must seek clearance from the Under
    Secretary of Defense for Acquisition and Technology. The Under
    Secretary is charged by the Secretary of Defense with monitoring arms
    control compliance and with providing the necessary guidance for DOD
    programs, such as ballistic missile defense, to assure they remain in
    compliance.
        Question. General Lyles, at the beginning of your statement you
    noted that it is important: that we recognize the challenges we still
    face in developing and fielding ballistic missile defenses--in many
    cases that really is ``rocket science.'' We are building highly
    sophisticated BMD systems, consisting of sophisticated sensors and
    interceptor missile that incorporate state-of-the-art electronics,
    seekers, communications, avionics and propulsion.
        I agree with your assessment of this technology. With the exception
    of the booster for the Ground-Based Interceptor, the technology is
    cutting edge. Too many people have been suggesting that we could field
    sensors, software, guidance systems and kill vehicles for a National
    Missile Defense system with currently-available technology.
        Could you please describe some of the technological challenges that
    the NMD program must overcome in order to field an effective system?
        Answer. The current NMD 3 plus 3 Program is designed to allow for
    continual technology development as the system is demonstrated and
    fielded. We are using technology that is currently being developed in
    each of our elements initially. These technologies will mature as the
    element and system test programs proceed. However, the most difficult
    challenges for the NMD program are the EKV sensor and kill vehicle
    development and integration, and the system integration and data fusion
    by the Battle Management Command, Control, and Communication (BM/C\3\)
    system ultimately combining the elements into the NMD system of
    systems.
        Question. General Lyles, on page 15 of your prepared statement you
    mention the ``Last year, Secretary Perry transitioned the NMD program
    from a `Technology' Readiness Program to a `Deployment' Readiness
    Program.'' Could you please be a little more specific about what this
    transition means for the program?
        I thought the goal of the Administration's ``3+3'' program was to
    have the technology ready in 1999 for a decision in 2000 or later on
    whether to deploy. Does this transition that you speak of mean that the
    BMDO is somehow prejudging the outcome of this policy decision, which
    has yet to be made?
        Answer. The Deployment Readiness Program was implemented to
    position the United States so that it could deploy a National Missile
    Defense System quickly if a threat from a rogue nation developed.
    Specifically, the program was structured as a ``3 plus 3'' so that
    sufficient development would be completed in 1999 to allow a deployment
    decision to be made as early as 2000. Once a decision is made to
    deploy, the program is required to be able to field the operational
    capability within three years. This provides for an earliest Initial
    Operational Capability of 2003 but in no way commits to the deployment
    for such an IOC.
        The time lines associated with a ``3 plus 3'' program are extremely
    stressing. To achieve these accelerated schedules it was necessary to
    utilize the existing technology developments underway at the programs
    inception. But, since these technology activities were not originally
    intended for deployment, additional development and integration efforts
    are also necessary to make this system of systems complete. Without
    these additional activities it would be impossible to test the entire
    system in the manner necessary to allow a deployment decision to be
    made. Over the last year we have identified the additional efforts
    required and have initiated many of the activities necessary to
    preserve the ``3 plus 3'' schedule. In this process no actions has been
    taken which would prejudge the deployment or any other policy decision.

                              subcommittee recess

        Senator Stevens. We are going to recess now. We will have a
    hearing on Wednesday, March 19, in S-407, for our intelligence
    issues before the committee.
        Thank you very much.
        General Lyles. Thank you, Mr. Chairman.
        [Whereupon, at 11:08 a.m., Wednesday, March 12, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                             MONDAY, MARCH 31, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                          Honolulu, HI.
        The subcommittee met at 9 a.m., in the Prince Kuhio Federal
    Building, 300 Ala Moana Boulevard, Hon. Ted Stevens (chairman)
    presiding.
        Present: Senators Stevens, Cochran, Domenici, and Inouye.
        Also present: Senator Roberts.

                             DEPARTMENT OF DEFENSE

                              U.S. Pacific Command

    STATEMENT OF ADM. JOSEPH W. PRUEHER, U.S. NAVY,
                COMMANDER IN CHIEF, U.S. PACIFIC COMMAND

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning. The subcommittee today will
    hear from Admiral Prueher, Commander in Chief of the U.S.
    Pacific Command.
        We meet today for this session in Hawaii at the conclusion
    of a 10-day mission to the Russian Far East, South Korea, and
    North Korea. Saturday, the members participating in today's
    hearings had the opportunity to meet with Admiral Prueher and
    the service component commanders here in the Pacific. We heard
    from them about issues facing this command and had the
    opportunity to report to them our observations from our trip.
        In Russia, we met with the leaders of the Far East Military
    District in Khabarovsk and the Russian Pacific Fleet in
    Vladivostok. In South Korea, we met with senior civilian
    leaders of the Republic of Korea and top United States
    commanders including General Tilelli and General Iverson.
        Our subcommittee went to the Pacific in part out of our
    concern that the current focus on Bosnia and Southwest Asia may
    have a negative impact on our forces in the Pacific. When we
    return to Washington, we face a $2.1 billion supplemental
    defense request to pay for the operations in Bosnia and
    Southwest Asia. All of those costs must be offset by reductions
    elsewhere in the defense budget.
        Admiral, today we want to know whether these other missions
    are impacting the readiness of forces under your command or the
    quality of life of your people. Admiral Prueher, your full
    statement will be included in the record for the benefit of
    those subcommittee members who cannot be with us here today.
        I ask that you summarize the issues that you would like to
    focus on during today's presentation, and then I believe all of
    us have some questions we would like to ask you for the record.
        Before we proceed, let me first thank the cochairman or
    vice chairman, whatever he wants to call himself, Senator Dan
    Inouye for his participation in our trip. He has a standing in
    the Pacific that no one else in the Congress has, and his
    hospitality in hosting this delegation here in Hawaii could not
    be surpassed.
        Senator Inouye, do you have any opening comments?

                        STATEMENT OF HON. DANIEL INOUYE

        Senator Inouye. Yes, Mr. Chairman. If I may, on a personal
    note, commend you, sir, for leading this delegation to parts,
    heretofore, unknown to most of us.
        Although most people will look upon Khabarovsk and Sakhalin
    and Vladivostok and Pyongyang as areas of great depression and
    ugly dark moods, I think it was good that these senior Senators
    took the time to visit them. We saw that their system of
    government is not doing as well as ours and that's an
    understatement. However, at the same time, I have to conclude
    that our problems are still ahead of us. Much as we would like
    to proclaim to the world and to our people that peace is at
    hand, after visiting Pyongyang, I cannot say that.
        It was a strange experience. On one hand this is a Nation
    with the fourth largest army in the world, with hundreds upon
    hundreds of artillery pieces aimed at Seoul, with missiles that
    can go beyond Seoul, with the No Dong missile that can reach
    Tokyo, with an army on exercise when we arrived there, with
    huge buildings, a 105-story hotel building which incidentally
    was never completed, boulevards that are eight lanes wide, and
    yet people are starving. That, to me, sir, is a very dangerous
    combination. And if we don't watch ourselves, we may be
    witnessing at this moment the beginning of an explosion.
        So I am glad that we have men like Admiral Prueher at the
    helm to make certain that this explosion doesn't happen. So I
    wish to join my chairman and welcome you.
        Admiral Prueher. Thank you, sir.
        Senator Inouye. And to tell you, Mr. Chairman, that your
    help in this delegation trip was immense. I think we got much
    out of it. Thank you, Mr. Chairman.
        Senator Stevens. Does any other member have an opening
    statement?
        Senator Cochran. No.
        Senator Roberts. No.
        Senator Domenici. No.
        Senator Stevens. I'd like to include in the record the
    names of the people who accompanied us on our trip including
    Dr. Chandler and Eric John, who is the person who occupies the
    North Korean desk at the State Department.
        Admiral Prueher, I would be happy to have your statement,
    sir.

                            Pacific Command strategy

        Admiral Prueher. Thank you very much, Mr. Chairman. It is a
    pleasure for me to be here with you Senators this morning, and
    welcome to Hawaii, particularly after coming from North Korea.
        In the last year since I have had the opportunity to visit
    most of the nations in the area of responsibility [AOR] and
    meet with their political leaders as well as their military
    leaders, and also to visit our troops, our soldiers, sailors,
    airmen, and marines and their families around the AOR, and to
    get a good look and a good feel for what they are doing. I must
    say it is a very encouraging picture.
        The Asia-Pacific region of responsibility is a pivotal one
    for our Nation, as we discussed on Saturday. It is an area that
    is largely at peace, but as Senator Inouye has pointed out,
    there are certain flash points and it is certainly not conflict
    free. We have fought three major wars here in the last century.
    But we are a region generally at peace, and our strategy, and
    our efforts are to keep it that way.
        It is an area marked by a confluence of security issues,
    economic issues, as well as diplomatic ones, and our effort is
    to work these in harmony and work them synchronously, as
    neither the diplomatic, military, nor economic issues in our
    view can be advanced separately.
        We talked also about the U.S. presence in the Asia-Pacific
    region, about 100,000 troops, which is shorthand for the
    capabilities represented here, brokering the security in the
    area which begets the stability which yields the economic
    prosperity which the Asia-Pacific region enjoys, the United
    States enjoys with the Asia-Pacific, and is important to the
    world economy as well.
        Our concept and our strategic notion for dealing with this
    is one of cooperative engagement. Cooperative engagement has
    three parts: The first part is peacetime engagement, what we do
    every day in visits like yours to the area, visits of high
    level military dialog that go on amongst the leaders in the
    region as well as efforts like the Asia-Pacific Center here in
    Honolulu, exercises in military-to-military relationships with
    the nations. That is the area in which we build bonds, we build
    structures on a day-to-day basis.
        The second element of our strategy of cooperative
    engagement is the ability to respond with capable, ready forces
    to crises. We need the forces capable and ready in the area to
    respond. An example of this was just about 1 year ago at the
    China-Taiwan crisis when we were able to respond with two
    carrier battle groups.
        And then the third part of this, our cooperative engagement
    strategy, is the ability to fight and win a major conflict
    which we hope not to do but we must be prepared to do and be
    seen to be prepared to do. And because of that, the ability to
    do this third part it enables us to operate in a lower
    spectrum, because in circular logic, that is the way that
    military strategy works.
        I think instead of running through a summary of my
    assessment of the various nations in the theater, I will wait
    for questions and answers, if those are of interest. But
    certainly the issue with China is a backdrop, our pivotal
    security relationship with Japan, which is our primary one in
    the area, and the burgeoning economies and the economic
    progress of the nations in the Asia-Pacific region are
    important to all of us.

                       resources to support the Strategy

        The resources our Congress and our Nation have provided to
    the Pacific Command to do our job, in terms of not only
    monetary resources but assets as well as the lives that are
    entrusted to us by our young soldiers, sailors, airmen, and
    marines are adequate to the task. We have enough to do but
    people are working very hard to carry out our national strategy
    at this point.
        There are a couple of things that are relatively low budget
    but very important to us. One is international military
    education and training [IMET] assets whereby we teach
    commissioned, enlisted, and civilian defense personnel from
    other militaries in the region and from all over the world. In
    fact, they come to the United States and go to our schools and
    learn about the United States as well as learn our military
    doctrine and resource management. That has low cost and high
    payoff for us and is an important program. Our forces are
    responsive, they are flexible, they are adaptable, and they are
    combat-ready.
        One last point I would like to make is what we, the
    commanders in chiefs [CINC's] of the regions in the world, owe
    our Congress and owe our Nation, and that is good stewardship
    of these assets provided to us. Frequently CINC's are talked
    about as having a short view, only responding and reacting to
    short-term crises and we are responsible and accountable for
    this. That is part of the statute of what we do.
        But also it is important for CINC's to realize our
    modernization will be short-term readiness 20 years from now.
    Modernization equals future readiness to us, so we must plan to
    use our assets carefully. We must not ask for more than we need
    to do chores. And we must consider prudent risk as we carry out
    all of our responsibilities. And we must also, when we are
    charged with working events with our Nation, work to try to
    bring these things to a close so they do not continue to just
    be a drain on assets for a longer period of time than they need
    to be. We need to plan carefully and use assets well.

                               prepared statement

        With that, Mr. Chairman, I would like to close my remarks,
    and thank you for putting my written statement in the record,
    and I am ready for your questions, sir.
        [The statement follows:]
                  Prepared Statement of Adm. Joseph W. Prueher
        Mister Chairman, Members of the Committee/Sub-Committee: On behalf
    of the men and women of the United States Pacific Command, thank you
    for this opportunity to provide you my theater security perspective on
    our region. The past year at the Pacific Command has been busy,
    enlightening, and rewarding, with many opportunities for dialogue with
    key U.S. and foreign officials and military leaders, service members
    and their families, and U.S. civilians. This report also marks the
    Pacific Command's fiftieth year of promoting peace and security in Asia
    and the Pacific. Though most of the region today bears little
    resemblance to the immediate post-World War II scene, the importance of
    strong U.S. military presence and engagement continues. Our presence,
    together with the cooperation of our allies and friends throughout the
    region, deter conflict and continue to underwrite the stable conditions
    upon which economic prosperity depends. This statement begins with a
    brief assessment of our area of responsibility, a review of our
    strategy, a report on how our strategy is working, and ends with some
    essential resources and needed support.
                               executive summary
        Security.--The Asia-Pacific, perhaps more than any other region,
    represents a confluence of the security, diplomatic, and economic
    elements of international power. This confluence helps define the
    significance of the region to the U.S. and the world, and drives our
    strategy of presence and engagement to promote and protect our national
    interests. Our government's leaders as well as those throughout the
    region agree that security, brokered primarily by U.S. military
    engagement and presence, underwrites the stable conditions upon which
    regional economic prosperity depends.
        Japan.--While many other issues draw our attention, our security
    relationship with Japan is pivotal to the entire region. Our united
    efforts are the foundation for peace and stability throughout the
    Pacific. The tangible Japanese support for our forces gives us the
    strategic reach necessary to deter conflict and to prevail in war. We
    should continue to nurture the U.S.-Japan relationship as the
    cornerstone of security and stability for Asia and the Pacific.
        North Korea.--North Korea's downward trends lead most observers to
    agree that economic and governmental change will occur. Due to North
    Korea's opaqueness, the timing and pace of change are uncertain--one to
    ten years perhaps, but it could come faster. Our immediate security
    concern is North Korea's ability to lash out if cornered. Our
    commitment of thirty-seven thousand U.S. troops plus our solidarity
    with our Republic of Korea and United Nations partners mitigate against
    that. We are also working to shape and accommodate eventual North-South
    reconciliation.
        China.--China will be a backdrop against which many regional
    activities are played. We share regional concern about China's military
    modernization and lack of transparency on security objectives. Our
    military-to-military contact with the People's Liberation Army (PLA) is
    important, not only to improve transparency, but also because of the
    PLA's influence on China's security policies. We see Hong Kong as a
    harbinger of China's ability to integrate into the global community as
    a responsible player. We can also expect perturbations on Taiwan
    issues, although we are much better off than we were a year ago.
    Peaceful resolution of cross-Strait tensions will be a long-term
    process where it is not in any party's interest to use force. We do not
    view China as an immediate threat and are cautiously optimistic about
    China's evolving leadership role in Asia. We have decades of steady
    work ahead, to patiently engage China from a position of strength and
    resolve, focusing on our interests while respecting theirs.
        Other nations.--The other countries in the region also deserve our
    attention and military-to-military engagement. Although India's
    immediate concern is with Pakistan and the Kashmir, India's long-term
    military concern is China. Economically, India also looks east,
    particularly to Southeast Asia. The Southeast Asian nations, with their
    burgeoning economies, are modernizing their armed forces. To date,
    these military enhancements are balanced and appropriate.
        Treaties.--Our treaty partnerships with Australia, Thailand and the
    Philippines are solid. Australia remains an especially staunch friend
    and regional supporter who highly values its defense relationship with
    us. Thailand is a model of access and mutual training. Continued
    military-to-military interaction with these countries is important to
    ensure that the relationships are not taken for granted.
        Strategic concept.--Our strategy of engagement and presence
    throughout Asia and the Pacific is the right solution for shaping an
    otherwise uncertain future. Our investment in peacetime engagement is
    more effective than a strategy based solely on reacting and fighting.
    The readiness of our combat forces and the will to use them to fight
    and win are essential to rendering peacetime engagement possible and
    successful.
        Forces.--Forward-deployed forces of about 100,000 military
    personnel mitigate the tyranny of distance in the Pacific and are the
    regional metric of our commitment. Maintaining our forward-deployed,
    forward-based, and CONUS reinforcing forces is essential to our
    strategy's success in peace, crisis and war. The resources allocated to
    PACOM are appropriate and necessary if the U.S. is to continue to be an
    active, engaged player, partner, and beneficiary in this vital region.
                            asia-pacific environment
        The unique Asia-Pacific region is important to the U.S. for a
    number of reasons. It goes well beyond the fact that we fought three
    wars in Asia in this century. A confluence of political, diplomatic,
    economic, and security issues help define the significance of the
    Pacific Command Area of Responsibility (AOR) which encompasses this
    region:
      --The Pacific Command AOR includes 44 countries representing many
            different forms of government.
      --More than fifty-six percent of the world's population lives in the
            Pacific Command's AOR.
      --Many developing countries in the Asia-Pacific region have economies
            growing at an annual rate greater than 7 percent.
      --Thirty-eight percent of U.S. international trade is with this
            region. This is double our amount of trade with Europe, and
            more than our trade with North and South America combined.
      --U.S. exports to the Asia-Pacific region account for more than 3
            million American jobs.
      --Foreign exchange reserves of the countries in the region total over
            $600 billion.
      --Sixty percent of the world's economic growth over the next decade
            is expected in this region.
      --Eight of the world's nine largest armed forces are located in or
            operate in the region.
      --Five of seven U.S. defense treaties are with nations in the region.
            These commitments bind the U.S. legally and morally to the
            region.
        The confluence of these factors inextricably links the U.S. with
    the nations of the Asia-Pacific region.
        Rapid changes which are occurring throughout the region also
    challenge present and future U.S. security interests:
      --Expanding commercial ties and market competition will increasingly
            affect our relationships within and without the region.
      --Increasing regional energy demands, particularly in India, China,
            and Japan, will stress global energy supplies.
      --Rapid industrialization, urbanization, and diminishing agrarian
            sectors pressure the region's states, domestically and
            internationally.
      --As economies expand globally, there are corresponding increases in
            reliance on shipping lanes and vulnerability from sea-lane
            chokepoints.
      --The propensity for rapid technical modernization of militaries
            increases as economies flourish and dual-use technologies
            become available and affordable.
      --The region faces a potential proliferation of weapons of mass
            destruction.
      --Historic animosities and enduring ethnic and ideological
            differences simmer among and within countries.
      --U.S. relationships will be affected as ``Asian values'' shape the
            evolution of national, regional, and international
            institutions.
        Engagement and presence of credible, combat-capable forces are key
    to safeguarding our national interests and coping with regional
    challenges and uncertainties. As Japanese Prime Minister Hashimoto
    stated during his January trip to ASEAN capitals, the most important
    factor for peace and stability in the region is ``* * * the presence of
    the United States in Asia.'' Virtually all Asia-Pacific leaders agree
    with Prime Minister Hashimoto. They join in consensus with the leaders
    of our government that security, brokered primarily by U.S. military
    presence and engagement, underwrites the stable conditions upon which
    regional economic prosperity depends.
                cooperative engagement in peace, crisis, and war
        Pacific Command's strategic concept of Cooperative Engagement is
    designed to accomplish three major goals: In peacetime, shape the
    regional environment to render conflicts and crises less likely; in
    times of crisis, resolve specific situations on terms that advance our
    long-range interests; and in war, win quickly and decisively with
    minimum loss of life.
    In Peace
        We believe a strategy that protects the nation's interests without
    fighting is far more effective and less costly than a strategy based on
    fighting. As a result, the preponderance of our activities today are
    aimed at conflict prevention--making conflicts and crises in the region
    less likely by shaping the security environment. These peacetime
    activities are designed to accomplish a range of subordinate objectives
    including: Sustaining regional peace and stability; deterring the use
    of force and encouraging peaceful resolution to conflicts; fulfilling
    security treaties and agreements; ensuring freedom of navigation on the
    sea and in the air; countering the proliferation of weapons of mass
    destruction; promoting security cooperation; and communicating U.S.
    interests and commitment.
        We accomplish these peacetime objectives through activities in two
    general categories, engagement and preparedness. Engagement involves
    bilateral and multilateral activities aimed at resolving security
    concerns in the region before they escalate to crisis or conflict, as
    well as demonstrating the steadfastness of U.S. commitment to the Asia-
    Pacific region. Engagement involves a wide range of activities
    including: multinational training exercises and operations, counterpart
    visits and exchanges at various levels, regional conferences and
    seminars.
        Preparedness consists primarily of unilateral efforts to maintain
    readiness to respond to the full range of potential conflicts and
    crises in the region. Being prepared to respond is the best way to
    deter conflicts and crises. Preparedness activities include not only
    unit-level training, large-scale joint and combined exercises, but also
    prepositioning materiel, and surveillance of regional hot spots.
        Successful engagement and preparedness require both presence and
    cooperation. Cooperation with our friends and allies is evidenced in
    our many bilateral arrangements. This cooperation is primarily
    bilateral and tailored for each relationship. Arrangements vary from
    long-standing treaty relationships with Japan, the Republic of Korea,
    the Philippines, Australia, and Thailand to nascent military-to-
    military relations with countries such as Mongolia. Multilateral
    military activities are slowly gaining wider appeal among regional
    countries as efficiencies are sought by all and confidence among
    militaries builds.
        U.S. forward presence facilitates cooperation, increases
    responsiveness, promotes transparency, and provides more options to
    U.S. decision makers. Our forces in the area provide the foundation for
    the ``shaping function'' of our national strategy and are a critical
    component of the overall force structure determinations as they provide
    our ability to respond to crises. U.S. presence also is tangible
    evidence of our commitment to the region, the most visible form of
    which is the forward stationing of forces and families in East Asia.
    Other forms include adaptable rotational units and forces participating
    in specific training exercises and exchanges. Our forward-deployed
    force structure of about 100,000 troops is watched closely by regional
    players and is the metric for assessing U.S. commitment to the region.
        In peace, our Cooperative Engagement strategy reduces the
    likelihood of conflict. The scope and depth of peacetime engagement
    activities are essential to continued U.S. success in the region. Our
    Security Assistance programs significantly contribute to regional
    security and our interests. These programs include defense sales--both
    Foreign Military Sales (FMS) and Direct Commercial Sales (DCS)--as well
    as Foreign Military Financing (FMF) and the International Military
    Education and Training (IMET) program. IMET is the best vehicle to
    expose and influence future political and military leaders to
    democratic principles. These peacetime engagement activities, in
    concert with our readiness and preparedness, reinforce security and
    prevent conflict in the Asia-Pacific region. Supplemental Security
    Assistance Program information is included at Annex D.
    Crisis Response
        Regardless of the effectiveness of our peacetime engagement
    activities, crises will occur. In PACOM we have developed a two-tiered
    command and control structure to employ resources efficiently and
    effectively in crises. Pre-designated commanders and their staffs are
    trained as Joint Task Force headquarters. In crisis, we augment them
    with a tailored cadre of joint warfighting specialists. These
    headquarters and forces from all services conduct periodic joint
    training and exercises to enhance the effectiveness and efficiency of
    this command and control concept. This structure is highly adaptable
    and is used in joint (multiservice) and combined (multinational)
    scenarios. As a result, we have several headquarters trained and ready
    to support a wide variety of Joint Task Force operations. This effort
    is essential to effective response to regional crises.
        Within PACOM, where distance is always a challenge, our forward
    infrastructure is pivotal to rapid, robust crisis response. To that
    end, Guam, by virtue of its proximity to potential trouble spots and
    its U.S. territorial status, has special strategic importance. Our
    assets there should be maintained.
        In the past year, several events validated our response capability
    across a spectrum of military operations. These events included the
    China/Taiwan confrontation last March, humanitarian operations in
    support of Kurdish refugees (Operation PACIFIC HAVEN) on Guam, Chinese
    migrants (Operation MARATHON PACIFIC), and disaster relief to Palau
    (Operation PACIFIC BRIDGE).
    Warfighting
        We can never lose sight of our raison d'etre: to be able to fight
    and win our nation's wars. Should crisis response fail, we are prepared
    to fight and win, multilaterally if possible, or unilaterally if
    required. In circular, but valid logic, our credible capability and
    will to fight and win underpin our peacetime engagement success. Our
    ready forces--forward deployed, forward based and CONUS based--are
    prepared to respond to crises across the spectrum of conflict.
    Realistic training combined with technologically superior equipment are
    essential to this capability.
              how cooperative engagement is working: an assessment
        Our Cooperative Engagement strategy is working well throughout the
    theater. The region is generally stable with increasing dialogue,
    transparency, and interdependence.
        Japan.--Events of the last year reemphasized the importance of our
    bilateral security relationship with Japan. During the Tokyo Summit,
    the President Clinton--Prime Minister Hashimoto Joint Security
    Declaration reaffirmed the commitments of our two countries to enhanced
    security dialogue and specific bilateral cooperation. The Declaration
    also specifically called for the continuing forward presence of ``about
    100,000'' U.S. military personnel in the region. Our two governments
    agreed to continue maintaining about the current level of U.S. troops
    in Japan. Japan will continue to provide an exceptional measure of Host
    Nation Support (approximately $5.1 billion per year.) Additionally, our
    two governments agreed to conduct a review of the 1978 Defense
    Guidelines. This ongoing review is likely to have far reaching
    implications for the U.S.-Japan relationship.
        The April signing of the Acquisition and Cross Servicing Agreement
    (ACSA) with Japan is improving reciprocal logistics support, supplies,
    and services between us. The issuance of the Special Action Committee
    on Okinawa (SACO) Final Report in December marked the culmination of
    intense effort between our two countries in reducing the impact of U.S.
    military presence on Okinawa while ensuring that critical military
    capability is maintained. Full implementation of the final report,
    particularly those aspects related to the return of Futenma Marine
    Corps Air Station, will take time. We will remain engaged in this
    ongoing bilateral process to promote our long-term regional security
    strategy and our shared interests with Japan.
        Korea.--A mutual beneficiary of the regional stability our presence
    has made possible, the Republic of Korea (ROK) is an emerging
    international economic power whose influence and partnership with us
    spreads well beyond the Pacific region. By contrast, North Korea's
    economy is in decline. Unfortunately, North Korea's military
    capabilities still present a real threat and the intentions of Kim Jong
    Il's regime are unpredictable. The September 1996 submarine incident is
    a clear example of the hostility. As we reaffirmed to the ROK at the
    October 1996 bilateral security meetings, the U.S. will continue to
    assist in deterring North Korean aggression through robust military and
    diplomatic cooperation. The physical presence of U.S. Forces in Korea,
    and PACOM's capability to quickly reinforce them remain the most
    important factors in deterring North Korean aggression. To help defray
    the U.S. cost of maintaining forces on the peninsula, the ROK has
    progressively increased its cost sharing contribution. The fiscal year
    1996 ROK government contribution to the U.S. was $330 million. This is
    planned to increase by 10 percent per year in 1997 and 1998.
        North Korea's decline runs counter to regional trends of
    interdependence, prosperity, and transparency. The North is in a
    downward spiral and collapse is widely predicted. However, timeline
    estimates vary because of the North's opaqueness, unpredictability, and
    record as a ``survivalist'' nation. While change in the next decade
    seems likely, even this estimate is the subject of debate. Our near-
    term concern is North Korea's ability to lash out should survival of
    the regime become threatened. PACOM and U.S. Forces Korea are working
    to keep that from happening. For the longer term, our efforts are
    directed toward shaping and dealing with eventual reconciliation.
        China.--China is a backdrop against which many regional activities
    are played. We share regional leaders' concern about China's military
    modernization and lack of transparency on security objectives. Recent
    air and maritime modernization programs are developing a limited force
    projection capability. In our estimate, it will be about one and one-
    half decades before China could field a military with a modernized,
    force projection capability. China's reticence to articulate a clear
    security strategy contributes to regional concerns. However, China's
    intent to improve their armed forces to play a stronger regional hand
    is manifest.
        Because the United States and China share many common interests, we
    are attempting to engage China in a military-to-military relationship.
    Our contact with the People's Liberation Army (PLA) is important, not
    only to improve transparency, but also because of the PLA's influence
    on China's security policies. China realizes that peace and stability
    in the region benefit all countries.
        We recognize how strongly China feels about Taiwan sovereignty.
    Likewise, Chinese leaders recognize from our response to events in the
    Taiwan Strait last spring that the U.S. is bound by our domestic law
    and is committed to peaceful resolution of the issue. We do not
    currently see China as a threat based on capabilities and intentions.
    However, greater efforts on their part toward transparency and
    confidence building would allay concerns about China's military
    modernization and goals.
        We see Hong Kong as a harbinger of China's ability to integrate
    into the global community as a responsible player. China's intended
    ``one country, two systems'' approach will be tested. Members of the
    Department of Defense and representatives of the Chinese Ministry of
    Foreign Affairs and PLA met in January to discuss technical details of
    post-reversion port calls by U.S. Navy ships. We look forward to
    concluding an agreement on post-reversion procedures in the next
    several months.
        We have many opportunities to work with China on a host of matters
    affecting the region and the world and we must plan to work these
    issues for the long haul. By building mutual trust and confidence
    between our two militaries we will increase the likelihood of
    cooperation, stability, and peace in the region. We are better off now
    than a year ago. We are optimistic regarding China's participation as a
    responsible player in the global community. We have decades of steady
    work ahead to patiently engage China. The U.S. can best influence the
    situation from a position of strength and resolve, focusing on our
    interests while respecting China's.
        Russia.--Russia is also a Pacific nation with legitimate national
    interests in the Asia-Pacific region. We are hopeful that an economic
    rebound will bolster Russia's fragile political reforms. Although
    readiness has deteriorated considerably since 1991, the Russian
    military retains significant influence, a credible nuclear capability,
    and potential for contributing to regional security.
        While smaller than in the Soviet era, today's Russian Pacific Fleet
    is built around a core of modern combatants. The Russian Pacific Fleet
    demonstrates continued resolve to increase combat readiness despite
    funding shortfalls. In 1996, Russian Pacific Fleet submarines carried
    out missions of strategic deterrence, protection of strategic assets,
    regional security, and training for anti-surface warfare. Additionally,
    surface operations were active and included two major training
    exercises and numerous smaller training events. The Russian Navy
    maintains the capability to carry out ``defense of the homeland''
    operations and retains the force structure for out-of-area submarine
    and surface combatant operations.
        PACOM supports the Chairman, Joint Chiefs of Staff, Russia Program
    through engagement with the Far East Military District and Russian
    Pacific Fleet. It is in our interest to stay engaged with Russia, by
    continuing military-to-military exchanges, visits, exercises, and
    working groups. Our hope is that Russia will become a constructive
    participant in Asia-Pacific security and prosperity.
        Australia.--Australia is a staunch treaty ally and one of our most
    reliable and innovative friends. The Joint Security Declaration signed
    at the July 1996 Australia-U.S. Ministerial and the November 1996
    Presidential visit reaffirmed the significance and vitality of this
    relationship. Australia offers consistent and timely support to the
    United States. Prime Minister Howard publicly endorsed our actions
    following Operation DESERT STRIKE in Iraq and during our deployments in
    the Taiwan Strait last Spring.
        Our military-to-military program reflects the strength of our
    overall relationship. The March 1997 bilateral training exercise TANDEM
    THRUST 97 is the largest exercise ever held in Australia and involves
    over 22,000 U.S. and Australian personnel. Additionally, Australia has
    offered the use of large training areas in the Northern Territory. This
    could provide excellent combined arms and live fire training for our
    forces, especially Navy and Marine Corps units transiting the region.
    Australia remains a solid friend and regional supporter which highly
    values its defense relationship with the United States.
        India.--India is a rising regional player with the potential to
    assume a larger global role. By the middle of the next century, India
    will surpass China as the world's most populous nation. While Pakistan
    is India's near-term concern, its long-term security anxiety is clearly
    China. India is also seeking greater economic cooperation with
    Southeast Asian nations. India is definitely looking East.
        We are concerned about developments in weapons of mass destruction
    and delivery means. Controlling proliferation is important to regional
    stability. We urge both India and Pakistan not to deploy ballistic
    missiles or to test nuclear devices.
        In 1995, the United States government established formal military-
    to-military relations as part of the larger U.S.-India security
    dialogue. PACOM is the designated executor of this dialogue.
        Thailand.--Under the treaty umbrella of the Manila Pact, the U.S.-
    Thai security relationship makes a critical contribution to regional
    security and stability. Our relationship with Thailand is a model for
    access and training. Our bilateral relationship is also a model for
    counter-drug programs with other nations in the region. We enjoy
    mutually beneficial interactions and expect this relationship to
    continue.
        Philippines.--The 1951 Mutual Defense Treaty serves as the
    framework for our bilateral security relationship with the Philippines.
    We have maintained a healthy program of military-to-military activities
    during the five years after we left Subic Bay and Clark. However, our
    activities in the Philippines are currently ``on hold'' pending
    resolution of legal protection issues for U.S. forces. We seek
    conclusion of a Status of Forces Agreement (SOFA) or interim measures
    which provide adequate legal protection for our personnel prior to
    resumption of our military activities. Our relationship with the
    Philippine military is excellent and I look forward to a timely
    resolution of the SOFA issue.
        Indonesia.--Indonesia's role in the Asia-Pacific region cannot be
    overstated. Its strategic location, large Muslim population, and well
    established regional involvement make closer relations with Indonesia a
    strategic requirement. The U.S.-Indonesian defense relationship is tied
    to the broad interests we share--stability, prosperity, and peaceful
    resolution of conflicts. Expanded-IMET is serving as a valuable tool to
    promote democratic values and to improve mutual cooperation and
    understanding. We look forward to continued progress in our
    relationship with Indonesia.
        ASEAN.--The Association of Southeast Asian Nations includes seven
    countries--Brunei, Indonesia, Malaysia, Philippines, Singapore,
    Thailand, Vietnam. We are hopeful that this organization will assume a
    greater role in regional security affairs.
        Increases in defense spending and military modernization by ASEAN
    nations reflect economic growth, rather than response to a perceived
    threat to the region in the immediate future. As domestic insurgencies
    have abated, emphasis has changed from counterinsurgency to improving
    conventional forces. Greater wealth prompts these nations to improve
    their ability to defend economic and security interests, including
    protection of territorial waters and sea and air lines of
    communications. Thus, ASEAN states are modernizing air and naval forces
    and developing ground forces with emphasis on rapid employment.
    Military modernization is balanced in the region and has not developed
    into an arms race.
        The ASEAN Regional Forum (ARF), consisting of 20 countries,
    including the U.S. and the European Union, contributes to regional
    security. As the region's most productive multilateral forum, ARF is an
    outstanding venue to highlight and discuss security issues. However, we
    must be careful not to view ARF through western eyes--it is not a NATO.
    It is uniquely Asian, and reflects Asian methods of working to achieve
    consensus on issues. The Forum deserves our continued support and
    active participation. Examples of the Forum's growing importance are
    inter-sessional meetings scheduled in Beijing, Singapore, New Zealand
    and Kuala Lumpur to discuss confidence building, peacekeeping, and
    search and rescue operations.
        Pacific Island Nations.--PACOM maintains U.S. presence throughout
    the Pacific island nations. Our goals are to maintain the good will and
    access which the U.S. has enjoyed through out these islands for the
    last 50 years. Under the Compacts of Free Association, PACOM maintains
    Civic Action Teams in Palau and the Federated States of Micronesia.
    These small teams provide vital construction and limited medical
    support to the governments of these developing nations.
        Our humanitarian and disaster assistance programs provide support
    throughout the Asia-Pacific region when it is needed most. During 1996,
    PACOM deployed water purification teams to Palau when water lines
    supplying the major population center were destroyed in a bridge
    collapse. Operations such as this demonstrate not only our humanitarian
    concerns, but also U.S. commitment to the region.
         balancing resources for our strategy: programs and initiatives
        Engagement and preparedness require resourcing that balances
    service, joint and combined requirements. We are committed to good
    stewardship of taxpayer dollars through innovative use of technology to
    support joint force and service training. Increased use of simulation
    is one ingredient in achieving training economies. This approach can
    increase efficiency while reducing costs and personnel tempo, but
    cannot fully substitute for regular unit exercises. Funding to support
    training for tomorrow's military leaders is critically important to
    ensure future readiness. Training conducted with our allies is
    especially useful, as it increases their self sufficiency, demonstrates
    our capability, and enhances combined interoperability.
        Harnessing technological advances will be a key factor in future
    warfare. Recapitalizing the current force and exploiting the potential
    for revolutionary improvements in sensor, mobility, targeting,
    precision munitions, and command and control is critical to future
    military readiness. Employing Advanced Concepts Technology
    Demonstrations (ACTD) allows us to realistically exercise new
    technologies. ACTD's help fill key needs faster by using commercially
    available technologies. ACTD's can reduce risk and shorten acquisition
    time.
        Modernization for future readiness must be balanced with current
    and near-term readiness requirements. Technology is not a panacea.
    Over-reliance on technology can divert attention from successful low-
    tech solutions such as options provided by Special Operations Forces
    and procedural innovations such as the theater Joint Intelligence
    Center (JIC) concept. Moreover, technical solutions can amplify
    friendly force vulnerabilities--prime targets for asymmetric attack by
    adversaries.
        Through participation in the Chairman's Joint Requirements and
    Oversight Council and the DOD budget process, Unified Commanders
    continue to have a voice in the decision process. This process helps to
    achieve the goals of the Goldwater-Nichols legislation and ensures a
    long-term joint perspective. Prudent risk in conducting efficient
    operations must be considered in balancing short-term operations with
    long-term modernization requirements.
        Other important programs, activities, and initiatives which
    directly support our strategy and deserve continued budgetary and
    policy support are: Operations in Southeast Asia to attain the fullest
    possible accounting for missing service members; counter-drug
    operations in Southeast Asia and in the Eastern Pacific; Military
    Construction; Security Assistance Programs which support humanitarian
    demining assistance in Cambodia and Laos International Military
    Education and Training activities with key militaries in the region;
    and the Asia-Pacific Center for Security Studies.
        Assessments of these ``tools'' and their impact on promoting U.S.
    security interests in the region are addressed in appropriate annexes.
        People remain the nexus of all our efforts. I am constantly
    impressed with the spirit and dedication of service members whom I
    meet. We must continue to attract intelligent, dedicated, motivated
    young Americans. This requires rewarding opportunities and quality of
    life commensurate with the high demands we place on our forces. Quality
    of life issues must remain a budget priority. PACOM strongly supports
    the Secretary of Defense and Chairman, Joint Chiefs of Staff, on the
    following quality of life priorities:
      --Maximum annual pay raises allowed by current law. The 3 percent pay
            raise and increase in dislocation allowance from 2 to 2.5
            months are positive initiatives to improve quality of life. We
            must continue to ensure that military pay is attractive and
            competitive with the private sector as called for in the
            President's budget.
      --Protection of retirement benefits. Maintaining a stable retirement
            system protected against inflation is an important career
            incentive.
      --Adequate health care benefits. As we ``right-size'' the medical
            community, we must ensure we preserve an affordable, accessible
            health care system with emphasis on prevention of disease and
            efficient care. We should not allow privatizing of some
            services to become a reduction in the quality of care or a
            windfall for insurers.
      --Continued funding of military family housing and bachelor enlisted
            quarters operation, maintenance, upgrades and privatization.
            The 4.6 percent increase in the Basic Allowance for Quarters
            continues progress toward the Congressional intent of 15
            percent out-of-pocket housing expense. Applying the new VHA
            floor approved by Congress in the fiscal year 1997 defense
            authorization bill benefits our personnel living in high cost
            areas. Several areas in PACOM are among the most expensive
            areas in the world to live. A balanced replacement of
            government housing in PACOM is encouraging to our service
            members. We must continue to maintain living standards at an
            adequate level.
        Quality of life includes workplaces and military communities free
    from discrimination and harassment of any kind and for any reason.
    Through command involvement, indoctrination and sustainment programs,
    we strive to maintain the highest standards of professional conduct.
        Another core requirement is to make duty stations as safe as
    reasonably possible from terrorist and other criminal threats.
    Antiterrorism and force protection are priority activities in PACOM.
    Force protection requires focused intelligence to produce predictive
    threat information, as well as physical and procedural deterrent and
    protection measures. Our initial estimates for force protection
    enhancements include $93.28 million and 108 additional military
    personnel. We will continue to refine these estimates and will submit
    them to DOD for consideration and decision.
                    conclusion--cooperative engagement works
        The security strategy in the Asia-Pacific region is working in our
    nation's interest. The region is at peace, but not conflict free. The
    prognosis is positive for peaceful resolution supplanting armed
    conflict as the mode for dispute resolution. Although security concerns
    such as the Korean Peninsula rightfully capture our attention and
    resources, the region as a whole is secure and nations are able to
    focus on economic development. This stability and the resulting
    prosperity we share are underwritten primarily by the consistent
    engagement and presence of U.S. military forces. Our strategy of
    engagement and presence is the right solution for shaping an uncertain
    future.
        We support the Quadrennial Defense Review process to determine a
    correct strategy, equipment, and mix of forces needed in the years
    ahead for the full spectrum of tasks we face. We are actively involved
    in this effort to develop an approach that balances readiness and
    modernization and capitalizes on our core strengths and comparative
    advantages. Maintaining the capabilities of our forward-deployed,
    forward based, and CONUS forces is essential to our strategy's success
    in peace, crisis, and war. Forward-deployed forces of about 100,000
    military personnel are about right to safeguard our commitment to the
    region.
        Visits to the region by Administration and Congressional
    delegations reinforce mutual understanding and enhance the perception
    of our nation's commitment to the region. The continued support by
    Congress and the American people is vital and appreciated. With your
    support and the cooperation of our allies and friends, the United
    States will continue successfully advancing our national interests as
    an active partner and beneficiary in the Asia-Pacific community.
                                     ______

                      Annex A.--PACOM Counter-Drug Program
        Illegal drugs pose a serious threat to the U.S. and the Asia-
    Pacific nations. Narcotics not only drain the strength and health of
    individual users, but that of nations as well. Drug production and
    trafficking are a multi-billion dollar business which pays no taxes.
    Drug trafficking insidiously encourages the corruption of government
    officials, addicts populations and destroys the basic fabric of
    society.
        PACOM's counter-drug program supports the President's National Drug
    Control Strategy, specifically Presidential Goals 4 and 5. (Goal 4:
    Shield America's air, land, and sea frontiers from the drug threat.
    Goal 5: Break foreign and domestic drug sources of supply.) With the
    help of many nations throughout the Asia-Pacific region, PACOM
    continues to fight the scourge of illegal drug use and trafficking.
    PACOM's counter-drug standing joint task force, Joint Interagency Task
    Force West (JIATF West), has steadily increased its counter-drug
    support to many countries throughout the Pacific. By directly
    supporting greater regional cooperation and counter-drug efforts, PACOM
    helps regional governments reduce the amount of illegal drugs produced,
    consumed, and transported in the Asia-Pacific area. This support
    includes cooperating closely with U.S. and foreign law enforcement
    agencies, training civil counter-drug police, sharing intelligence, and
    providing DOD expertise in command and control activities. We intend to
    continue our counter-drug activities throughout Southeast Asia over the
    next several years.
        While PACOM is primarily focused upon heroin and Southeast Asia, we
    are working closely with USCINCSOUTH to combat the flow of cocaine in
    the eastern Pacific. Since the beginning of 1997, JIATF West's Eastern
    Pacific Campaign Plan has netted over 3.3 tons of cocaine.
                                     ______

             Annex B.--Prisoner of War/Missing in Action Activities
        Joint Task Force-Full Accounting (JTF-FA) continues a high OPTEMPO
    in Vietnam, Laos, and Cambodia with the goal of ``fullest possible
    accounting'' for missing service members in Southeast Asia. During the
    past year, JTF-FA completed 325 field investigations and 68
    excavations. JTF-FA also sent a two-person investigation element to
    China in October 1996 to interview witnesses concerning losses in
    Vietnam and Hainan Island. These efforts resulted in the repatriation
    of 35 sets of remains associated with unaccounted for Americans.
    Vietnamese cooperation on the President's four key measures of progress
    continues to be good, and Lao cooperation is steadily improving. JTF-FA
    expects the current pace of operations to continue through 1999 in
    Vietnam and 2000 in Laos, followed by limited operations in both
    countries through 2001. Of course, these dates may change as new
    information comes to light.
        JTF-FA maintains forward detachments in Bangkok, Hanoi, Vientiane,
    and Phnom Penh. During fiscal year 1997, there are five field
    activities scheduled in Vietnam, six in Laos, and one in Cambodia.
    These field activities last about 30 days and involve as many as 100
    U.S. personnel in Vietnam and 40 U.S. personnel in Laos.
        Cooperation from host nations continues to be good. For example,
    Vietnam continues to publicize a remains amnesty program in an attempt
    to get private citizens to turn over remains they may be holding.
    Trilateral cooperation continues to progress. Vietnamese witnesses now
    routinely enter Laos to assist JTF-FA investigations, and the first use
    of a Vietnamese witness in Cambodia occurred in February 1997. Cambodia
    and Vietnam have undertaken a bilateral initiative to investigate cases
    along the Cambodia-Vietnam border. In Laos, archival research continues
    and the Lao government recently agreed to expand the program to include
    archival holdings in key provinces.
        JTF-FA's current caseload, which includes historically-based
    projections for reinvestigations and new excavations, consists of 299
    case investigations--244 in Vietnam, 44 in Laos, and 11 in Cambodia.
    There are 107 excavations or recovery operations to complete--39 in
    Vietnam, 66 in Laos, and 2 in Cambodia.
                                     ______

                        Annex C.--Military Construction
        Our top military construction priorities are warfighting
    infrastructure and quality of life projects. The infrastructure in the
    Pacific is our platform for launching our Cooperative Engagement
    strategy in peace, crisis, and war. Over the last several years we have
    significantly reduced our military base footprint in the Pacific.
    Remaining vital infrastructure must be properly maintained and renewed
    with new facilities when mission or economics require that capital
    investment. The fiscal year 1998 USPACOM MILCON program contains 45
    projects totaling $559 million (Table 1).

            Table 1.--Fiscal year 1998 USPACOM military construction

                                                                     Dollars
                                                                 in millions

    Warfighting Infrastructure:
        Construct Three 83,000 BBL Tanks, Elmendorf AFB, AK........... $21.7
        A-10 Squadron Operations/AMU, Eielson AFB, AK.................   7.8
        Upgrade POL System, Indian Mountain, AK.......................   2.0
        Replace POL Pipeline, Andersen AFB, Guam......................  16.4
        Aeromedical Clinic, Andersen AFB, Guam........................   3.7
        Fire Protection System Improvements, NCTAMS, Guam.............   4.1
        Oily Waste Collection Treatment System, Pearl Harbor, HI......  25.0
        Renovate Existing DFAS Facility, Pearl Harbor, HI.............  10.0
        Fire Training Facility, Kunsan AB, Korea......................   2.0
        Environmental Prev Med Unit Add./Alt., San Diego, CA..........   2.1
        Waterfront Operations Support Facility, Coronado, CA..........   7.5
        Aircraft Maintenance Training Facility, Camp Pendleton, CA....   4.3
        Highbay Warehouse (Phase II), Camp Pendleton, CA..............   6.9
        Emergency Spill Control, Camp Pendleton, CA...................   2.8
        River Field Control San Margar, Camp Pendleton, CA............  21.9
        Bridge Replacement, Camp Pendleton, CA........................   5.6
        Comm/Electronics Maint and Storage Facility, 29 Palms, CA.....   3.8
        Ordnance Facility, El Centro NAF, CA..........................  11.0
        Maintenance Support Facility, North Island, NAS...............  15.3
        Visual System Bldg. Addition, North Island, NAS...............   1.4
        Seawall Upgrade, North Island, NAS............................   2.9
        Tank Trail Erosion Mitigation, Yakima, WA.....................   2.0
        Medical/Dental Clinic, Everett, WA............................   7.5
        Electronic Warfare Training Facility, Whidbey Island, WA......   1.1
    Quality of Life:
        Improve 82 Units Family Housing, Elmendorf AFB, AK............  12.5
        Fitness Center Addition and Renovation, Wahiawa, HI...........   3.9
        Bachelor Quarters, MCBH, HI...................................  19.0
        Replace 132 Units Family Housing, Schofield, HI...............  27.0
        Whole Barracks Complex Renewal, Schofield, HI.................  44.0
        Improve 123 Units Family Housing, Hickam AFB, HI..............  23.8
        Whole Barracks Complex Renewal:
            Camp Red Cloud, Korea.....................................  23.6
            Camp Stanley, Korea.......................................   7.0
            Camp Castle, Korea........................................   8.4
            Camp Humphreys, Korea.....................................  32.0
        Dining Facility, Camp Casey, Korea............................   5.1
        Dormitory:
            Kunsan AB, Korea..........................................   8.3
            Osan AB, Korea............................................  11.1
        Bachelor Enlisted Quarters, Camp Pendleton, CA................  12.0
        Family Housing 171 Units, Camp Pendleton, CA..................  22.7
        Enlisted Dining Facility, Miramar, CA.........................   8.7
        Family Housing 166 Units, Miramar, CA.........................  29.1
        Family Housing Replacement:
            29 Palms, CA..............................................  24.1
            Lemoore NAS, CA...........................................  14.8
        Whole Barracks Complex Renewal, Fort Lewis, WA................  29.0
        Child Development Center, NSY Puget Sound, WA.................   4.4

        The Host Nation Funded Construction (HNFC) program is an excellent
    example of burden sharing by Japan and Korea. Our investment in this
    program is only 1.6 percent of the approximately $1.1 billion spent by
    the host nations. However, the Army's role as the executive agent for
    construction in Japan and Korea is critical to provide quality
    facilities. The Government of Japan (GOJ) provides approximately $1
    billion in construction each year under the Facilities Improvement
    Program (FIP). The GOJ does not pay for U.S. government quality
    assurance and criteria package development. The cost for Special Action
    Committee Okinawa (SACO) related construction is estimated to be $2.5
    million in fiscal year 1998. This funding requirement will increase
    during the following 4 years. Without the additional funding, the FIP
    will be affected as resources will have to be diverted to support SACO
    construction requirements. As soon as final costs can be determined
    PACOM will coordinate through DOD to ensure requirements are adequately
    funded.
        The Republic of Korea has proved an excellent burden sharing
    partner in the effort to improve our facilities. Under the November
    1995 Special Measures Agreement, Korea will increase its $100 million
    annual contribution to Host Nation Construction by 10 percent each year
    for the next two years. Unfortunately, our barracks in Korea are the
    worst in the military, and this contribution will not be enough to meet
    requirements. We need to do our share, and I request your support for
    $97 million for fiscal year 1998 for six barracks projects and a dining
    facility project.
        Elsewhere, we continue to improve housing for our families. Service
    members and their families are gratified by the completion of
    replacement housing and housing improvements. This is a significant
    factor in retention of highly skilled career personnel. Most of the
    construction budget for fiscal year 1998 is dedicated to improving
    family housing and barracks in Alaska, Hawaii, California and
    Washington.
        Our en route infrastructure is reaching the end of its service
    life, particularly aging POL systems. Many facilities constructed in
    the 1940-1950 time frame need major repair or replacement. Real
    property maintenance accounts for essential facility repairs are ``must
    pay'' costs that continue to escalate. Readiness is degraded by hollow
    infrastructure when facilities fall into disrepair, or when we must
    shift funds to perform expensive, incremental or emergency maintenance
    on those facilities.
                                     ______

                     Annex D.--Security Assistance Program
        The Pacific Command strongly endorses a robust and responsible
    Security Assistance program. This program continues to play a key role
    in supporting our regional engagement strategy. USPACOM fiscal year
    1996 Foreign Military Sales were over $3 billion while Direct
    Commercial Sales were over $1 billion. In fiscal year 1996 two
    countries in USPACOM received Foreign Military Financing grant funds
    for demining: Cambodia ($1 million in support of demining activities
    and another $1 million of unrestricted grants) and Laos ($500,000 for
    demining). This humanitarian and non-lethal assistance warrants
    continued support.
        IMET is one of our most cost effective activities promoting peace,
    security, democracy and interoperability. Our IMET program objectives
    are to gain country access, influence future leaders, and improve
    civilian control of the military. To ensure USPACOM and host country
    objectives are achieved, a robust and stable IMET program is a must for
    all eligible countries.
                                     ______

               Annex E.--Asia-Pacific Center for Security Studies
        The Asia-Pacific Center for Security Studies (APCSS) plays an
    important role in our theater strategy. In only its second year, the
    Center is expanding the linkages and common frames of reference vital
    to fostering cooperative approaches to security in the Asia-Pacific
    region. The Center's conferences focus on today's leaders, while its
    academic program focuses on tomorrow's leaders. The first 12-week
    security studies course in the Center's College of Security Studies
    (September 23 to December 13, 1996) brought together 23 students from
    12 nations. The second course started on March 3. The seven conferences
    conducted to date by the APCSS provided superb venues for interaction
    between key leaders from 35 Asia-Pacific nations. APCSS is an excellent
    investment in regional security. We are extremely optimistic about its
    contributions and future possibilities.
        The following provides a brief description of the key components of
    the APCSS:
        College of Security Studies.--As the primary component of the
    Center, future leaders from the region study past and present security
    issues and seek to identify potential security problems, the roles and
    missions of the military, and how governments shape their military
    forces to meet perceived threats. By 1998, the College will expand to
    three 12-week sessions per year with 75 to 100 participants per
    session. International participants will compose about 75 percent of
    each class. As one participant of the inaugural class stated, ``The
    U.S. is uniquely placed in taking this lead, which is without a doubt,
    both timely and important.''
        Conference and Research Center.--The six to eight conferences per
    year will be tailored to reflect specific issues such as ``Asia-Pacific
    security in the 21st century.'' The international research staff
    contributes to defining relevant conference topics, identifying leading
    experts for presentations, and recommending appropriate participants.
    The research staff also provides conference results to appropriate
    audiences.

                             engagement with Russia

        Senator Stevens. Thank you very much, Admiral. We are
    delighted to be able to be back with you again.
        You know, in Khabarovsk we met a General Kuroedov, the
    deputy commander of the Russian Far East Military District. We
    talked about many things including the IMET program. They
    remarked that none of their people have ever been involved in
    IMET, but we sensed that they really would welcome that. What
    would you think about that?
        Admiral Prueher. Well, sir, at present European Command
    manages IMET with Russia. We would like very much to work IMET
    with the Russians. We would welcome their participation in our
    schools and participation in the IMET program.
        Senator Stevens. Is there a chance that they might
    participate in your program here in Hawaii?
        Admiral Prueher. Yes, sir; in fact, we have two Russians
    here now in the current class. One came from the Russian
    Pacific Fleet, Russian Far East Military District, and one from
    the Russian General Staff Academy in Moscow. We have also
    invited the Russians to send two personnel to the next class at
    the Asia-Pacific Center.
        I will work with General Chechevatov and see if we can
    influence it so we can continue to get people from the Far East
    Military District, more of them if possible.
        Senator Stevens. We missed the opportunity to meet with
    him. We were told he was in Moscow at the time and may be being
    considered for a higher position in their military.
        But you know, it was apparent that both you and Adm. Archie
    Clemens have developed a very close relationship with the
    military in the Russian Far East, and we certainly commend you
    for that. They commented on both of you and the programs that
    they have participated in so far.
        But as you mentioned just now, they indicated that Moscow
    sort of forgets about the Russian Far East and that very
    little, if any, of the Nunn-Lugar moneys have been spent there
    in their part of Russia. We have some considerable interest in
    the disposal of the nuclear powerplants and the submarines to
    be decommissioned, and I personally discussed that with the
    admiral there, Admiral Kuroedov.
        What would you think if we tried to earmark some funds for
    you as the Commander of the Pacific Command to work with them
    to work out a cooperative program to assure that the disposal
    of those nuclear powerplants would not impact the future of the
    North Pacific?
        Admiral Prueher. Mr. Chairman, I think if funds were
    earmarked in that way, we would make sure they were spent well,
    and I think that would be helpful. You mentioned an earlier
    point about Moscow and the Far East Military District not
    necessarily coordinating. It is something that we--I don't
    think we have that problem to the degree that they do, but we
    can understand. I think we could work well with the Far East
    Military District.
        Senator Stevens. Alaskans sometimes wonder whether
    Washington understands the difference between Alaska and
    Siberia. There is no question about that.
        I just have one last comment. I don't think it is fair to
    question you about it, but you have about one-half of the world
    in your command in terms of area of responsibility, and you get
    about 10 percent of the defense budget. So as a practical
    matter, the problems that the Russian commanders commented on,
    you could easily comment on. I know that--that is in terms of
    being left out when it comes to dividing the money.
        But this committee tries its best to see to it that your
    projects do get funding. We would like to work out some way
    that there was more, really, thinking about the future in terms
    of allocating costs out here. The future of trade, the future
    of our relations with the world, the future of potential
    conflicts are primarily in the area of the Pacific Command, and
    I do hope we can find some better way to allocate funds for
    your use.

                    Forward presence and regional stability

        Senator Inouye.
        Senator Inouye. Thank you very much, Mr. Chairman. A few
    months after the U.S. military departure from Subic Bay, it was
    suggested to the committee that a special trip be taken to the
    Pacific rim nations. Senator Stevens and I went on a prolonged
    trip visiting the capitals of countries such as Australia,
    Malaysia, Indonesia, Thailand, Singapore, the Philippines,
    South Korea, Taiwan, Beijing, and Tokyo.
        And the one question we asked was, Do you want a forward
    military presence of the United States in this part of the
    world? And their response was rather enlightening because every
    country, in its own way, responded that Americans were
    welcomed, Americans were necessary. Some countries described
    our forward military presence as guarantors of peace or
    guarantors of stability.
        We are presently at peace in the region and as a result,
    for every jumbo jet that flies across the Atlantic, there are
    four of them flying across the Pacific. The dollar value of our
    trade with the Pacific rim is more than double that of Europe.
        So my question may have an obvious answer, but, for
    example, what would happen to the Spratly Islands if we were
    not there?
        Admiral Prueher. The premise certainly of the importance of
    the United States in the area is reemphasized everywhere I go
    by every political and military leader in the area,
    appreciating and increasingly stating in public support for the
    U.S. presence in the region.
        The Spratlys in the South China Sea are a very important
    part of what is going on. One thing that is gratifying, I
    think, is the way the ASEAN nations have banded together to
    work the Spratly issues as an offset to some of China's
    description about what it would like to do in establishing
    areas of influence in the South China Sea.
        But the United States presence and our commitment to
    freedom of navigation in the South China Sea and around the
    Spratlys and the Paracels has been vital, and our presence
    there is a backup to what the other nations are able to do with
    their militaries. It has ensured the stability, has ensured the
    free flow of traffic of about 400 ships a day that come through
    the South China Sea plying the routes upward to Japan and to
    South Korea and to the points to the north, sir.
        Senator Inouye. Then your answer would include the Malacca
    Straits?
        Admiral Prueher. The Malacca Straits as well, sir.
        Senator Inouye. What would happen in the Korean Peninsula
    if we were not there?
        Admiral Prueher. It is difficult for me to say exactly what
    would happen if we were not there, but what has happened over
    the last 46 years has been a gradual shift from a very powerful
    North Korea and a fragile South Korea to a democratic Republic
    of Korea, and as been described, a much weakened bastion of
    hardcore communism in North Korea, which is an economic
    failure.
        The stability on the Korean Peninsula has been brokered by
    our presence, not only physically with our 37,000 troops on the
    Korean Peninsula but also by the presence of the 7th Fleet, the
    III MEF, and the 5th and the 7th Air Forces in the region. So
    we have created a situation where--it was very tense, we have
    had an armistice, and we have not had conflict in that area.
    Hopefully, as we look toward the future, given the dire
    situation in the North, we can prevent a conflict from
    happening and create a peaceful solution to what is going on in
    the peninsula, sir.
        Senator Inouye. During the past years many political and
    military analysts and experts have suggested that if we were to
    leave that area, we would see the beginning of a horrendous
    arms race.
        For example, they suggest that Japan, who at this moment
    because of our presence doesn't feel it necessary to have a
    huge military contingent, may find itself requiring a military.
    And if that should happen, the Chinese would get excited and
    the Filipinos would get excited. Is that assessment credible?
        Admiral Prueher. Yes, sir, I believe it is. In trying to
    think about this issue, one of the worst notions most students,
    academics, and politicians can think about is if the U.S.
    presence were withdrawn from the Asia-Pacific region, what that
    might lead to, particularly as nations are more economically
    capable of modernizing their militaries.
        We create a balance in an area where there have been
    historic animosities, and our presence creates a balance and is
    very essential to be the flywheel, as it would, to create the
    balance of power in the Asia-Pacific region, which again
    creates security, creates the stability and the conditions for
    economic prosperity which we are enjoying right now, sir.
        Senator Inouye. Thank you very much, sir.
        Admiral Prueher. Thank you, Senator.
        Senator Stevens. Senator Cochran.
        Senator Cochran. Thank you, Mr. Chairman. First of all, I
    want to acknowledge the impressive leadership that you and
    Senator Inouye are providing for our committee, particularly in
    coming out to this region and giving us a chance to personally
    observe and inspect the situation and try to formulate some
    ideas about what this means in terms of our committee's
    responsibility to provide funds for the security of this
    region.
        Senator Inouye very carefully but accurately and
    graphically described what we saw when we were in North Korea.
    It is a sad sight and it is disconcerting, and I might add
    dangerous. My impression was that those with whom we met are
    asking the United States for food aid and at the same time
    blaming us for their economic problems rather than
    acknowledging the mistakes and failures of their own regime.
    Our country and others, especially South Korea and Japan, are
    being made the scapegoats for the hardships now being suffered
    by the people of North Korea.

                                Korean Peninsula

        Nobody can really be sure what this means in terms of a
    military threat to our forces that are deployed in South Korea,
    but I can tell you that it worries me. And I am concerned about
    whether or not the budget request submitted by the
    administration and now under review by our committee is
    sufficient to provide the funds to meet that threat.
        The Admiral has already talked about the need to modernize,
    to look down the road at the future and what our needs will be
    then as well as now but I am concerned about now as well as
    then.
        I wonder, Admiral, in that context, if you can tell us what
    your impression is of the situation and whether or not I may be
    overstating it. But it seems to me that our troops who are
    deployed in the Korean area are in a more dangerous situation
    than they have been in some time. Is that your assessment as
    well?
        Admiral Prueher. Sir, I think the tensions fluctuate
    between South Korea and North Korea. Our troops on the front
    line work there for 1 year at a time, and they work 365 days of
    that year with very little time off. I think you got a chance
    to see the 2d Infantry Division there, and they are working
    very hard. This 1-year tour is called a hardship tour. I think
    you also saw their morale is pretty high. They are committed to
    do what they do. They feel like it is worthwhile.
        And here are some conditions less good than we would like
    them to be for working that hard. I think they are physically
    not under more danger right now than they have been in the
    past, but we are watching very carefully with the major
    military exercise, and the conditions you all saw in North
    Korea. We are hoping that by resolutely standing arm-in-arm
    with our ROK allies in Korea, we can create a situation in
    which the North will not see it worth their while to lash out.
    And also we need diplomatically to handle the situation
    delicately so we don't corner them so they feel that they do
    need to lash out.

                                     China

        Senator Cochran. One of the things I remember about the
    Korean War was that China was very much involved on behalf of
    the North, working closely with the North, fighting side by
    side with North Koreans in that war.
        Do you see any relevance to that historic relationship to
    the fact that in China we are seeing a buildup and
    modernization of their military forces including a navy that is
    making port calls all around the Pacific region? Is China
    posing a new threat militarily to the United States now?
        Admiral Prueher. Senator Cochran, I would not characterize
    China as a new threat. I think with their increased economy,
    certainly in their southern provinces, they are putting more
    and more resources and modernizing primarily their air force
    and their navy. Their intent is strong to modernize their air
    force and their navy to be able to certainly be a regional
    power and to impact events in the world.
        From my military assessment, China is not a threat to the
    United States. And for reasons I can go into a little bit, I
    don't think they will pose a traditional power projection
    threat, except maybe right around their borders, for 1\1/2\
    decades. They have issues of training. Their conscript force
    does not get trained well enough to work with very modern
    technology.
        They are trying to work on tactics. And they are acquiring
    modern gear, but they are quite a ways away from that. I do not
    want to belittle their intent to modernize, it is just that
    there is a long way to go for China right now, sir.
        Senator Cochran. I think you have one of the most important
    commands that our military can offer one individual. This is a
    region of the world that is growing in importance economically
    and militarily. There are things happening here, changes
    occurring which attract our attention and concern. It seems to
    me that we do need to emphasize the importance through the
    process of appropriation.
        The bills that are drafted and reported by this committee
    not only carry out the policies of our Government, but in many
    cases, particularly in the area of national security and
    defense, set those policies. So this makes our hearing today
    all the more important, particularly in the context in which we
    find ourselves today with the activities and concerns that we
    have seen on our trip to this part of the world.
        We appreciate your being available to us and helping us
    understand what this means in dollars and cents terms, and what
    we ought to be on the lookout for in the future. Thank you very
    much, Admiral.
        Admiral Prueher. Thank you, Senator Cochran.
        Senator Stevens. Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman. I too
    want to thank you and Senator Inouye for your leadership. I
    wish that many more U.S. Senators could see what we have seen.

                                  North Korea

        It is a very strange environment to see a part of the
    Soviet Union, which less than a decade ago was communistic,
    free. Their political leaders, incidentally many of whom we met
    with, are very, very proud of the fact that they are free. They
    are also very, very proud, so that when you suggest ways of
    helping them, they aren't too sure they like the word ``help.''
        When you suggest, as some of us did, that their central
    government is terribly, terribly lackadaisical about changing
    their laws so that free enterprise can succeed, they readily
    acknowledge it, but in some strange sort of pride-filled way,
    they say, ``We will work it out.''
        The anomaly of all of this is that they went from communism
    to freedom and allegedly a capitalist economic system and have
    not changed their laws with reference to capital, profits, the
    kinds of things without which a free enterprise system will not
    work. It was amazing to me to see how well informed their local
    leadership and local dumas and their local governors were in
    that regard, openly stating how bad their laws were in
    preventing business successes.
        And then to go to North Korea you see a country which has
    not abandoned the communistic philosophy but has improvised
    upon it to where it is probably worse than the worst of Soviet
    communism in terms of the status of their people.
        It is amazing to me to listen to them speak because I would
    think if I were in your shoes here and those close to Korea, I
    would really be wondering whether they believe what they say,
    because they say so many ridiculous, ludicrous things as part
    of their approach to the region and to America and to South
    Korea that one just wonders if they believe it. If they believe
    it, things are worse than we think. And my guess is that they
    are not as open as the Soviet Union was before it fell, and
    thus, they may believe more than the Soviet Union believed of
    its status.
        To watch a starving country and a country with hardly
    enough energy to move food supplies in serious disrepair and to
    have this monstrous total mobilization, Admiral, which we were
    right in the middle of, was something to behold. I cannot
    imagine what goes through their military leaders' minds in
    pulling such an event off in the midst of deprivation. But it
    looks as sincere as anything that you could imagine.
        I, for one, am very proud of the relationship with South
    Korea, even though they have their problems. I hope we are
    ready to live up to our commitments to them. And when we say
    things about what we will do, I am hoping we can believe what
    we say. Can we deliver what we have indicated we will deliver
    in the case if these North Koreans do something as foolish as
    to invade South Korea?
        Admiral Prueher. Yes, sir, we can deliver what we say we
    will deliver. Certainly our equipment, our provisions, and our
    infrastructure are set to develop to support two major regional
    contingencies, one in Southwest Asia, one in Korea. If they
    both occurred concurrently, our time line for providing General
    Tilelli in [deleted] the assets he needs to work his war plan,
    his [deleted] is a little slower but we can meet it on a
    satisfactory level, sir.
        Senator Domenici. So when they are told what will happen to
    them, it is your opinion that we can make that happen?
        Admiral Prueher. There is no question that we would prevail
    if North Korea tried to invade South Korea. No question, sir.
        Senator Domenici. But you understand most Americans don't
    as of now understand that North Korea could inflict millions
    and millions of----
        Admiral Prueher. Yes, sir; if they did, it would be a
    bloody event.
        Senator Domenici. Because Seoul is within their artillery
    range?
        Admiral Prueher. Yes; that is correct. We estimate in the
    hundreds of thousands of casualties of both military and
    civilian in South Korea if they should invade, even though we
    would prevail.
        Senator Domenici. My own observation, for what it is worth,
    is that all the hot spots you have under your command and your
    concern, and there are some, China is an evolving monstrous,
    big country that we have to watch out for, but I think the most
    dangerous one is Korea at this point. Would you agree with
    that?
        Admiral Prueher. Yes, sir; I certainly agree. The situation
    in Korea is our most volatile flash point.

                                Quality of life

        Senator Domenici. Let me change the subject for just two
    questions. In your command, how many of the men and women that
    you command are members of a family? How many are married with
    dependents or at least married in a family unit, what
    percentage?
        Admiral Prueher. About 60 percent.
        Senator Domenici. What is the status of families under your
    control compared to the American mainland? Are there more
    divorces, less divorces? Are there more cases of abuse of
    spouse and children or less, or do you keep tabs on those kinds
    of things?
        Admiral Prueher. We keep tab on it but I will have to
    provide the comparative answer for the record, sir, but we
    watch very carefully the conditions in families and abuse
    cases. I think as people get stretched financially, as they get
    stretched from being away from home and some of the emotional
    stretches there, those cases tend to rise a little bit. We
    watch them very carefully, and there have been isolated pockets
    of increase, but there is not a trend increase in that type of
    issue.
        [The information follows:]

        There are no statistics available for divorce rates.
        The Department of Defense is in the process of developing a
    comprehensive data base for Family Advocacy (child abuse and
    neglect and spouse abuse) cases. A working document among the
    Office of the Assistant Secretary of Defense (OASD) for Family
    Policy, Support and Services (OFPS&S), the Defense Manpower
    Data Center (DMDC) and the Military Services Family Advocacy
    Program, Central Registries, which describes the guidelines,
    requirements and procedures for data collection, analysis and
    distribution has been implemented. Pacific region relevant data
    has been submitted to the Department of Defense by the military
    services. Retrieval of Pacific Command specific data is not yet
    possible. Action to make such retrieval possible is on-going.
        We do have good data on child abuse and neglect from the
    State of Hawaii. In 1981, the military represented 16 percent
    of the population and accounted for 27 percent of the child
    abuse and neglect reports. Our latest figures for 1995 show the
    military population at approximately 11 percent of the
    population, while the child abuse and neglect reports have
    dropped to slightly over 4 percent of the state total.
        This significant drop in child abuse and neglect cases is
    in no small way attributed to the success of prevention
    programs such as the ``A Solid Parenting Experience Through
    Community Teaching and Support'' (ASPECTS), a Department of
    Defense funded community health nursing program at Tripler
    Medical Center serving the entire military population in
    Hawaii.

        Admiral Prueher. We have, owing to a lot of work that this
    committee has done in providing funds for housing, the base
    housing for people in overseas locations has improved a great
    deal. It has improved here in Hawaii. It has improved
    throughout our AOR, and so some of these stresses are abating
    to some extent. But the deployments, as we have our people
    forward deployed more and they are away from home more, do
    create stresses on the family, sir.
        Senator Domenici. It is my opinion when we went to an All-
    Volunteer Army that we made, at first, a tacit commitment, and
    now it is obvious that it is an explicit commitment, that we
    would have to be supplying a standard of living that supported
    family life because our goal is to have them members for long
    periods of time.
        Are we adequately supplying you with the resources to be
    good stewards of these family relationships with reference to
    what you are able to provide them?
        Admiral Prueher. I think we are on track to do that, sir.
    From the time 30 years ago, 25 years ago when about 30 percent
    of our force was married, about, roughly one-third, to now
    about 60 percent, the situation has changed. And
    commensurately, we have increased the amount of funds spent for
    family issues and facilities, base facilities, and trying to
    care for the families of our troops. So it is working, it is on
    track to work well. We need to spend these resources very
    carefully as well, sir.
        Senator Domenici. Thank you very much, Mr. Chairman, and
    thank you, Admiral.
        Admiral Prueher. Thank you, sir.
        Senator Stevens. Senator Roberts.
        Senator Roberts. Thank you, Mr. Chairman. I am going to
    date myself and refer to an old Johnny Mercer tune called
    ``Accentuate the Positive, Eliminate the Negative, Don't Mess
    with Mr. In Between,'' and I would say that the men and women
    in uniform under your command are the folks that certainly help
    us with in between.
        But while I share the views of my distinguished colleagues,
    I would like to try to accentuate the positive as a result of
    Chairman Stevens' and Senator Inouye's very fine efforts.

                                  North Korea

        I just jotted down some thoughts here. As a result of our
    trip to North Korea, and for that matter the Russian Far East,
    I think we have made some real progress in convincing the North
    Koreans that they should take part in the four-party talks; at
    least that was my impression. After their obligatory statements
    in regards to ideology and commitment and the fact that their
    government, their way of life is not going to collapse, I think
    Chairman Stevens was able to set the parameters of the
    discussion, to a degree we made some progress, so that's good.
        I think in regards to food aid, it is my impression at
    least, that they did back off on making food aid a precondition
    to the four-party talks. They simply ended up saying something
    to the extent of a good faith effort. And I would point out
    that the American people and the Congress have always responded
    in regards to aid in a humanitarian nature. We have already
    committed $18 million. We will commit more in conjunction with
    our allies. And so I think we made some progress there.
        I think we made some progress in regards to the light water
    reactor. I know that's very difficult. I know it's very
    tenuous. Senator Cochran was very firm in pointing out to the
    North Koreans some of the severe problems that remain, more
    especially in regards to inspection, but I detected at least
    they listened. Perhaps they didn't listen the first day to
    Senator Cochran, but he persevered. And I think if that occurs,
    you are going to have 1,000 experts or technicians from South
    Korea into North Korea. You let 1,000 people from South Korea
    into that land and it will expedite the situation where I think
    certainly the populace would become gradually aware of the real
    world, so that's a positive.
        We are making some tenuous progress with the POW/MIA
    situation. And in regards to trade, which I think is the key to
    the long-term possible success of North Korea as to whether
    they succeed or not, I will tell you that at least the
    diplomatic folks that we dealt with can list every farm program
    over and above my knowledge of the farm programs, and I am the
    former chairman of the House Agriculture Committee. They know
    each and every program, and appealed to us in that regard.
        Senator Stevens. Let's take a station break for 1 minute
    and change the tapes.
        Senator Roberts. We will be back with these and other news
    stories in just a moment, but first this message.
        Which golden word of truth did you miss? I am on trade.
    Interestingly enough, I think the North Koreans are in a
    position where they would like to trade. And we were going over
    one particular situation, but they are learning that trading
    for a wheelbarrow full of IOU's doesn't work very well and so
    they are becoming educated to that. But I think there are some
    possibilities.
        And I think I want to pay credit again to our chairman who
    over and over again told them that while we were the first
    delegation to be allowed in to visit that very difficult
    country, that we could not negotiate. And I think they are
    learning about our system of government, but that we would make
    every effort to try to improve the situation.
        Well, that is my hope, but as you can tell from the
    testimony of my colleagues, it is a real flash point. You, sir,
    have already said our commitment of 37,000 United States troops
    plus our solidarity with the Republic of Korea and the United
    Nations partners mitigate against a situation, but you also
    warned about their ability to lash out. And while the
    diplomatic folks, at least under my impression, were under
    considerable pressure, the military and the theocracy that
    exists over there is into regime preservation at all costs, so
    we must be on the alert, and I commend you for doing that job.

                     United States interests in the Pacific

        There is one other thing that I would like to make as an
    observation, Mr. Chairman, and everybody else has asked the
    pertinent questions. The Admiral and I were having a discussion
    yesterday, and I don't think that foreign policy and defense
    policy is a very high blip on America's radar screen in terms
    of public attention, and I think it should be, because we are
    in a very tenuous situation, a very dangerous situation with
    North Korea.
        I am from Kansas. Somehow or other that Kansas wheat farmer
    has to understand that when we passed a major reform of our
    farm legislation, we must rely on trade and exports, and that
    is across the board for our total economy. You, sir, have
    indicated that if you have security, you have stability. If you
    have stability, you have economic opportunity and growth. I can
    tell you that if a Korean conflict will break out, that trade
    will be interrupted to the entire Asia market, and the price of
    wheat at the Dodge City elevator won't be $4, it is going to be
    about $2.50, and we will spend about $20, $25 billion on farm
    program subsidies that we shouldn't be spending.
        So the daily life and pocketbook of that particular cowboy
    in Dodge or wheat farmer in Dodge depends on the job that you
    do, and I think that is lost to a great degree on the American
    public, and I want to thank you in their behalf, even though
    they might really not know about the job that you are doing.
    But I think that is certainly far reaching with regards to the
    economy.
        I have no further questions, Mr. Chairman. You are doing a
    hell of a job, Admiral, and we really appreciate it. Thank you.

                       Alaska and exercises Northern Edge

        Admiral Prueher. Thanks, Senator Roberts.
        Senator Stevens. Thank you very much, Senator Roberts.
    Admiral, before we went to Russia, we stopped by in Alaska to
    see Gen. Pat Gamble and Gen. Ken Simpson and the Northern Edge
    exercise was discussed. I wonder if you could tell us, have you
    had any reports on that exercise and its success this year? And
    is there any reason to believe that that is going to increase
    in its tempo and include other forces in years to come?
        Admiral Prueher. The Northern Edge exercise we had this
    year was a tremendously successful exercise in terms of
    training value. And I have to tip my hat to General Gamble and
    General Simpson up there for putting together such a good one
    because the training areas are among the best that we have. The
    few restrictions on training, owing to the area available,
    allow us to train to a degree which we cannot do in other
    places.
        The Northern Edge exercise is an important piece of what we
    do. And as we look at our overall exercise program in trying to
    get the most we can for the dollar, we think Northern Edge will
    continue to be an important part. As you know, it is a little
    off the beaten track but for our Pacific forces, but when we
    look to the rest of the AOR back to the east where people
    really do the training to fight and win, the Northern Edge
    exercise is an important part, sir.

                                Missile defense

        Senator Stevens. Admiral, we will be going back now, and
    one of the basic problems we face as we look at the defense
    budget this year is prioritizing the national missile defense,
    theater missile defense, and the tactical missile defense
    concepts with all the other demands on us for funds in the
    military budget. We do handle that budget, and it is going to
    be a very contentious matter this year.
        As I have said before, you command the largest area in the
    world that has real demands on you for defense. How high a
    priority should we give to these missile defense systems,
    theater defense, and national missile defense and the basic
    tactical missile defense concepts?
        Admiral Prueher. Sir, if General Tilelli got an opportunity
    in Korea, he talked very much about how important theater
    missile defense was to him there on the peninsula. They live
    close to the flame, and it is a very high priority. It is a
    high priority for us as well.
        With what looks like occurred in Helsinki with some of the
    restrictions on theater missile systems that would have been in
    place from the ABM Treaty we will be able to work them in a
    fuller way with the agreements made in the recent trip to
    Helsinki by the Secretary of Defense and General Shali. So this
    opens up the theater missile defense, in my opinion, to take an
    increasing role in what we need to be doing in the United
    States.
        In my mind, national missile defense and theater missile
    defense are not necessarily completely exclusive in the areas
    that they can cover, though testing against certain types of
    missiles is the rub and that's still in the ABM Treaty. I think
    the theater missile defense should be a very high priority. We
    have several programs that have a lot of opportunity for
    payoff. Theater high altitude area defense [THAAD] is one, the
    Navy areawide and the Navy theaterwide systems are others. They
    have a lot of promise. I think theater missile defense should
    have a high priority for us because if we do theater missile
    defense well, we can move these assets around and take a big
    bite out of quite a few of our problems, not only in our AOR
    but also in our homeland defense.

                   United States carrier homeporting in Japan

        Senator Stevens. Gentlemen, any other questions?
        Senator Inouye. I have one.
        Senator Stevens. Senator Inouye.
        Senator Inouye. Admiral, of the few remaining aircraft
    carriers in operation all are nuclear powered, with the
    exception of a couple that are powered by diesel fuel, and
    those diesel-powered aircraft carriers will soon be
    decommissioned. The Japanese Government has indicated time and
    again that it will not permit nuclear-powered vessels to
    operate in their waters and be ported in their bases. What
    plans do we have at this moment for the forward presence of
    carriers?
        Admiral Prueher. [Deleted.] And so the problem is not
    immediately upon us but it is coming.
        So for our forward deployed, we gain a lot in terms of
    OPTEMPO with the ability to forward deploy a carrier. I think
    one of the things that has been discussed in the ``Quadrennial
    Defense Review'' is the possibility of forward deploying a
    carrier. The only other one we have done historically, other
    than in Japan, was we had a try in the 1970's in Greece where
    we forward deployed the Forrestal and it only worked for a
    couple of years. So right now I think we have no serious looks
    at forward deploying other carriers other than the one in
    Japan, [deleted].
        Senator Inouye. So we have no idea what the outcome will be
    at this moment?
        Admiral Prueher. From those discussions?
        Senator Inouye. Yes.
        Admiral Prueher. No, sir; not right now.
        Senator Inouye. Thank you, sir.
        Senator Stevens. Senator Cochran.

                                 Burdensharing

        Senator Cochran. Mr. Chairman, one other closing note on
    the Korea situation. One thing that we observed when we were in
    South Korea was that we have reached agreement with the South
    Korean Government to contribute more to defray the costs of
    maintaining our deployment in that region and providing for the
    collective defense.
        Are you satisfied that that agreement reflects a fair
    balance of responsibility to pay for those costs? We note that
    your statement on page 12 and 13 specifically says that the
    government there is going to contribute $330 million in this
    fiscal year and there is a planned increase of 10 percent per
    year in 1997 and 1998.
        Admiral Prueher. Yes, sir; what the South Korean Government
    is giving seems to be about right in their agreements to do
    those increases through 1998. It seems to be about the right
    amount for the proper balance for their defraying of our costs
    of being there, sir.
        Senator Cochran. In the case of Japan, we notice that that
    allocation of responsibility has been such that there is a
    substantial reimbursement by Japan for our costs of deployments
    in that region. A lot of people, I think, back in the States
    don't realize the extent to which Japan is contributing to help
    defray those costs. What does that come to now in terms of
    dollars or percentage of the total costs?
        Admiral Prueher. Japan contributes a great deal to the
    stability in the area. In terms of defraying the costs, they
    contribute about $5.1 billion a year, which is over 70 percent
    of the cost of our deployments in Japan.
        In addition, related to Senator Inouye's question about
    forward-deployed forces, they allow us, by having forces
    deployed in Okinawa and on mainland Japan, a great efficiency
    in our deployment patterns which creates an additional savings
    which I cannot give you a dollar figure for. I am not a good
    enough economist to do that. But they also contribute in that
    manner to the defense and stability of the region.
        Senator Cochran. Thank you very much, sir.
        Senator Stevens. Senator Domenici.
        Senator Domenici. I have no further questions.
        Senator Stevens. Senator Roberts. Any last questions?
        Senator Roberts. I just wanted to say that I am not an
    appropriator which means you don't have to pay much attention
    to me. But at any rate, I do serve on the Armed Services
    Committee and I want to bring you greetings from Senator
    Thurmond.
        Admiral Prueher. I feel like a defendant here already, sir.

                         CODEL visit to Northeast Asia

        Senator Roberts. I did want to say a special greeting from
    Senator Thurmond, our distinguished chairman, and the ranking
    members, Senator Levin and Senator Warner, and others, for the
    outstanding job that you are doing.
        I am also on the Intelligence Committee. I know you are--we
    are going through quite a meaningful dialog as we go through
    the QDR and all of that and trying to figure out where we are
    in regards to readiness and modernization and procurement and
    all the things that Senator Cochran has mentioned, and so we
    will do our level best.
        But one thing that I would like to underscore again, and I
    know I am being repetitive and I know I am taking time, Mr.
    Chairman, is the positive effort that I think you have brought
    as a result of this delegation in our relationship with North
    Korea. Now, we have heard an awful lot about how they can lash
    out, and how we have got an angry and very hungry badger in a
    hole, and I understand that, but I think through your decorum
    and through your very careful negotiations, we have set a
    positive tone at least with the diplomatic folks.
        I am concerned in regards to listening to the news and
    hearing the Vice President talk about ``North Korea will
    fall,'' as you will recall, and they may well. But as you will
    recall, they said that, ``We will not collapse,'' that ``Our
    people are not mad at our leadership and the dear leader, they
    are mad at you because you are causing this,'' which is sort of
    their paranoia. And I think it would be well if the
    administration could have a consistent voice. We have
    Ambassador Richardson stressing the approach that we certainly
    tried to use a position of strength but trying to get them to
    negotiate, and we have other comments made that could be
    contrary to that.
        I hope we can get that straightened out and I hope we can
    make some progress, and I think you've done a marvelous job in
    that respect.
        Senator Domenici. Mr. Chairman?
        Senator Stevens. Yes, Senator.
        Senator Domenici. I just wanted to mention, Admiral, when
    we were in Vladivostok talking to the admiral whose name is
    difficult for me to pronounce.
        Admiral Prueher. Kuroedov.
        Senator Domenici. Kuroedov, I asked him whether they would
    be willing to accept nuclear experts and scientists from our
    national laboratories if you were going to engage in an effort
    to dismantle and protect the environment in a maximum manner,
    and he said openly that he would welcome them. And we will look
    into that in Washington, but I think they are a great asset and
    I just wanted to call that response to your attention.
        Admiral Prueher. Thank you very much, sir. I think our
    conversations with them have been direct, and we have addressed
    issues. And I think they have confidence in us and we have a
    pretty good confidence in them in dealing with them, sir, so
    thank you.
        Senator Stevens. Admiral Prueher, we are home and we are
    more than happy to be home. But I've got to tell you that you
    can't make that trip without realizing that in both of the
    countries in the former Soviet Union, as well as in North
    Korea, their leaders made a substantial mistake in terms of the
    quantity of the resources they would have available for the
    future and in allocating those resources. As the Senators have
    said, when you see these large monuments in North Korea and the
    large and broad boulevards and you realize that they are not
    only out of food but they are out of fuel, you can understand
    the difficulty in allocation of resources.
        The job of this committee is to recommend to the Congress
    the allocation of resources, particularly in the defense area.
    And we have relied upon your advice and the other CINC's in the
    past, and we will continue to do that. I do hope that you will
    help us with regard to the problems there along the Pacific rim
    in terms of some of the funds we will try to make available to
    you to see if we can lessen this tension.
        As I left North Korea, I told Mr. Kim, who was the vice
    minister that dealt with us primarily, that I would like to see
    the day that I could return and visit Pyongyang and have it be
    in a park, an international park, where we could meet and
    discuss the history of the past relationships and really go on
    to a better relationship with that country.
        I share what Senator Roberts said, the hope that somehow or
    other we may have brought them to the point where they might
    think about different avenues of approach to the problems they
    face other than military solutions. If they seek a military
    solution, they certainly will be destroyed.
        If they do seek to find other ways to deal with us in a way
    that we might be able to help them solve some of their
    problems, you will be at the forefront of that effort. You are
    the representative that they recognize in the Pacific from our
    country on a constant day-to-day basis, and we want you to know
    we are going to do everything we can to give you the resources
    to meet those responsibilities. It has been a pleasure to be
    with you again and thank you very much.

                              subcommittee recess

        Admiral Prueher. Thank you very much, Mr. Chairman.
        Senator Stevens. The meeting is recessed.
        [Whereupon, at 9:58 a.m., Monday, March 31, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                            WEDNESDAY, APRIL 9, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:02 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Bond, Shelby,
    Gregg, Hutchison, Inouye, Hollings, Bumpers, and Dorgan.

                             DEPARTMENT OF DEFENSE

                             Department of the Navy

                            Office of the Secretary

    STATEMENT OF HON. JOHN H. DALTON, SECRETARY OF THE NAVY
    ACCOMPANIED BY:
            ADM. JAY L. JOHNSON, USN, CHIEF OF NAVAL OPERATIONS
            GEN. C.C. KRULAK, USMC, COMMANDANT OF THE MARINE CORPS

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning, gentlemen.
        I have to smile when I see my friend here. He sent us all a
    tee shirt that says ``I survived CODEL Stevens.'' [Laughter.]
        That has got to be something.
        We are going to begin our first of three overview hearings
    today. We welcome Secretary Dalton, Adm. J. Johnson, and
    General Krulak. We do look forward to your review of the Navy
    and Marine Corps 1998 budget request.
        Secretary Dalton and General Krulak have appeared before
    our committee before, but this is your first visit. Some people
    call it the maiden visit or voyage. I will have to think about
    that. Admiral, it is nice to have you with us, though.
        Admiral Johnson. Thank you, sir.
        Senator Stevens. We appreciate the demands that are placed
    upon those who are in charge of the marines and the Navy. We
    have visited many of your installations and people in the last
    few months. They are doing a great job for us around the world
    and they have great stewardship right now.
        Our trip to the Pacific that we have just come back from
    convinces us of really the validity of the policies we are
    pursuing with our naval forces and our marines in their
    deployment. So I think this should be a very happy occasion for
    all of us, and I welcome the statement of our co--we call him
    our co-dear leader now. [Laughter.]
        Guess what he calls me.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. I call him the magnificent one. [Laughter.]
        Mr. Secretary----
        Senator Stevens. The record will be sanitized and the press
    will be sanctioned. [Laughter.]
        Senator Inouye. Mr. Secretary, Admiral Johnson, and General
    Krulak: I would like to join my chairman in singing the praises
    of your senior officers in the Pacific. Once again, they have
    demonstrated that men and women in uniform can be good
    ambassadors, good diplomats, and our trip to the Russian far
    east demonstrated that very amply.
        This year the Navy will reduce its battle force ships to
    346--personally, I never thought it would reach that number--
    with further reductions planned for 1999. Civilian personnel
    will be reduced by another 2,200. More than one-third of the
    Navy's total civilian work force has been cut since 1990. Navy
    military personnel levels will fall by another 11,200, to
    391,000. Marine end strength will stay at 174,000.
        At the same time we are calling upon the Navy and our
    Marine forces to keep an eye on Bosnia, on China, on Korea, on
    the Persian Gulf, and everywhere else. So we continually ask
    ourselves if this posture can be sustained with these smaller
    forces. I am concerned, as I am sure you are as well, with the
    impact on our men and women in uniform. I know that you are
    doing all you can to ensure that we are taking adequate care of
    their needs.
        Looking at the investment budget, I know that the Navy will
    only build four combatant and two sealift ships this year, and
    I wonder how long we can sustain the fleet at these rates of
    production.
        Mr. Secretary, Admiral Johnson, and General Krulak, we are
    extremely grateful for your dedication and tireless efforts on
    behalf of our sea services.
        Mr. Chairman, I look forward to listening to their views on
    the state of the Navy and the Marine Corps. Thank you very
    much.
        Senator Stevens. Ladies and gentlemen, any further opening
    statements?

                 prepared STATEMENT OF HON. CHRISTOPHER S. BOND

        Senator Bond. Mr. Chairman, I will just submit mine to the
    record. I certainly welcome the Secretary, the Admiral, and the
    General. I join in the statements and the concerns expressed by
    you and the ranking member, and I will save my comments for the
    record.
        Senator Stevens. It will be printed in the record.
        [The statement follows:]

               Prepared Statement of Senator Christopher S. Bond

        Thank you, Secretary Dalton, Admiral Johnson, and General
    Krulak for speaking to the committee today. I want to echo the
    statements and concerns of the Chairman, Senator Stevens and
    the Ranking Member, Senator Inouye. I especially want to
    emphasize my concerns for the health and readiness of the Navy.
        As we all know, this year has been a busy one for our armed
    forces and I see no sign that our commitments and
    responsibilities are going to slack off in the future. As the
    President has sent the military on increasingly frequent and
    tedious missions, many observers have expressed real concern
    about the readiness and maintenance of our military equipment.
    I share the concern of committee leaders on the impact this has
    on personnel. Furthermore, as we lose bases abroad, our forces
    will have to remain at sea for longer durations and will be
    more dependent upon the Navy for operation platforms.
        Considering the present situation, I believe that naval
    aviation is the cornerstone of future operations and I am
    concerned by the overall state of naval aviation. It is in this
    same light that much has been said about the Navy's choice for
    a strike fighter aircraft.

        Senator Stevens. We welcome you, gentlemen. Secretary
    Dalton.

                      opening remarks of Secretary Dalton

        Mr. Dalton. Mr. Chairman, Senator Inouye, distinguished
    members of this body:
        It is a privilege and an honor for me to appear before you
    today for the fourth time on the state of the Navy and Marine
    Corps. My message this morning is simple. I am reporting to you
    that our Navy and Marine Corps are on course and speed, now and
    for the future.
        The Navy and the Marine Corps are meeting their operational
    commitments. Morale is good. Quality of life for our sailors,
    marines, civilians, and their families is the best we have seen
    it. And the future, while serious challenges remain, is bright.
        I do not want to paint an exaggerated picture of our
    situation, but operationally, programmatically, and in
    personnel the Navy-Marine Corps team is answering all bells. We
    are focused and efficient, operating forward to protect
    America's interests around the world. Our forces are second to
    none, and with your help I intend to keep it that way.

                           Quadrennial defense review

        Together with Secretary Cohen and our Defense Department
    leadership, the Navy and Marine Corps are taking a hard look at
    the makeup, the mission, and capability of our force structure.
    A major part of this process is the quadrennial defense review
    [QDR]. I believe it will offer a logical, reasoned assessment
    of America's defense strategy, force structure, military
    modernization programs, and defense infrastructure.
        The Navy Department is well positioned to tackle the tough
    issues ahead in strategy, programs, budget, and personnel.
    First and foremost, the Navy and Marine Corps do not need to
    reinvent themselves. We've already been down that road and have
    made the incremental and some revolutionary changes since the
    end of the cold war.
        Certainly, the Navy Department is energized, fully
    energized, to take another hard look at our strategy and
    requirements during the QDR.
        Let me address the areas of strategy, programs, and
    personnel in turn. First, our strategy and operations. Winston
    Churchill once observed: ``A warship is the best Ambassador.''
    That sentiment is true more than ever in today's world.
    Forward-deployed U.S. forces, primarily naval expeditionary
    forces, are crucial to regional stability and to keeping local
    crises from escalating into full-scale wars.
        I am very proud of our operational forces. They have been
    ready every time the Nation has called. The past year was no
    exception--from operations in the Taiwan Straight to calm
    tensions, to embargo enforcement in the Arabian Gulf and Red
    Sea, to peacekeeping with the Army and Air Force in Iraq and
    Bosnia, to evacuation operations in Liberia, and most recently
    in Albania. And they are on station today off the coast of
    Zaire in case we need to rescue Americans there in harm's way.
        So from A to Z, from Albania to Zaire and everything in
    between, our Navy-Marine Corps team does it all. When the
    Nation calls, we deliver. Last week I was with Senator Inouye
    visiting our sailors and marines in Hawaii. Those men and women
    serve at the tip of America's defense arsenal and they are
    ready to defend our Nation's interests on a moment's notice. It
    is not something any of us should take for granted. I certainly
    do not.
        Right now about one-half of our Navy and Marine Corps are
    underway; 33 percent, or 115 ships, and nearly 60,000 sailors
    and marines are forward-deployed, protecting American
    diplomatic and economic interests around the globe. And this is
    a typical day of operations. On average we have roughly 50
    percent of our force underway and around 30 percent forward
    deployed.
        This forward presence and the sacrifices associated with
    being underway are the price we pay for freedom. The United
    States and its allies should not be forced into fighting a war
    with overwhelming and expensive forces. Instead, it is much
    better and cheaper to resolve a crisis before it gets out of
    hand.
        It is obvious that the United States and our allies must
    maintain, even in a world that contains just one superpower, a
    level of military security that can operate forward, whether to
    support humanitarian operations, to keep peace, or make peace,
    whenever and wherever required. The force of choice to fulfill
    this mission is most often our naval expeditionary forces. That
    means a Navy-Marine Corps team that America, with your
    leadership, has bought and paid for, and it is a force with
    which you are all familiar.
        The second area where I think we are doing very well is in
    our programs and budget. The Navy-Marine Corps team has a
    solid, reasoned plan to modernize our forces for the 21st
    century. I am very pleased with our aviation and ship
    construction programs as we work the 1998 budget.
        On the aviation side, the V-22 Osprey and the F/A-18E/F
    immediately come to mind when I think of intelligent,
    innovative, efficient acquisition programs designed to meet any
    threat for the next 20 years. The T-45 Goshawk trainer, the AV-
    8B Harrier avionics upgrade, and the Joint Strike Fighter are
    other smart aviation programs vital to our future strike
    warfare capability.
        I am particularly pleased with our shipbuilding plan. We
    have funding for CVN-77 in 2002, LPD-17 and DDG are on track,
    and teaming for construction of the new attack submarine, with
    congressional approval, will solve some difficult funding and
    industrial base issues.
        We are also conducting research and development for the
    next generation aircraft carrier, or CVX, the arsenal ship, and
    a new surface combatant or SC-21, for the 21st century. Our
    shipbuilding plan is an extremely positive and balanced
    program.
        A big part of our success is due to an aggressive
    acquisition reform strategy. We have had to do more with fewer
    platforms and personnel, and efficiency has been the answer.
    The Department of the Navy will continue acquisition reforms
    while developing promising technologies for tomorrow's Navy and
    Marine Corps.

                          Super Hornet Strike Fighter

        Let me cite two examples of some of the changes we have
    made in the way we do business. First is our Super Hornet
    Strike Fighter. This was a program designed from the ground up
    to implement our new acquisition reforms. Both the technology
    and our production procedures are cutting edge.
        The Super Hornet project has been a tremendous success. It
    is on time, on budget, and underweight. And it has been a long
    time since we have had a major new weapon system that has met
    those criteria. Most importantly, the Super Hornet is flying
    right now at our Patuxent River, MD, test facility after
    completing its first round of carrier suitability trials this
    past January on board U.S.S. John C. Stennis.
        The Super Hornet is the right aircraft for the Navy now and
    for the future. The E/F can carry every tactical air-to-air and
    air-to-ground weapon in the Navy's inventory. We have balanced
    our approach to survivability by blending in low observable
    technology, state-of-the-art defense electronic
    countermeasures, and reduced areas of vulnerability.
        The Super Hornet is simply a superb multimission aircraft
    spanning the full tactical spectrum from long-range air
    dominance to all-weather deep strike. When we look out 20
    years, the intelligence community cannot predict one threat
    that this versatile strike fighter cannot counter. It is the
    right mix of technology, stealth, and affordability to meet the
    Navy's and the Nation's forward-deployed strike fighter
    requirements well into the next century.
        I am pleased with the Defense Department's decision to
    proceed with the low rate initial production of the Super
    Hornet. That is good news and the right answer for the Navy.

                      Advanced amphibious assault vehicle

        The second example is the advanced amphibious assault
    vehicle. Late last year, the Marine Corps and General Dynamics
    cut the ribbon on the new AAAV Center near Quantico, VA. I was
    there again last month to review their progress. Let me tell
    you that this groundbreaking center is working very well.
        We have collocated the program manager and the prime
    contractor in the same office. The benefits are clear: We are
    already increasing the flow of information, ideas, and
    creativity, all in an atmosphere that fosters trust and
    cooperation. This adds up to cost savings and enhanced
    capability.
        We will continue to press forward with these and other
    ship, aircraft, and systems modernization programs. Our goal
    for 1997 is to maximize efficiencies in our research,
    development, and acquisition processes to ensure that our next
    generations of systems and equipment are more cost effective,
    more affordable, and more capable.

                                     People

        The third area where I think we are doing a superb job is
    our people. I am extremely proud of our sailors and marines, of
    the job they do day in and day out. They are meeting the
    Department of the Navy's missions and requirements. Whether it
    is the Arabian Gulf, Haiti, Asia, supporting salvage operations
    in the case of TWA Flight 800, or off the coast of Albania or
    Zaire, we are on station right now.
        Our men and women are trained and capable professionals.
    That is something for which I am extremely grateful and very
    proud, and it is something that you can look on with a great
    deal of pride as well.
        I hope that you will stay in touch, continue to visit our
    forces, our bases, and our ships. See for yourselves how good
    our sailors and marines really are. The simple fact is we have
    the best sailors and marines we have ever had. I see it first-
    hand on ships, squadrons, and bases that I visit. It is a
    tremendous privilege and honor to lead these fine men and
    women.
        Running the Navy family also means we must address the full
    range of personnel issues. The Navy Department has certainly
    sailed some choppy seas in this particular area. Gender
    relations is a good example. As with some of the other tough
    personnel challenges that the Navy has faced, namely race and
    substance abuse, we have learned some lessons. While we were
    out front in identifying and addressing the issues, there are
    still some rough spots.
        Part of the issue is that our team must more closely
    reflect the society it serves in both opportunities and
    complexion. But we know the right answer, and in areas where we
    are not quite there yet we are working toward the goal as a
    team.
        Overall, I am pleased with the progress that the Department
    of the Navy has made and is making on combating sexual
    harassment and other unprofessional behavior. Our baseline
    requirement is clear. Treating each individual with dignity and
    respect is the only acceptable standard.
        The Department of the Navy will continue to ensure that our
    emphasis on the moral aspects of our people remains strong and
    clear. Honor, courage, and commitment will always be the
    entering arguments in our plans and policies. I have confidence
    that we will do whatever we need to do to keep our service the
    finest ever.
        I will say it again: The Navy Department is looking good
    and I am excited about the opportunities ahead. Let me
    emphasize that the Navy Department is indeed an organization
    for the future. The Department's programs, policies, and
    organizational changes are forward-looking and in step with the
    rapidly changing challenges to our national security.
        The Navy and Marine Corps are on course and speed to meet
    these challenges, and we are poised to remain the preeminent
    military force for decades to come.
        Mr. Chairman, before I conclude my statement I would like
    to recognize Capt. Mike Worley. As you may know, Captain Worley
    is retiring from the Navy on May 1. He has done a superb job in
    keeping the members of this subcommittee and your staffs
    informed on the Department of the Navy programs and issues. He
    has served me extremely well as my principal adviser on defense
    appropriations. Mike will be missed by this subcommittee, by
    the Navy he has served so faithfully for 28 years, and
    especially by me. I know you join me in wishing him continued
    success in his retirement.
        Senator Stevens. We do, Mike. We appreciate it very much.
        [Applause.]
        Mr. Dalton. I also look forward to great things from his
    relief, Capt. Dick Rodgers, and you can count on the same
    professionalism and responsiveness from him in the years to
    come.

                               prepared statement

        I would like to thank this subcommittee and each of you
    personally for your support in ensuring that our Navy-Marine
    Corps team remains in peace and war the finest the world has
    ever known.
        Thank you very much for the opportunity to appear before
    you today, and I look forward to responding to your questions.
        [The statement follows:]
                   Prepared Statement of Hon. John H. Dalton
                 department of the navy 1997 posture statement
        This posture statement explains the Department of the Navy's
    mission, our accomplishments this past year and the priorities that
    guide our decision making. In 1997, we will continue the focus on four
    broad departmental themes: people, readiness, technology, and
    efficiency. In each of these areas, the Navy and Marine Corps will
    balance current operational and budget demands with our strategic
    vision and projected force requirements for the 21st century.
        Recent operations around the world demonstrate the continuing
    requirement for naval forces that are ready, capable, and forward
    deployed. These sea-based forces are vital to regional stability and to
    containing crises. It is our forward presence that makes naval forces
    the right force, tailor-made for these uncertain and challenging times.
    They are the rheostat of national response capabilities--forces that
    use the world's oceans as a means of access and as a base and are
    equally effective across the full range of missions, from peacetime
    engagement, crisis response and deterrence, to warfighting campaign
    operations in support of a joint commander.
        Our Sailors, Marines, and civilians remain the heart and soul of
    the Navy and Marine Corps. The readiness of our force depends first and
    foremost on the men and women who comprise our team and the training
    and equipment we provide them. Building on a firm foundation of proven
    leadership, strong character, and ethical behavior, the Department will
    continue policies that protect individual dignity and respect for all
    personnel. We are also committed to providing the highest quality of
    life possible for our men and women and their families.
        The Department continues to foster an environment conducive to
    revolutionary thinking and innovation. In addition, we are pursuing an
    aggressive acquisition reform strategy while developing promising
    technologies for tomorrow's Navy and Marine Corps. These initiatives
    and reforms will allow us to press forward in our modernization and
    recapitalization programs. Our goal for 1997 is to maximize
    efficiencies in our research, development and acquisition processes to
    ensure that our next generation of systems and equipment are cost
    effective, mobile, affordable, and capable.
        Today, naval expeditionary forces are underway, ready and on-scene
    at trouble spots around the world. As you read through the following
    pages, you will see that our Sailors and Marines are well-prepared to
    respond to any mission ordered by the National Command Authorities. The
    Navy-Marine Corps team will continue to provide the premier forces from
    the sea that are adaptive, ready and forward-deployed to support the
    Nation's interests around the world--now and into the future.
                           the navy-marine corps team
        Events of the past year have reaffirmed the enduring significance
    that forward-deployed, combat ready naval forces play in shaping the
    strategic environment. In March, the carriers Nimitz (CVN 68) and
    Independence (CV 62) and their carrier battle groups moved into the
    South China Sea in a measured but swift response to rising tensions in
    the Taiwan Strait. From April through August, the 22d Marine
    Expeditionary Unit, as the joint task force commander, and the ready
    group with the amphibious assault ship Guam (LPH 9) evacuated 757 U.S.
    citizens and country nationals from Liberia and the Central African
    Republic. Also, in September, the Carl Vinson (CVN 70) carrier battle
    group was the centerpiece of a joint response to Iraqi aggression
    against the Kurds. Daily, U.S. naval forces demonstrate their ability
    to support and defend our national security interests through highly
    visible forward presence, expeditionary readiness, and potent on-scene
    power projection capability. Sea-based forces are sovereign extensions
    of our nation, operating in international waters. They are unencumbered
    by the treaties and access agreements that land-based forces normally
    need to operate overseas. Naval forces also offer the flexibility of
    acting within full view of a potential aggressor, over the horizon, or
    submerged and totally undetected.
        Naval forces play a pivotal role in supporting our national
    interests and the objectives as defined by the National Security
    Strategy and National Military Strategy. Our prosperity hinges on the
    sea: 70 percent of the world's population lives within 200 miles of the
    sea; 80 percent of the world's capitals lie within 300 miles of the
    sea; and 99 percent of all U.S. overseas trade travels on the seas. We
    are indeed a maritime nation.
        The Navy-Marine Corps white paper Forward . . . From, the Sea
    focuses on the importance of littoral operations and the daily presence
    of our naval forces around the world in meeting our national security
    objectives. Forward presence enhances regional stability through
    peacetime engagement, underscores U.S. resolve, bolsters deterrence,
    prevents and contains crises, reassures allies, and lays the groundwork
    for successful coalition operations. Similarly, the capabilities of our
    expeditionary naval forces are especially critical in the initial
    stages of a developing situation, when rapidly responding, combat
    credible forces heavily influence the outcome. Moreover, naval forces
    present a unique range of options to the National Command Authorities
    (NCA). By using the oceans both as a means of access and as a base,
    forward-deployed Navy and Marine air, land, and sea forces provide the
    NCA with a rheostat of national response capabilities.
    The Navy-Marine Corps team: The embodiment of jointness
        Naval forces also provide the joint force commander a full range of
    land- and sea-based military options flexibly tailored for peacetime
    missions, crisis response, or conflict. Naval forces are typically the
    first to arrive at the scene of a crisis; once there, they shape the
    battlespace for further joint operations. By attacking the enemy's
    infrastructure, seizing and defending key ports and airfields,
    sustaining the flow of sea-based logistics, and (in the future)
    providing sea-based theater missile defense, naval forces carry the
    fight until the heavier land-based forces are able to build up combat
    power ashore and achieve the full warfighting potential of a fully
    integrated joint force. In addition, naval forces can establish a
    temporary or permanent joint task force (JTF) command structure.
    Carrier battle groups and amphibious ready groups are ideally suited
    for assuming these duties in the initial stages of a crisis, while our
    numbered-Fleet command ships are capable of establishing a long term,
    national base for JTF command and control from the sea. The built-in
    command, control, and communication links of our carriers, amphibious
    assault and command ships, along with their ability to integrate
    quickly with forces from other services, are key factors in
    establishing a joint force. Naval forces also can establish a JTF
    Headquarters ashore, when needed. The II Marine Expeditionary Force is
    leading the effort to establish a premier standing JTF Headquarters.
    This Marine Corps initiative provides regional commanders with a ready-
    made organization that trains together and can deploy rapidly. The
    standing JTF Headquarters contains the command-and-control links
    necessary to conduct joint operations. On a smaller scale, all forward-
    deployed amphibious ready groups and their embarked Marine
    expeditionary units are being upgraded to assume a limited JTF
    Headquarters role when required. The Navy-Marine Corps team is the
    critical catalyst for joint operations.
        Most important, naval forces are adaptive forces for uncertain
    times. The Navy and Marine Corps continue to exploit the synergy
    created when carefully tailored naval forces are dispatched to the
    scene of a crisis. In addition to forward-deployed carrier battle
    groups and amphibious ready groups with embarked Marine expeditionary
    units, specifically tailored battle groups and special purpose Marine
    air-ground task forces provide regional commanders with the precise
    tools they need.
        Overall, naval forces provide our nation with a rapid response
    force: persuasive in peace, compelling in crisis, and capable
    throughout the full range of conflict. Whether the mission is
    humanitarian assistance, crisis response, or conflict resolution,
    adaptable forces from the sea, operating independently or jointly, are
    a powerful instrument for carrying out national policy.
        To ensure that the capabilities we acquire are appropriate for such
    a wide range of functions, the Navy and Marine Corps use joint
    coordination groups to discuss, evaluate, and propose to the leadership
    anticipated requirements for the two Services. The process allows the
    Navy-Marine Corps team to voice requirements within the joint arena
    from a single naval perspective. This teamwork also is occurring in the
    budget process. As the only military department with two services, the
    Department of the Navy must coordinate its budget submissions closely
    to improve efficiencies and create a more cohesive product. Such
    integration leads to better support of our overall naval strategy.
    A focus on the future
        The Department of the Navy is proud of its heritage of innovative
    thinking and its long-standing contributions to national security. In
    1991, the Navy-Marine Corps team examined the changing world
    environment and recognized that the ending of the Cold War era would
    require a move away from the standing Maritime Strategy. We responded
    with the publication of our landmark white papers: . . . From the Sea
    and Forward . . . From the Sea. These documents focused both the Navy
    and Marine Corps on the critical littoral regions of the world, while
    capturing the unique capabilities of each service. They also
    established the foundation for operational concepts that will drive our
    future doctrine and ensure our continued operational primacy.
    ``Operational Maneuver from the Sea,'' signed by the Commandant of the
    Marine Corps in January 1996, is one example. This capstone document
    details a naval concept for the projection of power ashore, exploits
    the Navy-Marine Corps team's expeditionary capabilities, and provides a
    framework for applying maneuver warfare to maritime operations during a
    joint campaign. Similarly, the Chief of Naval Operations will sign the
    Navy's Operational Concept in early 1997. This seminal document
    describes how the Navy operates forward from the sea to carry out the
    three components of the National Military Strategy: peacetime
    engagement; deterrence and conflict prevention; and fight and win. It
    explains the vital role of the Navy in future joint operations
    envisioned in Joint Vision 2010.
        With the Chairman of the Joint Chiefs of Staff's strategic vision,
    Joint Vision 2010, and the recently approved Joint Strategy Review as
    guides, the Department of the Navy is aggressively preparing for the
    future warfare environment. Organizations such as the Naval Doctrine
    Command and the Marine Corps Combat Development Command are working on
    concepts to make the capabilities of sea-based forces most useful to
    the joint force. Both services are examining these concepts through
    test beds such as the Commandant's Warfighting Lab, the Navy's Fleet
    Battle Experiments, and the recently approved ``Extending the Littoral
    Battlespace'' advanced concept technology demonstration .
                           naval expeditionary forces
    Executing the national military strategy today
        Our National Military Strategy of Flexible and Selective Engagement
    defines two national military objectives: promoting stability and
    thwarting aggression. It also outlines three sets of tasks: peacetime
    engagement; deterrence and conflict prevention; and fight to win.
    Because we are a maritime nation with vital economic and security
    interests that span the earth's oceans, we must meet the military
    objectives through overseas presence and power projection, which naval
    forces are ideally suited to execute. Indeed, forward presence and
    power projection form the centerpiece of strategic guidance in the
    white papers . . . From the Sea and Forward . . . From the Sea.
        U.S. naval forces remain a critical ingredient in promoting and
    protecting national interests. Joint Vision 2010 outlines a plan for
    achieving the objectives set by our National Military Strategy--a
    strategy revalidated by the Joint Strategy Review, and one that demands
    the capabilities of sea-based forces. Joint Vision 2010 also notes the
    rapid advances in command, control, and intelligence capabilities, and
    links information superiority with emerging technologies to create four
    new operational concepts: dominant maneuver; precision engagement;
    full-dimensional protection; and focused logistics. These concepts
    highlight many of the unique capabilities that sea-based forces possess
    today, and provide a framework for 21st-century execution of our
    enduring strategic concepts of overseas presence and power projection.
    They will enhance our naval forces' ability to continue to play a
    critical role: persuasive in peace, compelling in crisis, and capable
    in every aspect of war.
                Persuasive in peace
        Naval forces play a unique and vital role in maintaining U.S.
    overseas presence. Their full combat capability, inherent mobility, and
    capacity for self-sustained operations make them an expeditionary force
    without peer. A balanced, forward-deployed naval force serves multiple
    purposes. Simultaneously, it can reassure friends and allies, build and
    enhance coalition interoperability, deter potential aggressors, and
    respond effectively to crisis or war. On any given day, roughly 30
    percent of the Navy and Marine Corps' operating forces--more than
    50,000 men and women and 100 ships--are deployed throughout the world.
    Our carrier battle groups and amphibious ready groups with embarked
    Marine expeditionary units are forward-deployed to achieve near-
    continuous presence in four major deployment hubs: the Mediterranean
    Sea, the Arabian Gulf/Indian Ocean, the Western Pacific, and the
    Caribbean. In Japan, we maintain a Marine expeditionary force as well
    as the forward-stationed Independence (CV 62) battle group and the
    Belleau Wood (LHA 3) amphibious ready group. Finally, the Navy's
    Western Hemisphere Group specifically is focused on supporting our
    nation's counterdrug efforts as well as strengthening and improving our
    ties to Caribbean and South American friends and allies. From these
    strategically placed forward locations, naval forces can quickly deploy
    to crisis areas outside these regions.
        Naval forces participate in the full range of peacetime-engagement
    activities. This year alone, Navy ships made 1,629 port visits to 99
    nations, including such frequently visited ports as Freemantle,
    Australia, and Naples, Italy, and ports where U.S. forces are seldom
    seen--such as Shanghai, China, and St. Petersburg, Russia. Each of
    these visits provided enormous benefits through military-to-military
    contacts and goodwill established with local communities. These ships
    hosted hundreds of thousands of visitors onboard. In return, more than
    20,000 Sailors and Marines went into nearby communities to participate
    in numerous public-service projects, such as refurbishing schools and
    orphanages and providing basic medical care.
        Navy and Marine Corps cooperative efforts with the sea, land, and
    air forces of friends and allies are essential to successful coalition
    building. The enhanced relationships and interoperability--gained
    through 160 major multi-national and bilateral exercises with 64
    different countries--increase U.S. capability and credibility in
    forming and maintaining coalition partnerships to deter aggression and
    control crises. Because sea-based forces do not require sophisticated
    support facilities ashore to operate with other nations, the burden
    imposed on any exercising partner's infrastructure is limited.
    Ultimately, the interaction of our naval forces with other nations
    provides tangible evidence of our commitment to peace and regional
    security.
        Naval forces also are critical to joint force information
    superiority. They extend the national command, control, communications,
    computer, intelligence, surveillance, and reconnaissance (C\4\ISR)
    system throughout the littorals in peacetime, enabling the intelligence
    preparation of a potential battlespace well before crises or conflicts.
    These forces maintain operational familiarity with potential areas of
    conflict, and with coalition partners and potential adversaries. Our
    contribution to information superiority is critical today, and will be
    even more significant in joint warfare of the future.
        Recurring natural disasters, civil wars, and challenges to
    international law and order have led to an increase in the number of
    military operations other than war--including humanitarian relief,
    counterdrug, counterterrorism, and peace operations. These efforts
    usually require the disciplined, highly mobile, self-contained, and
    well-organized response capabilities inherent in our military services.
    Forward-deployed in a high state of readiness, naval expeditionary
    forces are especially attractive candidates to conduct these types of
    operations.
        As a key tenet of our National Military Strategy, our military
    forces must present a credible deterrent to an adversary's most potent
    weapon. As long as nuclear weapons are deployed in a manner that
    threatens our homeland or other national interests, we must continue to
    discourage their proliferation and use. Fundamental to overall nuclear
    deterrence is our highly mobile and capable strategic ballistic missile
    submarine force. This force, able to remain undetected at sea, is the
    most survivable element of the nation's strategic nuclear triad.
        Forces based in the continental United States do contribute, but
    the key to successful conventional deterrence lies in combat-credible
    forces overseas. Visible forward-deployed naval expeditionary forces
    clearly convey to potential aggressors our capability to both deny and
    punish--and to do so quickly and effectively. These forces also are
    bought and paid for as part of our budget. A distinct advantage of
    naval expeditionary forces is their ability to act as sovereign
    extensions of our nation, free of the political encumbrances that might
    inhibit or limit the employment of ground and land-based air forces.
    Our conventional deterrence capability enhances regional stability by
    deterring aggression and reassuring allies and friendly nations of our
    commitment to their well-being. These naval capabilities combine to
    make our forces truly persuasive in peace.
                Compelling in crisis
        Naval forces involved in peacetime engagement also serve the nation
    by providing immediate crisis response capabilities. Their
    expeditionary character becomes more pronounced when nations are
    reluctant to offer visible support or grant access, either for fear of
    reprisal or because the warning is ambiguous. Operating in an uncertain
    world, the Navy-Marine Corps team--highly mobile, self-sustaining, and
    responsive in nature--is a prudent first choice when our national
    interests are threatened. Naval forces, on scene at the onset of a
    crisis or conflict, represent the Nation's willingness to act and share
    in the risks. To limit the extent of a crisis, U.S. leadership is
    provided a wide range of options, including: naval fires for fire
    support, interdiction and strike missions; amphibious operations;
    special operations; and Marine air-ground task force operations ashore.
    These forces also serve as the immediately available and visible
    forward element of the powerful combination of joint forces that can be
    projected from the continental United States. These attributes result
    in naval forces frequently being used as an instrument of our foreign
    policy. Naval forces are suited ideally for conducting rapid
    noncombatant evacuation operations when U.S. citizens or foreign
    nationals are at risk, supporting U.N. sanctions or crisis response. A
    number of operations, that clearly demonstrated naval crisis-response
    capabilities during the past year, are discussed in the following
    chapter.
        An increasingly important issue in promoting regional stability
    during a crisis is our emerging ability to extend theater missile
    defenses (TMD) to joint forces, friends, and allies--unobtrusively,
    from offshore. Mobile, sea-based TMD will enhance the security and
    safety of friendly nations by providing defense against missile attacks
    by rogue states. Building on the existing Aegis system, the Navy is
    vigorously pursuing area and theater missile defense capabilities.
        The Navy-Marine Corps team continues to be a powerful, visible, and
    credible instrument for supporting national policies and preventing
    conflict. Forward-deployed naval forces, expeditionary and adaptive in
    nature, are the preeminent force for deterrence and conflict
    prevention, and they are able to bring sustained, decisive force to
    bear when required. Naval forces protect our nation's global
    interests--most of which reside within the littorals. Their on-scene
    capability, ready to respond immediately to the nation's tasking, makes
    them compelling in crisis.
                Capable in every aspect of war
        The ability to fight and win against any adversary is the
    irreducible core of the U.S. military. Naval forces are an integral
    part of this joint capability. When deterrence fails, forward-deployed
    naval forces, working with other U.S. and coalition forces, must blunt
    an adversary's offensive, prevent him from consolidating its position,
    and protect friendly forces until additional combat power can arrive in
    theater. The speed and flexibility of these forward-deployed naval
    forces provide the National Command Authorities with viable options
    during the initial stages of a crisis or conflict. In recent years,
    rapid repositioning of carrier battle groups and amphibious ready
    groups has been instrumental to national policy execution. The
    acquisition and deployment of the F/A-18 E/F will enhance significantly
    our strike capability and will ensure continued air superiority in
    future conflicts.
        Naval forces must guarantee maritime superiority and provide
    strategic sealift to transport joint and allied forces into theater.
    Using the sea as a secure maneuver space, naval forces can ensure
    dominant maneuver at the operational level, throughout the littorals.
    The sea-control, strategic-sealift, and forcible-entry capabilities
    inherent in our naval forces are essential to attaining dominant
    maneuver by joint forces. Procurement and development of the MV-22
    Osprey tilt rotor aircraft and the advanced amphibious assault vehicle,
    coupled with the present utility of the air cushion landing craft and
    highly capable amphibious shipping, will provide improved tactical and
    operational mobility for over-the-horizon maneuver. The threat of
    amphibious operations disrupts enemy planning and execution, forcing it
    either to concentrate its forces at the most likely avenues of approach
    or to spread its defenses to cover the entire threatened area. In
    either case, the enemy's action--or inaction--will expose gaps and
    vulnerabilities that joint or combined forces can exploit.
        Maneuver operations from the sea provide an opportunity to exploit
    unique naval advantages in executing precision engagement. Naval
    precision engagement underscores the Navy-Marine Corps team's ability
    to tailor force packages for specialized and task-organized missions,
    to employ special-operations forces and Marine air-ground task forces,
    and to deliver extremely accurate and high-volume naval fires. We are
    leveraging technology aggressively to enhance precision engagement and
    destroy targets that become exposed in the course of our dominant
    maneuver.
        Emerging technology will allow naval forces to employ a wide range
    of ordnance against targets ashore. Our weapons can be delivered from a
    variety of platforms, with unprecedented flexibility and lethality.
    These fires can be launched from well beyond an opponent's reach. Sea-
    based engagement permits rapid maneuver and sustained concentration of
    lethal fires from far less vulnerable positions. Integrating precision
    fires with extensive command, control, computer, communication,
    intelligence, surveillance and reconnaissance (C\4\ISR) will allow us
    to quickly transmit tasking orders for strike, interdiction, and fire
    support, to deliver accurately the appropriate ordnance, to conduct
    timely battle damage assessment, and to reattack when required. In
    1996, the Navy's Cooperative Engagement Capability, which links sea,
    air, and land sensors to firing platforms for air and missile defense,
    supported the first-ever successful engagement of an air target that
    was well beyond a firing unit's radar horizon. Improvements in Tomahawk
    cruise missiles and innovations in naval surface fire support and
    weaponry--such as the Arsenal Ship and improved munitions, to include
    the extended range guided munition and a Navy tactical missile system--
    hold the potential to increase dramatically the ability to conduct
    precision-engagement operations.
        Naval forces also provide the defensive umbrella under which joint
    and combined forces can deploy safely during a conflict. These forces
    counter enemy threats from the air, land, or sea. Beyond defensive
    measures, naval contributions to full-dimensional protection will
    include offensive initiatives to eliminate potential threats at the
    source. Sea-based defenses will, in many circumstances, be the only
    capability available at the onset of a crisis. They provide critical
    protection to forces flowing into theater by airlift, sealift, or
    prepositioning ships.
        The future long-range delivery of weapons of mass destruction will
    increase the importance of force protection for U.S., allied, and
    coalition forces. The emergence of naval theater missile defense
    capabilities will reassure potential coalition partners and allies, and
    will be critical for gaining access to overseas bases and
    infrastructure. Another critical part of full-dimensional protection
    are units such as the Marine Corps Fleet Antiterrorism Security Teams
    and the Chemical-Biological Incident Response Force. These units
    provide protection against terrorism and consequence management for
    chemical and biological incidents, respectively.
        Controlling the undersea battlespace remains a unique naval
    capability and is a vital aspect of sea control. Our dominance in this
    arena counters the threat posed by advanced capability submarines and
    sea mines and enables early preparation of the battlespace through
    surveillance and intelligence collection. In addition, since over 90
    percent of the material required to support a land campaign arrives by
    sea, undersea battlespace dominance ensures other elements of the joint
    force may transit successfully to the objective. Concern with the
    growing challenge posed by submerged threats to our power projection
    forces prompted the Navy to establish the ``Anti-Submarine Warfare
    Requirements Division'' under the Deputy Chief of Naval Operations for
    Resource and Warfare Requirements. This organization assesses the
    Navy's undersea warfare capabilities to ensure continued undersea
    battlespace dominance.
        Naval forces provide the strategic sealift to transport forces into
    theater and to ensure the uninterrupted flow of logistical support--the
    lifeblood of any military operation. Self-sustaining endurance is an
    intrinsic strength of naval expeditionary forces. As the vulnerability
    of large stockpiles ashore continues to increase, sea-based logistics
    will become even more important. The Navy and Marine Corps are
    experimenting actively with innovative concepts to overcome the
    logistic challenges associated with supporting a land campaign from the
    sea. Future developments in the Maritime Prepositioning Force and
    advances in ship design are part of the answer to these challenges.
    Providing focused logistics from the sea in support of forces
    throughout the littorals will become a reality, as innovative concepts
    reducing logistic requirements are tested and proved.
        Naval forces make critical contributions during all phases of
    conflict, to include: maritime, air, and information superiority;
    Marine air-ground task force, Maritime Prepositioning Force, and
    amphibious operations; precise naval fires for fire support,
    interdiction, and strike; special forces operations; and crucial sea-
    based logistics. This wide range of missions demonstrate our naval
    force capabilities in every aspect of war.
                Total force integration
        To ensure success, throughout the full range of missions that have
    been discussed, requires the seamless integration of active and reserve
    forces in the Total Force package. This is critical with today's
    smaller active-duty force strength. Unprecedented levels of Reserve
    support in 1996 have increased reserve readiness while helping to
    maintain an acceptable operational tempo for our active forces. Through
    this total integration of our active and reserve forces, naval
    capabilities are further enhanced and our overall ability to meet all
    taskings is increased.
        In conclusion, our continued operational primacy depends on the
    total integration of our warfighting capabilities. Proliferation of
    precision technology will make it increasingly dangerous to mass forces
    ashore, especially in the early stages of a conflict. During this
    period, joint force commanders can look to naval forces to provide fire
    support, logistics, and operational maneuver from the sea. Forward-
    deployed naval forces serve as a catalyst for joint operations. Our
    capabilities fully support Joint Vision 2010 operational concepts of
    dominant maneuver, precision engagement, full-dimensional protection,
    and focused logistics.
                              operational primacy
        Although our overarching responsibility ultimately lies in
    maintaining our ability to fight and win wars, our day-to-day efforts
    are focused on peacetime engagement and crisis response. The
    accompanying figures show the actual force dispersal of a carrier
    battle group and amphibious ready group with an embarked Marine
    expeditionary unit during a recent deployment. The George Washington
    (CVN 73) Carrier Battle Group (CVBG) and the Guam (LPH 9) Amphibious
    Ready Group (ARG), with 22d Marine Expeditionary Unit (MEU) embarked,
    provide a vivid example of the utility of naval forces to the National
    Command Authorities across the full range of operations. Specifically,
    the Guam ARG and 22d MEU demonstrated: mobility, by transiting over
    3,500 nautical miles within the region; flexibility, by executing
    multiple taskings through combined and split force operations; joint
    capability, by performing as a joint task force commander during a
    regional crisis; sustainability, by remaining unobtrusively on station
    for 69 days; and national resolve, by protecting and evacuating U.S.
    citizens and foreign nationals. Simultaneously, the George Washington
    CVBG rapidly repositioned multiple times in support of national
    interests in three widely dispersed geographic regions: the
    Mediterranean Sea, continuing our Adriatic presence in support of
    Bosnia peacekeeping; the Persian Gulf, supporting a U.N.-mandated no-
    fly zone in southern Iraq and Southwest Asia maritime interception
    operations; and the Indian Ocean/Western Pacific, surging to release
    Nimitz (CVN 68) in response to heightened tensions in the Taiwan
    Strait. These diverse actions highlight the importance and utility of
    naval forces to the nation.
        The following summary reflects the wide variety of real-world
    operations and exercises that the Navy-Marine Corps team conducted in
    1996. It includes crises, humanitarian operations, support to our civil
    authorities, and major joint and combined exercises.
    Summary of 1996 operations
                Europe
        Bosnia-Herzegovina: Operation Provide Promise (July 1992-March
    1996).--This joint operation with the U.S. Air Force, involving both
    naval carrier aircraft and land-based air, protected humanitarian
    relief efforts in the besieged cities of former Yugoslavia. Navy and
    Marine Corps aircraft, a Marine aerial refueling squadron, a military
    police unit, a Navy fleet hospital manned with both active and reserve
    personnel, and on-call Marines from the European theater's amphibious
    ready group (ARG) and Marine expeditionary unit (special-operations
    capable) (MEU [SOC]) supplied vital support to U.N. forces.
        Adriatic Sea: Operation Sharp Guard (June 1993-December 1995)/
    Operation Decisive Enhancement (December 1995-December 1996)/Operation
    Determined Guard (December 1996-Present).--U.S. naval forces, including
    surface combatants, intelligence-gathering attack submarines, and
    active and reserve maritime patrol aircraft, operated with NATO and the
    Western European Union to enforce the U.N. sanctions in the former
    Yugoslavia. Over the past three years, 73,000 ships have been
    challenged. Among these, more than 5,800 were inspected at sea and
    another 1,400 were diverted for inspections in port.
        Bosnia-Herzegovina: Operation Joint Endeavor (December 1995-
    December 1996)/Operation Joint Guard (December 1996-present).--The
    European Command's ARG/MEU(SOC) was assigned as theater reserve for
    NATO forces, while Naval Mobile Construction Battalions 133 and 40
    constructed base camps for Implementation Force personnel. In addition,
    from June to October a Marine Corps unmanned aerial vehicle (UAV)
    squadron, VMU-1, supported the operation with Pioneer UAV imagery both
    to U.S. and multi-national units. VMU-2 continues to provide similar
    support.
        Bosnia-Herzegovina: Operation Deny Flight (July 1993-December
    1995)/Operation Decisive Edge (January-December 1996)/Operation
    Deliberate Guard (December 1996-Present).--Operation Deny Flight
    transitioned to Decisive Edge in support of the Implementation Force
    (IFOR) Operation Joint Endeavor. Operation Decisive Edge then
    transitioned to Deliberate Guard in support of the Stabilization Force
    (SFOR) Operation Joint Guard. Carrier and shore based squadrons
    continued flight operations in support of joint and combined
    enforcement of a U.N.-mandated no-fly zone in the airspace over the
    Republic of Bosnia-Herzegovina. Throughout the year, Italy-based Marine
    F/A-18D and EA-6B aircraft provided suppression of enemy air defenses,
    close air support, and electronic warfare to IFOR. This included
    support from the Tactical Electronic Reconnaissance Processing
    Evaluation System that provided critical, analyzed intelligence
    information to the area commanders. In addition, Navy maritime patrol
    aircraft, equipped with electro-optical sensors, provided real-time,
    still and full motion video imagery to the ground commanders.
                Africa
        Liberia: Operation Assured Response (April-August 1996).--As a
    result of factional fighting and general violence in Liberia, the
    exceptional flexibility and capabilities of naval forces were again
    showcased. In early April, elements of the Guam (LPH 5) amphibious
    ready group (ARG) and the 22d MEU (SOC), were ordered to the vicinity
    of Monrovia, Liberia. Upon arrival, the 22d MEU (SOC) commanding
    officer assumed command of Joint Task Force-Assured Response (JTF-AR),
    which included Air Force, Navy, and Marine forces. With additional
    support from an MH-53E helicopter detachment and other Navy-Marine
    Corps aircraft, embassy security and transportation were provided and
    309 non-combatants were evacuated--including 49 U.S. citizens. While
    still conducting this operation, elements of JTF-AR were ordered to
    Bangui, Central African Republic, to conduct similar operations. A
    special purpose Marine air-ground task force, embarked on the Ponce
    (LPD 15) and with ten days' notice, relieved the Guam task force, and
    assumed the duties of CJTF-AR. This was done to allow the Guam ready
    group and the 22d MEU(SOC) to return to the Adriatic Sea and provide
    the European Command's desired over-the-horizon presence during the
    Bosnian national elections.
        Central African Republic: Operation Quick Response (May-August
    1996).--In response to civil unrest and rebellion by rogue military
    elements in the Central African Republic, the same Navy-Marine Corps
    team that responded in Liberia successfully provided security to the
    U.S. Embassy and evacuated 448 noncombatants, including 208 American
    citizens.
        Zaire/Rwanda: Operation Quardian Assistance (November-December
    1996).--To assist in the large humanitarian effort in Africa, Navy P-3C
    aircraft, which were forward-deployed to the Mediterranean, detached to
    Entebbe, Uganda. The crew and aircraft provided critical overland
    surveillance data to the joint task force commander. This information
    on the mass movement of refugees from Rwanda to Zaire assisted
    national-level policymakers in responding to changing needs. The timely
    distribution and evaluation of this data prevented the unnecessary
    deployment of a multi-national force.
                Southwest Asia
        Iraq: Operation Southern Watch (1991-present).--U.S. Navy, Marine,
    and Air Force units continued to enforce the U.N.-mandated no-fly zone
    over Iraq protecting Iraqi minority populations. Naval operations in
    1996 included extensive Navy and Marine aircraft sorties from carriers
    America (CV 66), Nimitz (CVN 68), George Washington (CVN 73), Carl
    Vinson (CVN 70), Enterprise (CVN 65), Kitty Hawk (CV 63), and
    amphibious assault ship Peleliu (LHA 4).
        Iraq: Operation Desert Strike (September 1996).--Despite warnings
    from the United States, Iraq moved 40,000 troops into Northern Iraq,
    which threatened the Kurdish population. In response, the President
    ordered a strike on military targets posing a threat to coalition
    aircraft in the no-fly-zone. On 3 September 1996, a coordinated cruise
    missile attack on the Iraqi air defense infrastructure was launched.
    Laboon (DDG 58) and Shiloh (CG 67) fired 14 of the 27 cruise missiles
    while Air Force B-52's, escorted by F-14's from Carl Vinson (CVN 70),
    fired the remaining 13. The following day, a second strike of 17
    Tomahawks from destroyers Russell (DDG 59), Hewitt (DD 966), Laboon and
    nuclear-powered attack submarine Jefferson City (SSN 759) was
    conducted. The speed and flexibility of forward-deployed naval forces
    was demonstrated following the initial strike. Enterprise (CVN 65)
    departed the Adriatic Sea on order of the National Command Authorities
    and conducted a high speed transit through the Suez Canal. Her arrival
    in the theater two days later enhanced the overall force disposition in
    the Persian Gulf and further demonstrated U.S. resolve.
        Saudi Arabia: Operation Desert Focus (July 1996-present).--The I
    Marine Expeditionary Force provided counterintelligence team support to
    Joint Task Force Southwest Asia (JTF-SWA) in the aftermath of the
    Khobar Towers bombing in Dhahran, Saudi Arabia. Effective route survey
    and counterintelligence ensured protection of JTF-SWA movements in
    Riyadh, to include the U.S. Air Force 4409th Operational Group aircrew
    relocation to and from the airfield. The deployment has been extended
    into fiscal year 1997 in light of a continued terrorist threat.
        Kuwait: Operation Vigilant Sentinel (August 1995-present).--Navy
    and Marine Corps combat forces and active and reserve Military Sealift
    Command forces quickly responded to Iraqi threats against Jordan and
    Kuwait. Maritime Prepositioning Ship Squadron Two sortied from Diego
    Garcia, with equipment for a 17,300-Marine combat force, and remained
    onstation to provide rapid response capability in this U.S. Central
    Command area of responsibility.
        Bahrain: Reinforcement of naval security in Bahrain (July 1996-
    present).--On 4 July 1996, elements of the Fleet Antiterrorism Security
    Team (FAST) Company deployed in response to a request for security
    augmentation. The FAST Company reinforced Navy security forces of
    Administrative Support Unit Bahrain immediately following the attack on
    an Air Force barracks in Dhahran. Following the initial reinforcement,
    the Marine Corps developed a plan to provide extended security support.
    The timely disestablishment of Marine Corps Security Force Company on
    Diego Garcia provided a force structure for an interim company in
    Bahrain.
        Maritime intercept operations.--Throughout 1996, surface combatants
    and maritime patrol aircraft continued to execute maritime intercept
    operations in the Arabian Gulf in support of U.N. sanctions against
    Iraq. The U.S. Coast Guard cutter Morgenthau supported the 5th Fleet's
    mission in the Gulf, applying the 1995 Department of Defense and
    Department of Transportation Memorandum of Agreement on ``Use of Coast
    Guard Capabilities and Resources in Support of the National Military
    Strategy.'' By the end of 1996, surface combatants had conducted more
    than 23,000 at-sea intercepts, while simultaneously carrying out other
    forward-presence missions in the region.
                Caribbean
        Haiti: U.N. mission in Haiti (April 1995-April 1996)/U.S. Support
    Group Haiti (April 1996-Present).--Navy SeaBees participated in
    Exercise Fairwinds 96-2, helping to rebuild Haitian infrastructure that
    included schools, hospitals, water systems, and roads. Navy
    construction personnel, both active and reserve, built, repaired or
    upgraded these facilities. Marines from the Fleet Antiterrorism
    Security Team provided security to all facets of the operation. Naval
    forces provided humanitarian civil assistance and supported the effort
    to institute democracy in Haiti. Currently, the II Marine Expeditionary
    Force has deployed three of the four subordinate elements to the U.S.
    Support Group Haiti which include detachments from a medical battalion
    and the 2d Marine Air Wing, and companies from a tank and engineering
    support battalion.
        Guantanamo, Cuba: Operation Sea Signal (August 1994-February
    1996).--Navy personnel based at Guantanamo Bay, Cuba, and Marines from
    II Marine Expeditionary Force continued Cuban and Haitian migrant
    handling, as well as security support to Joint Task Force 160. Since
    September 1994, the Navy-Marine Corps team housed and processed over
    40,000 migrants awaiting repatriation or parole to the United States.
    Support to Joint Task Force 160 spanned 18 months.
        Counterdrug operations.--Navy ships and aircraft, active and
    reserve, continued counterdrug detection and monitoring missions in the
    transit zone of the Caribbean and Eastern Pacific. In fiscal year 1996,
    more than 32,000 counterdrug flight hours were flown by fixed-and
    rotary-wing aircraft; 2,000 ship steaming days were provided by Navy
    surface combatants and surveillance ships modified especially for
    counterdrug missions; and 170 days of covert support were conducted by
    submarines. Marine Corps teams conducted 96 logistical and operational
    missions with domestic law enforcement agencies along the southwest
    border of the United States. Naval mobile training teams provide
    additional support and training to drug source countries in Central and
    South America. Navy and Marine Corps personnel also serve as tactical
    planners and analysts to enhance host nation law enforcement and
    military capabilities. Navy relocatable over-the-horizon radar sites in
    Virginia and Texas provide wide-area surveillance of the transit zone.
    A third site, planned for Puerto Rico, will enhance coverage further.
    Marines provided one of five ground mobile radar sites positioned to
    assist in disrupting illegal uses of airspace and interdicting
    alternate modes of transportation and drug-production capabilities. The
    Director of Naval Intelligence provides dedicated, maritime-focused
    counterdrug intelligence support and inter-agency coordination through
    multi-source fusion analysis of commercial shipping and non-commercial
    suspect vessels.
                Northeast Asia
        Guam: Operation Pacific Haven (September 1996-present).--The U.S.
    Pacific Command established a joint task force (JTF) on Guam to screen
    and process Kurdish refugees fleeing from northern Iraq, after Iraqi
    military operations began in early September. More than 350 Marines and
    35 Navy personnel are supporting the operation--either with JTF
    Headquarters, security details, or medical units. To date, more than
    2,100 refugees have been processed and relocated while another 4,500
    remain on Guam awaiting relocation decisions.
        Taiwan Strait flexible deterrent option (March-April 1996).--The
    value and flexibility of forward-deployed naval forces was demonstrated
    when the U.S. Seventh Fleet monitored Chinese military live-fire
    exercises off the coast of Taiwan. The forward-deployed Independence
    (CV 62) carrier battle group (CVBG), with embarked Carrier Air Wing
    Five, responded to rising tensions between China and Taiwan by taking
    station off the eastern coast of Taiwan. These forces provided a
    visible sign of U.S. commitment to stability in the region. The Nimitz
    (CVN 68) CVBG transited at high speed to arrive in the South China Sea
    within days, intensifying the signal of U.S. resolve. The successful
    tracking of missiles during the exercise demonstrated the inherent
    capability of Aegis as a foundation for sea-based theater missile
    defense.
        Korea.--Forward-based Navy and Marine expeditionary forces from
    Japan continue to provide a visible and unambiguous presence on the
    Korean Peninsula and in surrounding waters during routine operations
    and bilateral training exercises with South Korean forces. One of the
    most important exercises is the Combined Forces Command sponsored,
    joint/combined command post exercise Ulchi Focus Lens. This exercise
    supports real world operation plan concepts and evaluates specific
    aspects of command, control and communication by providing essential
    joint and combined staff interaction from the lowest to the highest
    staff echelons. Participating elements were globally sourced with
    personnel coming from Marine Forces Reserve and Marine Forces Atlantic
    joining the in-area staffs from Naval Forces Korea, Marine Forces
    Pacific, Marine Forces Korea, and 7th Fleet. This total force exercise
    provided a unique opportunity for both Commander, Marine Forces Korea
    and Commander, Naval Forces Korea as component headquarters to operate
    and to demonstrate the importance they play in the overall defense of
    Korea.
                Military support to civil authorities
        TWA Flight 800 salvage operations (July-November 1996).--The Navy
    supported operations closer to home with salvage operations for TWA
    Flight 800. Navy Supervisor of Salvage assets and explosive ordnance
    disposal teams were among the first to respond to this tragedy. Their
    efforts included coordination of both the civilian and military crash
    site mapping efforts. The first Navy salvage ship on scene, Grasp (ARS
    51), responded only 50 hours after returning from a five-month
    Mediterranean deployment. As the scale of the operation grew, the Navy
    deployed Grapple (ARS 53) to provide additional support. A total of 149
    active and reserve Navy divers participated in the recovery of victims,
    location and retrieval of flight data and voice recorders, and recovery
    of more than 90 percent of the wreckage. Amphibious ships Oak Hill (LSD
    51) and Trenton (LPD 14) served as afloat command post and wreckage-
    retrieval platforms.
        Northwest forest fires (September 1996).--During September, more
    than 500 Marines from I Marine Expeditionary Force deployed to Oregon
    and joined 5th Army efforts in fighting forest fires in the Umatilla
    National Forest. The Marines provided a command element, 25
    firefighting teams, and a medical evacuation detachment for two weeks,
    supporting the National Interagency Firefighting Center's effort to
    bring forest fires under control throughout the West.
        Additional domestic support (July-November 1996).--Our forces
    responded to numerous requests for assistance to civil authorities in
    support of domestic operations. During July and August, the Marine
    Corps Chemical/Biological Incident Response Force (CBIRF) and military
    police explosive-detection dog teams supported security efforts for the
    1996 Summer Olympic Games in Atlanta, Georgia, and just recently, CBIRF
    provided support during the presidential inaugural. In addition, from
    August through November, the explosive-detection dog teams provided
    support to the U.S. Secret Service at the Democratic and Republican
    conventions, and during campaign stops by candidates throughout the
    United States.
                Major joint and combined exercises
        Russia.--Exercise Cooperation From The Sea 96, conducted in
    Vladivostok, included both amphibious and at-sea training for U.S. and
    Russian naval forces. In addition, elements of the America (CV 66)
    carrier battle group and Wasp (LHD 1) amphibious ready group conducted
    bilateral operations with a Russian carrier battle group in the
    Mediterranean. These interactions continued to build on the positive
    foundation laid in 1995, and set the stage for further cooperation
    between our naval forces. U.S. naval forces also participated in the
    Russian Navy's 300th anniversary celebrations in St. Petersburg and
    Kaliningrad.
        Central and Eastern Europe.--The Partnership For Peace (PfP)
    program continued to be the centerpiece of NATO's strategic
    relationship with Central and Eastern Europe. Naval forces conducted
    four major PfP exercises with Eastern European nations. These
    operations, part of our bilateral military-to-military contacts
    program, included basic seamanship exercises and familiarization visits
    with the naval forces of the region. Units from the Sixth Fleet,
    including assigned Marine expeditionary forces, conducted fleet and
    amphibious training exercises with forces from Romania, Ukraine,
    Bulgaria, Albania, and Georgia. The training exercise BALTOPS 96 was
    conducted in the Baltic Sea and involved a record 43 ships from 12
    countries, including the U.S. Coast Guard cutter Gallatin (WHEC 721).
        Cooperative Osprey 96.--This 19-nation exercise, was conducted at
    Camp Lejeune, North Carolina, with the Commanding General, Marine
    Forces Atlantic, as the exercise director. Part of the PfP program,
    this exercise focused on military operations other than war. Exercise
    objectives included developing procedures to form and train coalition
    forces for peacetime operations in the littorals. The first visit by
    Ukrainian Navy ships to the United States in September was particularly
    significant. These vessels conducted amphibious training with Atlantic
    Fleet units at Norfolk, Virginia.
        Black Sea operations.--Marines conducting training with forces from
    Romania, Ukraine, and Bulgaria made a major contribution in building
    Black Sea alliances and furthering PfP efforts in the region. Forward-
    deployed, self-sustaining amphibious task forces can exploit excellent
    opportunities for initial bilateral training with the armed forces of
    emerging democracies.
        UNITAS 96.--The 37th annual UNITAS deployment is a primary means of
    supporting regional stability in the Western Hemisphere. Active and
    reserve surface combatants, P-3C aircraft, Marines embarked in an
    amphibious combatant, and a submarine joined to conduct multi-national
    exercises with South American nations, while circumnavigating the
    continent, during a five-month period. This year, Canada, Germany, the
    United Kingdom, South Africa, and the Netherlands also participated
    during certain phases of the deployment. Our naval forces operate with
    host-nation air, sea, and land forces during each Latin American stop.
    These exercises often provide the only opportunity for Latin American
    forces to train with U.S. and other allied forces. For example, UNITAS
    Marines participated in four amphibious exercises and two riverine
    exercises in the nine-nation, 27-city deployment. The riverine
    exercises provided an invaluable foundation for the expanded riverine
    training occurring with South American allies through the recently
    established Riverine Center for Excellence. In addition, this year
    embarked explosive ordnance detachments experienced real-world training
    while searching for voice and data flight recorders from AeroPeru
    Flight 603, after the aircraft crashed off the coast of Lima, Peru, in
    October.
        CARAT 96.--Regional stability in Southeast Asia is supported by the
    Pacific Fleet's Cooperation Afloat Readiness and Training (CARAT)
    program, patterned after the UNITAS deployment. Active and reserve
    surface combatants, maritime patrol aircraft, a special purpose Marine
    air-ground task force embarked in amphibious combatants, medical
    detachments, and a U.S. Coast Guard training detachment exercise with
    six countries in the South China Sea region for two months each year.
    In 1996, Brunei, the Philippines, Indonesia, Malaysia, Thailand and
    Singapore participated. During each stop, our naval forces exercised
    with the host nation's air, sea, and land forces. The objectives for
    each phase were to promote regional maritime interoperability, increase
    readiness, enhance military-to-military relations, and ensure stability
    of Southeast Asian sea lanes of communication.
        Rim-of-the-Pacific 1996 (RIMPAC 96) is a biennial exercise designed
    to enhance interoperability and proficiency of multinational and
    bilateral forces operating in response to short-notice littoral
    missions. More than 28 ships and 1,200 Marines--including the
    Independence (CV 62) and Kitty Hawk (CV 63) carrier battle groups, the
    Essex (LHD 2) amphibious ready group with the 11th MEU(SOC) embarked,
    and U.S. Coast Guard vessels--participated in RIMPAC 96. An additional
    29 ships from Australia, Canada, Chile, Korea, and Japan were involved
    in the exercise. In addition to embarked carrier air wings, U.S. Air
    Force and Hawaiian Air National Guard and maritime patrol aircraft from
    the United States, Canada, and Japan also participated.
        West African training cruise (WATC 96).--Is an annual exercise
    conducted to provide interaction between U.S. naval forces and host-
    nation counterparts, enhance military training, and maintain
    familiarity with the West African littoral environment. U.S. Marine
    Corps and Coast Guard personnel, embarked in amphibious ship Tortuga
    (LSD 46), conducted training in Benin, Cape Verde, Cote D'Ivoire,
    Guinea-Bissau, Mauritania, Senegal, and Togo.
        Sorbet Royal.--Was a NATO-sponsored submarine escape-and-rescue
    exercise, involving units from seven countries and observers from six
    other countries. Conducted in the Vestfjord area of Norway, the
    exercise successfully demonstrated an ability to coordinate a
    multinational rescue of the crew of a disabled submarine and marked
    real progress in the standardization of procedures and equipment.
                Freedom of navigation
        An essential element of U.S. foreign policy is ensuring free and
    safe transit through ocean areas and international air space as a
    matter of legal right--not contingent upon the approval of adjacent
    countries. Naval forces are especially useful in demonstrating transit
    rights under international law. In 1996, Navy ships and aircraft
    conducted numerous freedom-of-navigation operations in or through areas
    where coastal nations have maintained excessive maritime claims in
    conflict with existing international law. The President, Secretary of
    Defense, and Chairman of the Joint Chiefs of Staff all have emphasized
    the importance of these operations as an active component of U.S.
    policy.
    People
        The most vital resource of the Navy-Marine Corps team is our
    people: active, reserve, and civilian. The intense demands of a modern,
    high-tech naval force operating in a complex foreign littoral
    environment require highly motivated, well-trained, and responsibly-led
    Sailors and Marines. The daily sacrifices of our people, who are
    deployed around the globe to ensure the security of the United States,
    deserve the best possible career and family support.
    The current force
                Total integration--The active, reserve, and civilian team
        During 1996, the Navy's endstrength was 416,735 active and 97,956
    reserve personnel. Further reductions are planned to meet our fiscal
    year 1999 programmed endstrength. The Marine Corps continues to
    maintain a force mixture of 174,000 active-duty Marines and 42,000
    reservists. Department of the Navy civilian personnel endstrength
    approached 224,768, the lowest level since before World War II, and is
    targeted for 210,967 by fiscal year 1999. This reflects the results of
    base closures, force-structure reductions, and management efficiency.
    To meet the demands of our worldwide commitments successfully, an
    unprecedented level of integration among our active, reserve and
    civilian components is in order.
        The role of the Naval and Marine Corps Reserve, in fulfilling the
    Department of the Navy's mission, has increased through their
    contributory support to the active component. The extent of this varies
    between warfare communities, ranging from routine operations and
    regional commander support, to such contingency operations as the
    evacuation of civilians from Liberia.
        Capitalizing on reserve capabilities and our ability to employ
    reserve components seamlessly, we expanded active and reserve force
    integrated operations. Reserves regularly supported missile exercises,
    naval coastal warfare exercises, counterdrug operations, and search-
    and-rescue services for fleet carrier qualifications. In 1996, Marine
    Corps reservists participated in numerous exercises, such as BATTLE
    GRIFFIN, a USMC/Norwegian combined exercise in which 85 percent of U.S.
    participants (including the commanding general) were reservists. In
    addition, Marine Corps reservists from the 6th Engineer Support
    Battalion participated in Arctic Engineer, the military engineer civic
    action exercise in Noorvik, Alaska. This exercise provided valuable
    training for over 100 Marines in the movement and widening of an
    existing runway, protecting the airfield from encroachment of a nearby
    river. The Naval Reserve also played a significant role in exercises,
    including: BALTOPS 96, in which the first-ever reserve ship visit to a
    former Soviet port was conducted; UNIFIED SPIRIT 96, the largest NATO
    exercise of its type in more than five years; and UNITAS 96. This
    integration of reserve personnel and equipment into missions normally
    assigned to the active component not only improves reserve readiness
    but also keeps the active component personnel deployment rates at a
    reasonable level.
        The Coast Guard also is a valuable participant in naval services
    integration and brings unique capabilities and expertise to the joint
    forces team. In addition to its complementary surge capability, the
    Coast Guard plays a distinctive role in executing the regional
    commanders' peacetime engagement strategies. Smaller foreign nations
    view the Coast Guard as a model for their maritime forces, which share
    similar missions and challenges. The Navy and Coast Guard made
    significant strides toward the increased integration of forces in
    support of national security and military strategies.
    Creating the force for the future
                Recruiting
        The Department's readiness depends heavily on the ability to
    attract and retain high-quality people. Although quite challenging,
    1996 proved to be a highly successful year for Navy and Marine Corps
    recruiting. Through targeted marketing, Navy and Marine Corps
    recruiters achieved 100 percent of the enlisted accession goal. The
    recruiting strategy attracted qualified individuals for particular
    skill areas needed most in the Fleet and Fleet Marine Forces, while
    making significant progress in recruiting minorities. Minority
    accessions this year will be the most representative in the
    Department's history. Although low national unemployment and other
    changes in demographics made for a difficult recruiting environment,
    the academic quality of enlisted recruits remained high: 95 percent
    possessed high school diplomas, and more than 66 percent scored in the
    upper half of the Armed Forces Qualification Test. The addition of more
    recruiters to the force and a congressionally sponsored increase in
    recruiter special duty assignment pay will help ensure a solid
    recruiting effort. Federally legislated educational benefits also have
    a direct impact on recruiting. The 1995 New Recruit Survey listed the
    Montgomery G.I. Bill as the number one reason for enlisting. The Navy
    and Marine Corps College Funds are used as an enlistment incentive for
    specialized skill areas.
        The year also was successful for officer recruiting, with nearly
    all programs attaining 100 percent of goal. Medical recruiting accessed
    36 percent more physicians and dentists than just a year ago. Similar
    increases were attained for pilots and naval flight officers.
        To continue the positive momentum of the Navy-Marine Corps
    recruiting team, the services implemented several initiatives to
    improve the process. Adopting proven methods from the commercial
    sector, the Navy successfully tested the concept of using professional
    telemarketers, resulting in more than 34,000 quality leads for
    recruiters. In addition, a 60-second ``infomercial'' was developed for
    selected cable networks. This promising program generated leads
    comparable to direct-mail efforts, and will be further evaluated during
    1997. Traditional commercials emphasizing core values are well received
    and continue to be a major factor in reaching the general populace.
    Based on new recruit-survey results, our fiscal year 1996 advertising
    program has worked. The Department of Defense Youth Attitude Tracking
    Survey registered the first positive movement since 1991 in the desire
    of male youth to join the Navy.
        For the Marine Corps, the propensity to enlist has remained
    constant. This is largely attributable to a modest but effective
    advertising program. An increase in the direct-mail budget realized a
    25 percent rise in contacts. The Internet also proved to be a useful,
    low-cost source of leads and contacts. Continued improvements include
    an expanded ``enhanced area canvassing'' effort through ``event''
    partnerships with youth-oriented programs. This program, along with
    other cost-effective methods, is connecting our recruiters directly
    with the youth market.
        As an investment in future civilian recruitment needs, we have
    established special residential and scholars programs to expose
    outstanding high school and college students to the Department's
    technical missions and functions. These programs have enhanced our
    ability to recruit a well-qualified and diverse civilian work force, by
    bringing Navy and Marine Corps activities together with tomorrow's work
    force.
                Retaining a quality force
        Maintaining a quality force is a key element of overall readiness,
    and retention of officer and enlisted personnel is a critical
    component. We have many tools to accomplish this. Special pay and
    bonuses are targeted to those skills most costly to replace. The
    Selected Reenlistment Bonus (SRB) and Special Duty Assignment Pay
    (SDAP) are two of these. The SRB program is the Navy and Marine Corps'
    most cost-effective tool for increasing or holding steady the retention
    of high-quality people and highly technical skills. It provides an
    ability to respond quickly and precisely to changes in either
    requirements or retention.
        Similar to bonuses, special pay provide compensation for personnel
    serving in specific billets, locations, or types of arduous duty. SDAP
    is used to attract high-quality volunteers into the most demanding and
    responsible billets. This initiative permits significant savings in the
    areas of permanent-change-of-station costs and retraining of new
    personnel for those billets.
        Bonuses and special pay also are essential tools for ensuring that
    our future inventory of officers meets our diverse and highly technical
    requirements. Examples of these include Nuclear Officer Incentive Pay,
    Aviation Continuation Pay, and Medical Officer Incentive Special Pay.
    Bonuses and special pay help us remain competitive for those skills
    that can be used directly in civilian industry. As a case in point--
    problems were encountered in Navy and Marine Corps aviator retention,
    primarily because of a major increase in civilian airline hirings. The
    Marine Corps has expanded its Aviation Retention Bonus program in
    fiscal year 1997 to reverse this trend. The Navy's Aviation
    Continuation Pay program also has been expanded to reflect the
    increased competition from the civilian sector and increases to the
    programmed force structure. In addition, legislation has been included
    as part of the Department of Defense fiscal year 1998 budget submission
    which maintains the bonus program structure and increases the maximum
    allowed award level for Nuclear Officer Incentive Pay. This increase
    will help counter falling retention, currently at a ten year low, in
    order to adequately man the nuclear-powered fleet. Adequate
    compensation and consequent improved retention in mission-critical
    skills will allow us to maintain peak readiness and morale, which is
    critical in today's all-volunteer force.
        The Navy has initiated a new Homebasing Program designed to reduce
    the turbulence and costs associated with PCS moves. This enlisted
    program is evolving in response to changing Navy demographics. Since
    1980, the number of Navy personnel with families has increased from 42
    percent to the current 60 percent. The Homebasing Program's goals are
    to improve quality of life and retention.
        Voluntary education programs also make a significant contribution
    to recruiting, retention, and readiness. For those already in the
    service, the vast majority of tuition assistance users are our prime
    retention candidates in pay grades E-4 to E-6. We have made concerted
    efforts toward standardizing the tuition assistance payment policy;
    expanding distance learning opportunities through the Program for
    Afloat College Education and the Marine Corps Satellite Education
    Network; increasing access to basic academic skills learning; and
    establishing an official educational transcript program, which will
    ensure that military personnel receive full academic credit for their
    educational experiences.
    Training and educating for the future
        We have the best trained Navy and Marine forces in the world, and
    several innovative training concepts are under development.
                Training challenges
        Providing affordable, quality training is a major challenge. Course
    consolidation, outsourcing, and interservice training all are being
    used to train in a more cost-effective manner. Specific evaluations of
    training schedules and career timing have resulted in better
    integration of training and operational commitments. In addition, we
    have made significant shifts in training to more appropriate career
    points. Aggressive use of simulation, virtual reality, war games,
    models, and distance learning also are providing quality solutions to
    some of our training challenges. Our training methods are improving,
    and we continue to look for better ways.
                Innovative solutions
        Accession training.--Technological advances, such as electronic
    classrooms and electronic training manuals, have improved training
    effectiveness and curriculum design. Training reviews have led to the
    adoption of core and strand training courses, selected computer-based
    instruction, and general reductions in the time required to train
    individuals.
        Recruit training.--The transformation process is quite challenging,
    and requires an emphasis on instilling the ideals and core values of
    our naval services to build an effective fighting force. The Marine
    Corps has begun a four-phased program to build Marines with the mental,
    physical and moral courage that will be required to succeed on the
    chaotic battlefields of the 21st century. Marine recruiters begin the
    first phase by selecting only the most qualified young men and women to
    become Marines and introducing them, during their time in the delayed
    entry pool, to the ethos of the institution and to our core values.
    Drill instructors continue this process with the second phase during
    recruit training. The addition of one week focuses on core values
    training and allows for inclusion of the ``Crucible''--a 54-hour mental
    and physical challenge exacerbated by sleep and food deprivation,
    designed to teach recruits steeped in self-discipline the value of
    selflessness. Marines learn in the ``Crucible'' that they must rely on
    each other to succeed, much the same as in combat. Marines then attend
    Marine Combat Training--training designed to give each Marine a common,
    solid foundation in basic warrior skills. The third phase, cohesion,
    involves teams of Marines from recruit training remaining together upon
    graduation for their first tour of duty. Through the team, Marines can
    draw strength from one another and our core values when confronted with
    challenges inherent in being a Marine. The fourth and final phase,
    sustainment, continues through the duration of a Marine's enlistment or
    career and is the responsibility of every NCO, SNCO and officer in the
    Marine Corps. This phase is the continuation of the educational
    process, ultimately ensuring that Marines win in combat and that the
    Marine Corps returns to the nation a better citizen for having been a
    Marine.
        The Navy also has adopted the concept of mentorship and individual
    stewardship to promote further the internalization of core values. This
    concept begins on day one of the new Sailor's journey at Recruit
    Training Command. On a new Sailor's first day, the recruit is met at
    the airport by Recruit Division Commanders and escorted to a bus within
    the first 45 minutes. While en route to the Great Lakes Training
    facility, the recruits view indoctrination videos and receive a ``Blue
    Card''--designed to reassure new Sailors of the network of support
    around them--and a ``Recruit Bill of Rights Card''--which outlines the
    Navy's policy regarding discrimination and sexual harassment. These
    improvements are indicative of the Navy's efforts to create a climate
    of excellence, founded on an initial positive and reassuring
    experience. Our efforts send men and women to the fleet prepared to
    participate, contribute, learn, help, and grow. In addition, these
    initiatives reduce attrition and increase the foundation for future
    success in the fleet. The Navy's basic military continuum builds upon
    the solid foundation established during boot camp.
        Innovative readiness training.--Is a Department of Defense
    civilian/military program that provides combat support and combat
    service support units with the opportunity for hands-on, real-world
    training in their occupational fields, while providing support to
    under-served civilian communities. The Marine Corps Reserve sponsored
    Operation Arctic Care 96, in which members of the 4th Force Service
    Support Group (FSSG) Medical and Dental Battalions provided medical
    services to remote Alaskan villages above the Arctic Circle. Operation
    Arctic Engineer 96 used the same FSSG and 4th Marine Aircraft Wing
    personnel to repair and upgrade a rural runway in Noorvik, Alaska.
                Leadership training and professional education
        Leadership continuum.--Strong leadership is the cornerstone of our
    Navy and the key to future success. Strong leadership ensures mission
    readiness and provides our members and their families with a sense of
    purpose and commitment to our profession. Continually improving
    leadership throughout the chain of command is essential.
        The Navy established the Leadership Continuum as a vehicle for
    imparting leadership qualities for specific positions in the chain of
    command. Developing exceptional leaders requires role models,
    experience, and commitment to excellence. The Leadership Continuum
    molds these qualities into a program of recurring training and provides
    a concentrated, hard-hitting series of two-week courses under a single
    training program. Enlisted personnel will attend the continuum after
    selection to E-5, E-6, Chief Petty Officer, and Command Master Chief/
    Chief of the Boat. Officers will receive instruction during training en
    route to their first duty assignment, at the 7-9 year point, at the 11-
    14 year point, and prior to their first command tour at approximately
    the 15-21 year point. The courses are solid, relevant, and of superior
    quality.
        Marine Corps Research Center.--The Marine Corps University is
    expanding educational opportunities through improved nonresident
    professional military education courses, distance learning resources,
    video-teleconferencing, and ``virtual'' seminar and conference groups.
    The recently opened Marine Corps Research Center (MCRC), as part of the
    Marine Corps University, is specifically designed to meet the growing
    information needs of our global force. The MCRC provides a
    comprehensive facility for the study of expeditionary and amphibious
    warfighting, linking scholarly research and schools of professional
    military education with lessons learned from the field. It serves the
    information needs of the operating forces around the world, as well as
    those of the professional military education schools.
        Civilian leadership development program.--The Department of the
    Navy Civilian Leadership Development (CLD) Program was established to
    deal with the challenges of restructuring, downsizing, technological
    changes, and new roles and missions. The program also ensures that
    minorities and women are provided improved opportunities to acquire
    skills and abilities that enhance their competitiveness for higher
    level positions. To meet these challenges, we are developing a
    framework of technical and leadership training for civilian employees.
    The framework identifies certain competencies of good leaders that
    commands and activities can use as a basis for establishing formal
    leadership development programs. A Civilian Leadership Board assists in
    developing the CLD framework and overseeing its implementation by
    commands and activities.
    Climate of excellence
                Core values: What we give and what we get
        The Department of the Navy is committed to the moral foundations of
    our Services. The past year involved a Department-wide effort to
    rededicate ourselves to our core values of honor, courage, and
    commitment. To this end, a core values charter was established this
    year and distributed throughout the Department of the Navy. In an
    effort to ensure that all who enter the naval services can move to a
    higher plane, the charter highlights the bedrock principles of the Navy
    and Marine Corps: uncompromising integrity; honesty and truthfulness;
    the moral courage to take responsibility for our actions; meeting the
    demands of our profession and mission; and achieving the well-being of
    our people, without regard to race, religion, or gender. We strive to
    develop the highest degrees of moral character and professional
    excellence in our people. The principles of honor, courage, and
    commitment are being incorporated systematically not only in training
    but also in the actions and decisions in day-to-day operations. The
    understanding of these core values begins with recruiting. In the Navy,
    these core values are the basis of the 1997 national advertising
    campaign; while the Marine Corps' emphasis centers on the
    transformation process. Both of these approaches are intended to ensure
    that young people who join the Navy and Marine Corps understand our
    expectations and are willing to serve at this level of excellence.
        By instilling these values in our people, it enriches not only our
    Navy-Marine Corps team, but also our society--whether an individual
    stays in the service or returns to civilian life.
                Equal opportunity
        Through leadership, training, education, and mentoring, the
    Department of the Navy offers all hands the opportunity to succeed. To
    that end, it provides an environment that recognizes the dignity and
    unique qualities of all. The Navy equal-opportunity vision statement is
    a foundation of this environment, supplemented by our increased
    emphasis on core values. Leadership is the key in this area, and
    through mentoring and personal attention at all levels, all will have
    the opportunity to demonstrate their skills and ability to succeed.
    Several initiatives provide the policy guidance necessary to assist
    leaders in identifying and eliminating discrimination, as well as in
    removing artificial barriers to advancement. These include the Navy and
    Marine Corps' Equal Opportunity Manuals, various equal opportunity
    conferences, and a stern reminder by the Secretary of the Navy that
    involvement in extremist activities and membership in supremacist or
    extremist groups by naval personnel will not be tolerated.
        The Department of the Navy has made great strides in identifying
    and eliminating sexual misconduct. Active efforts throughout the
    Department concentrate on oversight, leadership, policies, and
    training, while at the same time providing assistance services and
    formal assessments of our progress. The Navy's Leadership Continuum and
    the Marine Corps Professional Military Education courses provide fleet
    relevant leadership education, with strong core values emphasis. We
    continue to support a top-level standing committee on military and
    civilian women. We have added more fleet equal-opportunity billets, and
    have provided command-managed equal opportunity officers or equal
    opportunity advisors to all commands. Toll-free advice lines, as well
    as victim/witness assistance programs, have been established at
    installations, offering full access to counseling, advocacy, and other
    community support services. We are committed to the elimination of
    discrimination and sexual harassment from our ranks, and as statistics
    and prevention/intervention strategies are reviewed over time, we will
    continue developing and refining our policies and initiatives.
        The Department of the Navy also is continuing its support of the
    ``Enhanced Opportunities for Minorities Initiative (12/12/5)'' to
    achieve cultural diversity within the Navy and Marine Corps. The goal
    is to reach an accession level of 12 percent African American, 12
    percent Hispanic, and 5 percent other minorities by the year 2005. This
    would create an officer corps that is reflective of the racial
    composition of American society and our enlisted force by the year
    2025. Although the goals of this initiative will take a number of years
    to achieve, the impact will have a lasting and positive effect on the
    future of our Navy, Marine Corps, and our country.
                Quality of life
        The best quality of life we can provide is to bring our Sailors and
    Marines home alive. To do this, we must ensure our naval forces are
    well trained, equipped, supported, and led. An important component of
    this effort is in taking care of our personnel and their families. Key
    elements of quality of life include an adequate package of compensation
    and benefits as well as a positive environment that provides service
    members the tools to reach their full potential. To this end, the
    Department of the Navy has established minimum quality-of-life
    standards--and aggressive goals to meet these standards in cost-
    effective and coordinated ways.
        Quality bachelor and family housing continue to be a high priority.
    Recently, a private sector-based housing strategy was developed to
    construct and revitalize housing for military personnel. This public-
    private venture, the Military Housing Privatization Initiative, was
    authorized by Congress in fiscal year 1996. It has been expanded to
    include bachelor housing in 1997. Revitalization and construction of
    bachelor and family housing hinges on our ability to use these
    authorizations. A combination of these approaches will permit
    accelerated achievement of the Department's goals, without increasing
    costs.
        Quality child care at affordable prices also is critical. Several
    options to meet the growing child care demand already are under way or
    currently being developed. These initiatives include contracting for
    spaces in qualified off-base civilian centers, expanding family child
    care to incorporate off-base residences, enhancing our resource and
    referral program, school-age care partnerships, and obtaining wrap-
    around contracts with local providers.
        We also remain committed to providing a full range of community and
    family support services for our service and family members. These
    services emphasize basic skills-for-living adult education and provide
    timely, accurate community information and referral. They also help
    prepare family members for the rigors of required relocations, major
    life transitions, employment opportunities, deployments, and
    mobilizations. Examples of these programs are the Marine Corps' formal
    Key Volunteer Network program and Navy's Ombudsman program which are
    designed to assist spouses while the service member is deployed. In
    addition, the Marine Corps is implementing ``LINKS'' (Lifestyle,
    Insights, Networking, Knowledge and Skills), a program that assists new
    families in adapting to the Corps. Additional funding is programmed in
    fiscal year 1998 for counseling services, to ensure that the highest-
    quality professional assistance is available.
        The needs of our single members also are a key concern. Single
    Sailors and Marines, representing the majority of our Sailors afloat
    and overseas, typically live in the most modest accommodations. They
    have a greater need for programs which enhance their recreational
    opportunities which enhance their recreational opportunities and offer
    constructive activities for their off duty hours. Recent survey results
    indicate single Sailors and Marines perceive their needs have not been
    met at the same level as married personnel. The Navy and Marine Corps
    have established separate Single Sailor and Marine programs with long-
    term funding to address specific needs. Initiatives include safe and
    secure storage for personal belongings and vehicles during deployment,
    and pierside laundry facilities for those who live aboard ship or are
    deployed overseas. In addition, the Navy has established a center at
    Great Lakes to meet student recreational needs and emphasizes
    constructive leisure activities and opportunities available in Navy
    recreation programs during the recruit training curriculum.
        The Department of the Navy has made a significant commitment to
    funding morale, welfare and recreation (MWR) programs. This provides a
    stable, long-range recapitalization plan to ensure adequate MWR
    facilities. Computerized libraries, learning resource centers, and
    state-of-the art fitness equipment and recreational gear are all being
    funded to enhance morale.
                Community action and healthy people
        The Department is actively promoting numerous programs that create
    the right environment and provide the necessary guidance for our people
    to pursue healthy life styles. Our zero tolerance drug policy has
    significantly reduced drug use, with a decrease in positive drug-test
    results from 14 percent in 1981 to 1 percent in 1996. Over the past
    year, we established a standing committee on alcohol use
    deglamorization, to highlight the Department's policies and attempt to
    change existing attitudes toward alcohol. The Navy's Right Spirit
    campaign and the Marine Corps' Semper Fit program are additional ways
    of educating our people and instilling personal responsibility for
    themselves and each other.
        We are not limiting these programs to our naval family. Programs
    such as the Drug Education for Youth, Seaborne Conservation Corps,
    Young Marines, and our media campaign seek to influence local youths by
    emphasizing core values and using role models from the Department.
                Meeting our spiritual needs
        More than 800 military chaplains in the Navy continue to mold
    values by facilitating the free exercise of religious faith. In
    addition to round-the-clock pastoral care and counsel, they provide
    spiritual-formation programs encompassing marriage preparation and
    enrichment and personal growth events, such as the Chaplains Religious
    Education Development Organization. Among other traditional and
    innovative programs, chaplains continue to foster initiatives for
    individuals and families with chaplain-led programs and benevolent
    service projects in the local communities.
        As key players during crisis, chaplains provide intervention and
    support during times of personal loss, bereavement, and transition. In
    cooperation with the Army Chaplain Corps, Navy chaplains fill quotas
    for attendance at the prestigious Menninger Clinic for a one-week
    suicide prevention course.
        Enhancing the quality of life means ministry at sea and ashore,
    with chaplains interacting with family service centers, the Navy and
    Marine Corps Relief Society, the American Red Cross, and others to
    ensure that military people have the best support possible.
                Quality of civilian work life
        In 1994, President Clinton directed the leaders of executive
    departments and agencies to establish programs to encourage and support
    expansion of flexible, family-friendly work arrangements, including:
    job sharing, career part-time employment; alternative work schedules;
    telecommuting; and satellite work locations. We have established a
    multi-tiered work life program to attain the objectives of the
    President's directive. Work life resource and information centers are
    being established at several locations throughout the Navy to make
    available material and information in such areas as career and personal
    planning, health and wellness, financial planning, and continuous
    learning. The Department of the Navy is participating in a federal
    telecommuting pilot program in the Washington, DC, metropolitan area to
    allow work to be performed at home by selected personnel. The
    President's Management Council has asked the Department to expand the
    telecommuting pilot to include civilians outside this area.
                Regionalization of the civilian human resources management
                        system
        Program Decision Memorandum 61 directed Department of Defense
    components to regionalize base level civilian personnel functions and
    to reduce manpower to a 1:100 ratio between personnel specialists and
    the serviced population. Achievement of this significant improvement in
    servicing ratio, coupled with the planned drawdown of the civilian work
    force, requires reducing (by roughly 45 percent) the number of
    employees providing base level civilian personnel services by the year
    2001. A major challenge is to continue providing quality civilian
    personnel services to our managers and employees throughout this
    transition. After extensive analysis of facts and alternatives, and
    with continuing participation by diverse groups of stakeholders, the
    Department will stand up three human resource service centers in fiscal
    year 1997 and four in fiscal year 1998. We believe that regionalization
    will give us the best return on our dollars, by eliminating duplication
    and standardizing human resource services.
                Medical
        The Department is committed to providing the highest-quality health
    care to active-duty and retired service members and their families.
    Recent innovations for keeping people healthy and on the job, providing
    medical services as close as possible to the work site, and using
    technology to move information instead of patients have provided a
    solid foundation for future improvements.
        Navy medicine's strategic plan, Journey to Excellence: Meeting the
    Challenges of the Future, will help guide us in meeting our primary
    mission of readiness. This strategic plan describes the means for
    reengineering the approach to medicine and health care services,
    particularly through the development of measurable data. Navy medicine
    is developing performance indicators that are specific, measurable,
    accountable, realistic, and time-phased. The annual planning process
    aligns us with the Government Performance and Results Act; supports
    TriCare, the Department of Defense managed-care program; and makes
    strategic planning a part of our culture.
        Navy medicine has had great success this year with telemedicine
    technology, greatly reducing the need to transport patients. By using
    this new technology, we are realizing benefits with enhanced medical
    care, specialty consultation to remote areas, and time and cost
    savings. This technology also is enhancing our ability to provide
    quality health care forward with operational forces, ships at sea, and
    remote medical treatment facilities. This change in the way we do
    business is helping to keep our people on the job by taking health care
    to the deckplates. The successes on board George Washington (CVN 73),
    our operational testbed for telemedicine technology, have been
    incorporated into other areas of operational medical support and
    treatment facilities in the United States and overseas.
        Another example of our reengineering efforts is a pilot project to
    enhance medical support for ships at sea through active preventive
    health care and health promotion. This past year, we deployed a
    physical therapist and a dietitian with Enterprise (CVN 65), providing
    significant health maintenance benefits to the crew.
        Navy medicine is on board with the Department of Defense's TriCare
    implementation and is performing its responsibilities as the lead
    service in San Diego, California, and Portsmouth, Virginia. TriCare is
    allowing us to give our beneficiaries what they want: choice,
    guaranteed access, and quality care at low out-of-pocket expense.
        Another important program is the Medicare subvention demonstration
    project to allow the Military Health Services System to be reimbursed
    for medical care given to retirees over age 65. The Department of
    Defense is considering additional alternatives that will demonstrate
    our concern for and commitment to military retirees who are Medicare-
    eligible. Meanwhile, Medicare-eligible patients continue to be seen on
    a space available basis at military hospitals and clinics.
                                   readiness
        Navy and Marine Corps readiness is high today, but concerns about
    the future persist. Readiness is not limited to our ability to meet
    today's commitments; our readiness must be able to answer both near-
    term and long-term needs, as well. This requires attaining a careful
    balance between funding of current operations, modernization of
    existing assets, and procurement of new platforms to recapitalize
    future force levels--a balance that is increasingly more difficult to
    reach. Application of balanced solutions to the sometimes divergent
    objectives of maintaining current capabilities, operations, and
    recapitalizing for the future is a significant challenge in view of
    projected fiscal constraints.
    Today's readiness
        Indicative of today's readiness is the continued success of the
    Navy-Marine Corps team during this past year. Beginning with forward-
    presence missions committed to real-world operations and culminating
    with joint and combined exercises, naval forces were successful because
    our readiness remained high. This level of readiness was attained by
    providing the best training and equipment available, and by preserving
    these assets with outstanding leadership and prudent safety programs.
    Our tactical training strategy ensures battle group, amphibious ready
    group, and Marine expeditionary unit readiness through a comprehensive,
    realistic interdeployment training cycle.
        Because we are forward deployed, incremental costs for contingency
    operations can be relatively small. However, unfunded contingencies
    that require deployment of additional ships, aircraft squadrons, and
    Marines cause reductions in other areas of the Navy and Marine Corps
    Active and Reserve Operations and Maintenance (O&M) accounts. Diverting
    programmed O&M funds directly impacts the balance of current readiness
    across the force, delaying vital equipment repairs and disrupting
    quality training.
                Realistic operational training
        Realistic operational training while deployed or preparing for
    deployment has remained a top priority for the Navy and Marine Corps.
    Funding constraints have made it imperative that we reap the top
    benefit from our training budget. Continued advances in simulators and
    unit-level training systems provide highly effective training and
    reduce the time required to train on actual equipment. Almost all
    systems purchased today have cost-effective computer-based training
    systems that enhance operator skills. The Battle Force Tactical
    Trainer, a shore-based broadcast system, now can simulate combat
    scenarios with real-time updates, allowing watchstanders the
    opportunity to run integrated battle problems inport or underway.
    Simulators are providing valuable and realistic training in dangerous
    scenarios without risk to personnel, and at a significant monetary
    savings. For example, the Marine Corps Air-Ground Combat Center at
    Twenty-Nine Palms, California, is on the leading edge of advanced
    warfighting experiments. Their modeling, simulation, and range
    instrumentation capture information and permit more accurate and
    precise evaluation of actions and decisions made under the stress of
    simulated combat. Sea-based instrumented ranges, such as the Naval Air
    Warfare Center Sea Range and the Atlantic Undersea Test and Evaluation
    Center, also provide critical training data. These technological
    advances are providing major improvements in our training--and
    ultimately in our readiness.
        A critical component of readiness includes the hundreds of
    unilateral, joint, and combined exercises in which we participate each
    year. In 1996, more than 260 joint and combined exercises had naval
    participation. This training not only provided valuable service-
    specific training but also increased interoperability readiness with
    the Army, Air Force, and foreign countries.
        Protecting and, when possible, expanding the areas where naval
    forces can conduct training is key to readiness. Initiatives such as
    obtaining permission to use foreign training areas allow us to maintain
    our combat edge while deployed. Superb examples of important overseas
    training areas include Northern Australia and the missile range off the
    coast of Crete in the Mediterranean Sea.
        The Department is committed to maintaining a proper balance between
    environmental protection and operational readiness and safety. Today,
    environmental concerns have limited training and testing at numerous
    ranges and bases. The key to successful management of our environmental
    responsibilities is the integration of environmental planning into the
    earliest stages of decisionmaking, especially in the operations and
    acquisition arenas. The Department is working closely with the
    environmental agencies to ensure that a prudent balance is maintained
    between critical environmental issues and vital readiness for our naval
    forces. Several initiatives are being pursued to solve shipboard-
    discharge challenges and base and installation hazardous waste
    disposal/cleanup. Also, we are seeking aggressively common ground to
    address--and, where necessary, eliminate--the impact of our training
    and testing on endangered species and marine mammals, which ultimately
    will lessen the likelihood of environmental issues affecting both Navy
    and Marine Corps missions.
                Equipment readiness
        Our readiness today depends on providing the tools our forces need
    to operate. This year our equipment readiness has been consistently at
    or above goal, primarily attributable to the outstanding maintenance
    efforts of our Sailors and Marines. However, there are areas of
    potential concern. Due to the age of a significant portion of Marine
    Corps equipment, the average maintenance requirements are growing.
    Close scrutiny of the material condition of our equipment is required
    to guarantee future readiness. We must ensure our equipment remains
    well maintained amid a declining budget without further decreasing our
    modernization accounts.
                Preserving our assets
        An inherent responsibility of the Department of the Navy is to
    conserve resources and protect our personnel from hazards. The
    preservation of our assets is the cornerstone of our safety and
    occupational health program and must be successful or readiness will
    suffer.
        Operational safety and survivability initiatives, in conjunction
    with the Naval Postgraduate School, the Naval Safety Center, and Fleet
    and Fleet Marine Force units, are beginning to reduce characteristic
    losses of the past. Losses attributable to human causal factors, which
    generally run in the range of 75-80 percent of total losses, are under
    special scrutiny. A focused Human Factors Quality Management Board has
    begun to analyze underlying cultural characteristics that provide
    information and guidelines necessary to reduce losses further. In all
    phases of naval operations, new windows of human performance
    information and opportunity are being explored. Initial goals of
    reducing human-factors-related losses by 50 percent in five years, and
    by 70 percent in ten years, have been set.
        Operational Risk Management (ORM) is an effective tool for
    maintaining readiness in peacetime and dominance in combat. The Navy's
    ORM program is modeled on the very successful Army program dating to
    1991. This program is designed to eliminate unnecessary losses, whether
    in combat or training, by providing the unit commander with an
    understanding of risks associated with pending actions. The Navy is
    emphasizing ORM in multiple safety and education programs toward the
    goal of attaining significantly lower mishap rates. The knowledge
    gained will help define and control risks. Subsequent actions will
    improve effectiveness and contribute to a continued high state of
    readiness.
        The Navy surface force had its second-best year ever in fiscal year
    1996, while naval aviation recorded one of its best years in history.
    Highly visible aviation mishaps received increased attention from many
    sectors, but the Navy and Marine Corps safety-of-flight programs--which
    already were under way in cockpit voice and flight data recorders,
    Global Positioning System navigation systems, and Ground Proximity
    Warning Systems--gained new footholds as baseline systems for long-term
    operational success and loss reduction. Other new safety initiatives
    throughout the Department include: A revitalized explosives and weapon
    systems safety program; safety and survivability ``Reinvention Lab''
    streamlined acquisition programs; changes in Marine Corps aviation from
    an hour-based to a sortie-based training system; and improved base and
    station fire-fighting support, to include fire department
    consolidation.
    Improving our readiness
        A fundamental part of readiness is to focus frankly and honestly on
    the chinks in our armor. For example, the proliferation of technology
    has had a revolutionary impact on the full range of warfare, presenting
    significant challenges in the form of enemy access to satellite
    reconnaissance and secure communications, cruise missiles, chemical/
    biological weapons, sea mines and advanced capability submarines. Our
    naval expeditionary forces influence and work in the battlespace
    extending out from the shores of a potential aggressor. Therefore, the
    Navy-Marine Corps team has pursued aggressively initiatives to maintain
    dominance in the littorals. Some examples of our push to preserve our
    expeditionary edge include:
      --Acquisition of the San Antonio-class (LPD 17) amphibious warfare
            ship;
      --Procurement of the MV-22 tilt rotor aircraft to extend the Marine
            air-ground task force's influence inland;
      --Development of organic minehunting capability for surface and
            submarine forces;
      --Procurement of the F/A-18E/F aircraft to improve power projection
            capability;
      --Employment of Pioneer unmanned aerial vehicles along with the
            development of follow-on systems to enhance the
            interoperability and connectivity of naval forces;
      --Development of the advanced amphibious assault vehicle to provide a
            needed maneuver-at-sea capability;
      --Conversion of Inchon (former LPH 12) into a mine countermeasures
            command-and-control ship;
      --Development of advanced antisubmarine capabilities in our attack
            submarines, P-3C aircraft, and surface ships' sonar suites and
            weapon systems;
      --Pursuing the Navy's theater missile defense capability for Aegis
            cruisers and destroyers;
      --Development of extended-range 5-inch projectiles and a strike
            missile to revitalize naval fires;
      --Arming SH-60 LAMPS helicopters with the antiship Penguin missile;
      --Acquisition of the Advanced Deployable System to enhance the
            undersea battlespace picture and provide timely cueing to
            undersea warfare (USW) forces.
        These programs typify the Department of the Navy's efforts to
    upgrade its capabilities as the force of influence and of choice in the
    littoral regions of the world.
    Readiness for the future
        Future readiness requires investment today. Both the Navy and
    Marine Corps are planning increases in procurement and research and
    development accounts to guarantee future readiness. This continues to
    be dependent on the need for readiness today. New Attack Submarines and
    San Antonio (LPD 17) class amphibious ships will replace their aging
    predecessors in the near term. Next-generation platforms and systems,
    such as the Surface Combatant of the 21st century (SC 21), MV-22
    aircraft, the Joint Strike Fighter, advanced amphibious assault
    vehicle, and theater missile defense are essential long-term
    investments. Where considered most cost-efficient, current systems--
    such as the AV-8B Harrier aircraft and P-3 Orion aircraft--are being
    remanufactured or given service-life extensions. Using the development
    of Cooperative Engagement Capability and the naval C\4\I strategy
    (Copernicus . . . Forward), the Department will leverage the capability
    of all present and future systems. Cost efficiencies also are sought by
    designing ships with reduced manning requirements, such as the new
    arsenal ship. But whether giving new life to old systems or taking a
    technological leap into systems of the next century, it is only through
    proper funding of modernization accounts that naval forces will be able
    to support the national security and military strategies in the future.
    However, increases in modernization accounts must come from continued
    reductions in infrastructure investment and other savings initiatives.
    The budget constraints challenge us to create and maintain the correct
    balance between current and future readiness. Both are important and
    neither can be ignored. The Department believes that within these
    constraints a correct balance has been attained.
                                   technology
    Modernizing the current force
        The Department of the Navy is investing in the platforms,
    equipment, and infrastructure necessary for success in the future. Our
    approach relies on an acquisition investment strategy that maximizes
    our scarce procurement dollars without compromising quality or losing
    critical capabilities. This strategy must capture the cutting edge of
    technology to guarantee the continued operational primacy of our Navy-
    Marine Corps team. Our goal is to maintain a balance between
    reinvigorating older platforms through technology insertion and
    acquiring the next generation of systems. A quick review of naval
    programs shows that we are meeting our goal.
        Solid, proven platforms are superb candidates for modernization.
    The Arleigh Burke (DDG 51) class destroyer, Los Angeles (SSN 688) class
    submarine, AV-8B Harrier, F-14 Tomcat, and the Marine Corps' light and
    medium vehicles are suited perfectly to this approach. Modernizing
    these platforms is fiscally sound. For example, a relatively small
    investment in Arleigh Burke destroyer modernization initiatives results
    in exceptional capabilities upgrades. Similarly, a remanufactured AV-8B
    saves approximately 23 percent, compared to the cost of a new aircraft.
        Although modernization of major systems is appropriate in the short
    term, retaining our operational primacy requires recapitalizing our
    force structure. A successful recapitalization program requires
    continued funding support to meet production goals and acquisition
    timelines. Our investment strategy must remain executable, to avoid
    losing future capabilities.
        New-generation platforms, including the New Attack Submarine, MV-
    22, Joint Strike Fighter, advanced amphibious assault vehicle, and
    Surface Combatant of the 21st century (SC 21) are critical replacements
    for older technology. By the time some of these platforms enter active
    service, they will be replacing systems that have been on the front
    lines for 30 years or more. Our strategy maximizes the return on
    investment. One example of this strategy is the dual-track
    recapitalization philosophy being pursued with CVN 77. In addition to
    modernizing the carrier force, CVN 77 will incorporate innovative
    technologies for both existing and future aircraft carriers. Most
    important, CVN 77 maintains the carrier force level while facilitating
    long-term planning for CVX, a completely new and revolutionary air
    capable platform for the 21st century.
        In another approach, revolutionary technology will be introduced
    through platforms such as the tilt-rotor MV-22 Osprey, the replacement
    for aging CH-46E and CH-53A/D helicopters. The MV-22 will revolutionize
    the battlefield and lead to further use of advanced technology.
        The Advanced Enclosed Mast System (AEMS) is an excellent example of
    using technology insertion to produce advanced equipment at a reduced
    cost. The AEMS encloses rotating antennas in a composite structure to
    reduce radar signature, improve sensor performance, and reduce
    maintenance. Positioning sensors and communication equipment, an AEMS
    structure improves ship survivability and facilitates the integration
    of next-generation planar and embedded sensors. The AEMS will be
    installed on the Radford (DD 968) during fiscal year 1997 and is under
    consideration for San Antonio (LPD 17) class ships.
    Exploiting technology: Investing for our future
        Every day, naval personnel operate complicated systems around the
    world in extremely diverse and challenging physical environments. To
    contend with these complex requirements, we must embrace change and
    keep pace with rapid technological advances. Training, materials,
    systems, and platforms all require cutting-edge technology.
    Consequently, the Department is using the latest business applications,
    commercial off-the-shelf (COTS) technology, and streamlined acquisition
    methods to expand capabilities for the future. These methods ensure new
    technology is readily available when needed. The use of COTS technology
    in such systems as Battle Force Tactical Training, C\4\I equipment, and
    submarine sonar processing and display equipment are examples of
    improving the pace of technology insertion into the Fleet.
        Naval science and technology (S&T) programs continue to explore
    ideas that span the technology spectrum, such as basic and applied
    research, advanced technology development, and a vigorous manufacturing
    technology program. Some examples of Navy S&T programs that will be of
    great value to the Fleet include the ``Mountain Top'' cruise missile
    defense program--which achieved the first-ever beyond-radar-horizon
    engagement of cruise missile targets in 1996, using the new Cooperative
    Engagement Capability technology--and the Specific Emitter
    Identification program, which will allow tracking of individual ships
    by their unique radio-frequency ``fingerprints.'' The Navy's Smart Ship
    project is another effort to exploit commercial technology. This pilot
    program is designed to rapidly identify labor saving technologies and
    evaluate them in a designated test ship, Yorktown (CG 48). Specific
    initiatives designed to reduce manpower are being evaluated during
    fiscal year 1997. Because science and technology opportunities are
    abundant in areas outside the Department, we actively foster
    partnerships with the other services, government agencies, academia,
    and industry to reduce acquisition costs. The Joint Direct Attack
    Munitions program and the Global Command-and-Control System are
    multiservice programs typifying these efforts.
        Marine Corps S&T has focused on the land-warfare aspects of naval
    warfare, using Operational Maneuver From the Sea as the guide. Joint
    S&T investment with the U.S. Army has proved highly successful.
    Recently, the Target Location and Designation Hand-Off System--a Marine
    Corps Advanced Technology Demonstration--displayed the ability to
    locate mobile targets precisely and to transmit pre-formatted calls for
    fires rapidly. These efforts have achieved unprecedented improvements
    in responsiveness, accuracy, and lethality.
    Excellence through innovation
        Innovation occurs throughout the Department of the Navy. Although
    innovation in technology is key to future success, innovation in
    concepts is yet another engine that pulls the technology train.
    Experience from operations in the littorals and maneuver from the sea
    has resulted in such new platform and weapon concepts as the Arsenal
    Ship. In partnership with the Defense Advanced Research Project Agency,
    arsenal-ship technology efforts focus on demonstrating affordable and
    innovative enhancements to our current force. The arsenal-ship concept
    has the potential ability to mass firepower in the littorals to deliver
    strike, missile-defense, and naval fires. The arsenal-ship concept
    further investigates critical manpower savings and C\4\I linkage
    issues. The future concepts tested in the Arsenal Ship will become
    available for incorporation in the SC 21 and other future platforms.
        Innovations also are evolving around organizational structures,
    such as the Marine Corps Chemical-Biological Incident Response Force
    (CBIRF). The first of its kind, it connects electronically the
    aggregate knowledge of specialists located at institutions, schools,
    hospitals, and government organizations around the United States with
    the deployed unit. Intended to provide consequence management during
    chemical and biological incidents, the CBIRF first was deployed in
    support of the 1996 Summer Olympics and later to Washington, D.C., to
    support the presidential inaugural.
        Other innovations include the development of theater missile
    defense around existing Aegis hardware to enhance full-dimensional
    joint force protection in the littoral. In addition, increased
    peacekeeping and peace-enforcement operations result in the innovative
    development and use of nonlethal technology. The Marine Corps, as the
    designated Department of Defense Executive Agent for nonlethal weapons,
    is ensuring the timely development and fielding of these weapons
    throughout DOD. Deployable Marine Corps units already are equipped with
    several nonlethal weapons. We are striving to develop a flexible
    standoff capability by employing nonlethal weapons across the full
    range of conflict. These examples highlight the role of the Navy-Marine
    Corps team as innovators--innovators in technology, concepts, and
    organizations.
    Leading through innovation
        Both the Navy and Marine Corps have developed the necessary
    institutions to experiment with and evaluate new ideas and equipment.
    These institutions ensure that the best of each concept is captured,
    developed, and efficiently implemented. Some of these institutions and
    forums include:
        Commandant's Warfighting Laboratory (CWL), established in October
    1995, serves as the cradle and test bed for development of enhanced
    operational concepts, tactics, techniques, and procedures that will be
    progressively introduced into the Fleet Marine Forces in concert with
    new technologies. The CWL serves as the catalyst for the integration of
    new technologies and warfighting refinement into the Marine Corps. For
    example, Sea Dragon is the CWL's open process of technology
    exploitation and operational concept development. It seeks to build on
    existing strengths of the Navy-Marine Corps team and exploit
    innovative, competitive advantages in future combat. The Chemical-
    Biological Incidence Response Force is one example of CWL
    experimentation coming to fruition. The CWL developed a Five Year
    Experimental Plan (FYEP) as the guideline for planning and
    experimentation. The FYEP is divided into three phases--Hunter Warrior,
    Urban Warrior, and Capable Warrior. The FYEP is supported by the Sea
    Dragon Advanced Concept Technology Demonstration, which examines the
    ``Extended Littoral Battlespace.'' An experimental special purpose
    Marine air-ground task force serves as a test bed for experiments. The
    first advanced warfighting experiment, Hunter Warrior, will focus on
    expanding the area of naval expeditionary force influence in the early
    stages of conflict. The emphasis will be on advanced command and
    control, fires and targeting, innovative combat service support, and
    operations on an extended, dispersed, noncontiguous battlefield.
        ``Extending the Littoral Battlespace'' advanced concept technology
    demonstration (ACTD), recently approved by the Deputy Under Secretary
    of Defense (Acquisition and Technology), provides a means to
    demonstrate key elements of the Defense Science Board's 1996 Summer
    Study. The purpose of the ACTD is to demonstrate the efficacy of
    emerging capabilities, to include theater-wide situational
    understanding, effective remote fires, and a robust interconnected
    information infrastructure, in providing significant increases in the
    effectiveness of naval expeditionary forces. This ACTD seeks joint
    participation and targets implementation of the advanced warfighting
    concepts outlined in Forward From the Sea, Operational Maneuver from
    the Sea, Joint Force 2010, and Joint Vision 2010. The over-arching
    objective of the ACTD is to demonstrate an enhanced C\2\/fires and
    targeting capability which will enable rapid employment, maneuver, and
    fire support from the sea of dispersed units operating in an extended
    littoral battlespace.
        CNO's fleet battle experiments, established in October 1996, takes
    forward-looking programs and integrates them with innovative
    operational concepts. We continue to exploit modeling and simulation in
    testing new systems and concepts. Yet, experimentation, through the use
    of operational prototypes or systems, is required to validate our
    models and refine our systems and concepts. We are establishing At-Sea-
    Battle-Labs to dovetail technological advances and innovative
    operational concepts with real world-training and simulation. Recent
    innovations operationally tested at sea include the Global Broadcast
    System and the Cooperative Engagement Concept Mountain Top experiment.
    In the future we will use the Fleet Battle Experiments to test CJTF/
    MAGTF Afloat, C\4\ISR, Arsenal Ship, naval surface fire support
    improvements and TMD. These experiments will focus on future programs
    that align the Navy with Joint Vision 2010 and demonstrate the
    innovative, yet enduring nature of naval capabilities.
        CNO's Strategic Studies Group (SSG) recently was designated as the
    Navy Center for Innovation by the Chief of Naval Operations (CNO). Each
    year a dozen hand-picked captains and colonels from the Navy, Marine
    Corps, and Coast Guard work with top students from the Naval War
    College and Naval Postgraduate School. These teams conduct ten month
    studies on issues identified by the CNO. The SSG consults with
    industrial leaders, scientists, and engineers from leading research and
    development facilities, fleet operational commanders, and officers
    developing military doctrine and operational concepts. Their efforts
    center on the use of new technologies addressing future naval
    challenges and developing the organizational and operational concepts
    needed to complement future Navy and Marine Corps systems.
        CNO's executive panel (CEP) is designed to provide independent
    policy and technical advice to the CNO. Composed of leading experts
    from a variety of areas, the CEP studies significant issues identified
    by the CNO. One CEP task force continues its partnership with the
    Strategic Studies Group to foster strong, independent concept-
    generation teams in the area of naval warfare innovation.
        Wargaming continues as a valuable innovation tool. Institutions
    such as the Naval War College and the Marine Corps' Wargaming Center
    conducted or cosponsored numerous wargames dealing with evolving
    concepts and the Revolution in Military Affairs. These wargames
    identify deficiencies in research-and-development efforts and assist in
    developing the operational and organizational concepts of the future.
    Naval wargaming possesses a long, successful history of contributing to
    innovation. Today's wargames will lead to revolutionary changes on
    tomorrow's battlefield--changes that will test the employment of
    systems such as the Arsenal Ship and MV-22.
    Improving readiness through modeling and simulation
        Providing affordable quality training is the major training
    challenge. Technologies being explored will enhance skills of ground,
    sea, and aviation forces. The naval services are full-time partners
    with the Defense Department in modeling and simulation. These
    initiatives form the foundation for future education, training,
    operations, analysis, and acquisition. The Joint Simulations System
    (JSIMS) represents true innovation and allows all services to benefit
    from a common framework, facilitated through a joint development
    effort. Anticipating an initial operational capability at the end of
    fiscal year 1999, JSIMS will provide realistic and interoperable joint
    training for naval expeditionary forces. Other simulation efforts and
    implementing organizations include:
      --Navy and Marine Corps Modeling and Simulation Management Office
            (NAVMSMO & MCMSMO).--NAVMSMO and MCMSMO were created to support
            technical and management initiatives directed by the Department
            of Defense and the Secretary of the Navy. These offices bring
            organization and focus to the development and use of modeling
            and simulation tools throughout the Navy and Marine Corps. They
            are the central agencies for formulation and implementation of
            policy and guidance in modeling and simulation. Both offices
            are pursuing initiatives that harmonize management, minimize
            redundancy, sharpen requirements, improve joint program
            participation, leverage other initiatives, and verify the
            quality of modeling and simulation across all functional areas.
            In addition to coordination among the two offices, they also
            cooperate with the Defense Modeling and Simulation Management
            Office, to ensure compatible model development and eliminate
            duplication of effort.
      --Marine air-ground task force tactical warfare simulation (MTWS).--
            MTWS is a computer-assisted warfare gaming system supporting
            Marine Corps commander and staff training. The system provides
            a full range of combat models to support Marine Corps
            exercises.
      --Battle force tactical training (BFTT).--BFTT supports realistic
            combat systems training in all warfare areas. BFTT allows ships
            to conduct operator- and unit-level training inport and at sea.
            Ships, crews, and battle groups use BFTT to exercise in a
            common synthetic joint warfare theater, regardless of actual
            location.
      --The indoor simulated marksmanship trainer (ISMT) and infantry squad
            trainer (IST).--The ISMT/IST is an interactive videodisk-based
            system that realistically replicates the firing characteristics
            of 11 weapons and provides additional training in specified
            combat skills. The ISMT/IST also provides the capability of
            using simulation to train Marines in the employment of their
            weapons and to enhance combat skills. The ISMT/IST can be
            deployed and used on board amphibious shipping.
      --Interactive multimedia acoustic trainer (IMAT).--IMAT is used by
            the surface and submarine communities to provide realistic
            visualization of complex acoustic theory. This innovative
            device improves operator understanding of acoustic concepts and
            increases proficiency in target detection.
      --Combat vehicle appended trainer (CVAT).--CVAT provides a
            deployable, high fidelity, full-crew, precision gunnery,
            networked trainer for the crew of the Marine Corps family of
            armored vehicles--such as the M1A1 Tank, Light Armored Vehicle,
            and Amphibious Assault Vehicle. The CVAT will use simulation to
            train combat vehicle crews in the employment of their vehicle,
            to include driver, loader, and vehicle commander skills as well
            as gunnery and unit tactics. Simulation will complement and
            enhance training by providing more realistic performance
            conditions.
      --LCAC full mission trainer.--The LCAC Full Mission Trainer is a
            simulator that provides realistic operator training at one-
            tenth the cost of underway operations.
      --Marine doom.--Marine Doom is an interactive video game patterned
            after the popular commercial video game ``Doom.'' This game
            enables Marine fire teams to simulate an attack on an objective
            in a military-operation-in-urban-terrain environment. Use of
            Marine Doom teaches teamwork and the importance of mutual
            support.
                                   efficiency
        Today's fiscal realities clearly call for efficient, responsible
    use of our precious resources. The Department of the Navy has been
    steadfast in its efforts to scrutinize every aspect of our operations,
    infrastructure, and methodology--for efficiencies and cost savings. We
    also are capitalizing on emerging technologies, employing lessons
    learned from other successful defense programs, and implementing
    acquisition policies that stabilize our out-year procurement funding.
    These efforts are building a foundation for our future success.
    Infrastructure reform
        Base realignment and closure (BRAC).--The BRAC process is resulting
    in the most visible infrastructure reform. The Department of the Navy
    is aggressively implementing BRAC initiatives identified during the
    1988, 1991, 1993, and 1995 commission rounds. By the end of fiscal year
    1996, 115 of the 178 required BRAC closures and realignments were
    complete. Remaining actions will be accomplished within the required
    six-year timeframe. The Department is intensifying efforts to implement
    BRAC actions to reap the projected savings. Prompt and efficient
    closure and disposal of excess infrastructure is expected to yield
    significant savings--in excess of $2.5 billion annually, beginning in
    fiscal year 1999. These funds can and must be directed to force
    modernization and support of the remaining infrastructure. These
    potential savings make it imperative that BRAC actions remain
    appropriately funded; otherwise, delays could reduce anticipated
    savings and create new closure costs.
        The fiscal year 1997 funding will complete all remaining BRAC 1991
    moves and realignments, leaving the Department with most major closing
    actions complete and a substantial portion of environmental remediation
    actions under way. Our fiscal year 1998 budget submission reflects a
    change in direction, with more funds dedicated to disposal actions than
    to construction and relocation. This shift ensures that base conversion
    and redevelopment is accomplished with the adjacent communities in
    mind. The Department is working closely with local officials to ensure
    a smooth and efficient turnover.
        One of our BRAC implementation goals is to improve efficiency at
    remaining bases and facilities. We will implement proven business
    practices and exploit new technologies while consolidating functions,
    programs, and processes to gain the highest possible returns from BRAC
    initiatives.
        Regional maintenance strategy.--The Navy is implementing a
    fundamental restructuring and consolidation for ashore maintenance
    capabilities and capacities to improve effectiveness and efficiency.
    The objectives of regional maintenance are the elimination of excess
    infrastructure and the creation of single, accessible, accountable
    maintenance providers for our customers. The process of integrating or
    collocating intermediate and depot-level maintenance activities is
    under way. Eight Regional Maintenance Center pilot programs have been
    established. The next step is to consolidate ship maintenance
    engineering and planning functions within Ship Availability Planning
    and Engineering Centers (SHAPEC's). A SHAPEC pilot program is being
    conducted at the Portsmouth Naval Shipyard for SSN 688-class overhauls.
        Outsourcing and privatization.--All services are pursuing the
    identification and subsequent implementation of outsourcing and
    privatizing initiatives. These initiatives are important for two
    reasons: the reduction of naval personnel, both military and civilian,
    over the past six years requires some shift in workload; and industrial
    technology application in critical military areas is faster and more
    efficient. In response to the Commission on Roles and Missions
    recommendations, the Department began to commercialize or privatize
    prudent areas where the largest returns were anticipated. Increasing
    efficiency through outsourcing and privatization provides potential
    benefits both to the Department and to the private sector.
        Smart base.--Naval and Marine Corps bases are complex activities,
    similar to small cities. Numerous services are provided at these
    stations, where costs could be reduced by leveraging commercial
    technology or methodology. Consequently, testing will begin soon to
    determine potential cost savings under a concept entitled Smart Base.
    Experimentation will be conducted under the auspices of an Advance
    Concept Technology Demonstration and a Reinvention Laboratory, enabling
    the program to abbreviate acquisition procedures and waive certain
    regulations, thus speeding implementation. Two installations have been
    identified as test sites, and in cooperation with industry, academia,
    and federal and local governments, will evaluate a full array of
    promising cost reduction initiatives. Success will be judged by
    resulting efficiencies, such as the cost or manpower savings realized
    when compared to the initial implementation investment required.
        Industrial base.--This year, a significant effort to focus on
    stabilizing the civilian shipbuilding industry occurred. Commercial
    shipyards are deeply involved in constructing Nimitz (CVN 68)-class
    nuclear aircraft carriers, San Antonio (LPD 17)-class amphibious
    warfare ships, Arleigh Burke (DDG 51)-class destroyers, and Seawolf
    (SSN 21)-class submarines--the pillars of our Navy and the most capable
    warships ever built. The industrial base is facilitating efficiency by
    adopting innovative business practices that reduce costs, improve
    product quality, and strengthen defense partnerships. Government
    initiatives--such as multiyear procurement contracts and incentives for
    foreign nations to buy U.S.-built ships--are important parts of
    stabilizing the industry. For example, foreign purchase of U.S. ships
    will spur commercial activity and allow direct application of lessons
    learned to military construction. Continued innovative practices are
    crucial to achieving a smooth transition into the future.
    Acquisition reform
        Focus during 1996 was placed on incorporating the tools provided
    through the Federal Acquisition Streamlining Act and the Federal
    Acquisition Reform Act; developing Integrated Product Teams (IPT's) and
    applying Integrated Product and Process Development to program
    management; expanding the use of Past Performance and Earned Value
    concepts; creating action teams to work Cycle Time Reduction projects;
    completing the move to performance-based specifications in the
    contracting process; and expanding the use of Single Plant Processes.
    In a report to the Office of the Secretary of Defense this year, we
    projected significant savings or cost avoidances through the use of
    these proven business practices. Some techniques, such as use of
    established material specification modifications or government-owned
    prototypes during production phases, are simple but highly effective.
    Other initiatives, such as use of long-lead or multiyear procurement
    contracts, are more involved. Regardless of the complexity, all efforts
    contribute to time and fiscal savings and ultimately acquire the best
    equipment.
        Acquisition Reform Office.--The initial emphasis of acquisition
    reform was on major programs with the greatest potential for
    significant cost avoidances and cost reductions. We now seek to broaden
    our focus. The Acquisition Reform Office, organized last year with a 3-
    5 year charter, continues to serve as a catalyst for acquisition
    process change. The Department's guiding instruction for acquisition
    management was rewritten to include only mandatory requirements and
    allow program managers the freedom to tailor these requirements to
    their specific program needs. Future initiatives focus on total
    ownership cost, use of cost as an independent variable and integration
    of modeling and simulation technologies. As we move towards the 21st
    century, the Department will move closer to achieving a simulation-
    based acquisition system.
        Acquisition Center of Excellence (ACE).--In a groundbreaking
    ceremony on 17 October 1996, the Department of the Navy began
    development of a research facility designed to combine cutting-edge
    technology with world-class business practices. At the heart of ACE's
    research capabilities is a collaboratory: a totally reconfigurable
    working environment utilizing high-powered computing technology. The
    collaboratory will support virtual prototyping of naval systems from
    concept and engineering analysis to production and support. The ACE
    will house the knowledge and combined expertise of hundreds of
    acquisition professionals, research scientists, management experts, and
    engineers. It will provide research and resources to assist acquisition
    professionals, contractors and customers in solving complex systems
    engineering and management challenges. The ACE will also serve as a
    host for many coalitions among the Navy, Marine Corps, industry, and
    academia to bring tools, successes and lessons learned into the
    Department's acquisition environment. The facility will be operational
    by Spring 1997.
        Acquisition reform success stories.--The Department of the Navy's
    bold approach and forward-looking strategy continues to accrue results
    through acquisition reform. Led by the Acquisition Reform Senior
    Oversight Council, the Department is applying world-class practices to
    attain cost and time reductions in the defense acquisition process.
      --Multiyear contracts.--With congressional assistance, multiyear
            procurement contracts allow industry to offer the most for our
            investment. The Medium Tactical Vehicle Remanufacture program
            is an excellent example of significant cost avoidance through
            multiyear contracting. A total of 7,945 five-ton trucks are
            planned for remanufacture beginning in fiscal year 1999, with
            an estimated cost avoidance of nearly $104 million attributable
            to approval of multiyear contracting. In another example, the
            Navy is pursuing multiyear procurement of Aegis destroyers
            through 2001. In 1996, this program authorized a package
            procurement of six ships over fiscal years 1996 and 1997,
            followed by multiyear procurement of 12 ships from fiscal year
            1998 through fiscal year 2001. This effort provides industrial
            stability and the most efficient production rates, and will
            allow the Department to procure 12 Aegis destroyers for the
            price of 11.
      --The San Antonio (LPD 17) amphibious transport dock ship achieved a
            cost avoidance of $15 billion over the life of the ship class
            in design, procurement and ownership costs. During the current
            design phase, the program has reduced military specifications
            and standards, collocated its integrated product and process
            development teams, standardized unique systems, used commercial
            items, and applied modeling and simulation. The LPD 17 will
            invest in an integrated digital product model and concurrent
            engineering processes during detailed design and construction.
      --The cooperative engagement capability program adopted a streamlined
            approach to cost estimating which achieved significant
            research, development, testing and evaluation and procurement
            savings. The program achieved these savings through reduced
            administrative costs, program management costs, military
            specifications and standards, and program documentation.
      --The new attack submarine (NSSN) program achieved an estimated cost
            avoidance of $450 to $650 million. Integrated product and
            process design is providing measurable lead ship savings
            through elimination of design hours, preproduction planning,
            reduced change orders, use of a single design agent, and
            component savings through use of commercial off-the-shelf and
            reengineered parts. The application of contract ``teaming''
            allowed the participating shipbuilders to benefit from a
            consolidated modular construction ``learning curve,''
            eliminated the need to maintain independent design and
            construction data bases, and reduced duplication of some
            construction and test facilities. The NSSN command, control,
            communication and information (C\3\I) program won the Secretary
            of Defense David Packard Award for Acquisition Reform
            Excellence. This award highlighted one of many management and
            technological innovations employed by the NSSN program.
            Notably, it included the unprecedented application of cost as
            an independent variable, coupled with a technology refreshment
            process.
      --The F/A-18E/F Super Hornet program successfully applied independent
            variable principles, integrated product teams, government-
            industry partnering, and concurrent design and manufacturing to
            achieve a cost avoidance of approximately $3 billion.
            Implementing acquisition reform initiatives permitted
            achievement of the aggressive program milestones as the
            engineering and manufacturing development phase remains on cost
            and schedule. These efforts resulted in the Super Hornet
            receiving the first-ever Department of Defense Acquisition
            Excellence Award in 1996.
      --The advanced amphibious assault vehicle is the Department's first
            major program with nearly all acquisition reform initiatives
            embedded from the program's start. These initiatives include
            the use of a system performance specification, virtual
            elimination of military specifications and standards, use of
            cost as an independent variable in trade-off analysis, creation
            of government and industry integrated product teams for system
            design and development, and co-location of these teams.
    Organizational reform
        Operational fleet reorganization.--1996 marked the first full year
    of implementation for the operational fleet reorganization. Adjustments
    were designed to maximize training efficiency at sea and eliminate non-
    mission essential training. These organizational changes were critical
    to meeting increased operational commitments worldwide. Changes
    included the stand up of 5th Fleet in Southwest Asia, Atlantic and
    Pacific Fleet reorganization into 12 core battle groups to enhance
    operational integrity, and establishment of the Western Hemisphere
    Group to focus on naval operations in the Caribbean Sea and Eastern
    Atlantic Ocean.
        Marine Corps process improvement program.--The Marine Corps
    continues to improve the combat development system and its business
    enterprise by adopting proven DOD and industry techniques that
    reengineer critical internal functions and processes. Specifically,
    using both a business and an operational focus results in an infusion
    of readily available technologies, which streamline processes and
    subsequently realign resources throughout the organization. Mentoring
    by senior leadership provides a strategic business vision and
    establishes goals for improving the combat development system. Analysis
    of key processes such as resource allocation, force structure, and
    information management yields significant efficiencies that enhance our
    ability to ``make Marines and win battles.''
    Incorporating innovative business practices
        International cooperative programs.--We are making great strides in
    cultivating international program opportunities that reduce naval
    technology and system modernization costs. Cooperative research,
    development, and acquisition activities on such programs as the Joint
    Strike Fighter, Multifunctional Information Distribution System, and
    the Evolved Sea Sparrow missile are in progress already. International
    cooperation results in millions of research and development dollars
    from foreign nations. Foreign military sales yield another major
    benefit beyond burden sharing and cost savings. Fielding common
    equipment with our friends and allies fosters interoperability and
    directly supports our coalition strategy. Continued pursuit of
    international activities will minimize duplicative investment and
    result in a greater number of high-quality, high-payoff cooperative
    programs in future years.
        Lightweight 155 mm Towed Howitzer (LW155).--The LW155 program
    demonstrates the inherent ability of Integrated Product Teams (IPT's)
    to create enormous efficiencies. By employing IPT concepts and
    leveraging data developed from earlier prototype weapons testing, the
    first three LW155 program milestones were passed within a year. The IPT
    not only coordinated the planning and documentation efforts but also
    focused and encouraged team members to meet schedule and performance
    goals. It also empowered team members with authority to make binding
    decisions reflecting best business practices and user requirements. The
    empowerment aspect shortened approval of the milestone package to three
    months instead of the normal six months. The success of the LW155
    program--the recipient of the Department of the Navy's IPT of the Year
    award--and its application of multi-agency, multi-service IPT concepts
    are spurring implementation of IPT's in lower-level programs. IPT's can
    improve significantly the way we acquire, field, and support systems
    and equipment.
        Predator program.--Using proven business practices, the Predator
    missile program maximizes the use of existing technology and
    nondevelopmental components to reduce cost and risk. Predator also
    takes advantage of modular design to increase versatility for future
    change. Some of the savings include:
      --Estimated savings of $12 million in developmental costs using Tow2B
            warhead and Javelin rocket motor technology;
      --Reduction of more than 1,500 parts to fewer than 300 through a
            risk-reduction effort during the demonstration/validation
            stage. This endeavor accelerated production by one year, saving
            an estimated $12 million;
      --Savings of approximately $60 million for an Army program by
            capitalizing on the Predator efforts.
        Program objective memorandum (POM).--The Department of the Navy
    fiscal year 1998-2003 POM was an important benchmark in the integration
    of individual Navy and Marine Corps POM's. Coordination between the
    services began early in the Program Assessment and POM development
    phase and continued through POM submission to the Secretary of Defense.
    While each service developed its own POM, integration throughout the
    process ensured departmental requirements were articulated effectively,
    resources were better used, and the end product was attained in a more
    efficient way.
    Efficiency through environmental stewardship
        Compliance with environmental protection programs requires both
    effectiveness and efficiency. The Department has achieved success in
    both areas. The number of known, contaminated sites stabilized at about
    4,300 while site close-outs increased. Our total cleanup cost decreased
    by about $200 million. Field personnel continue seeking and deploying
    effective new cleanup technologies and business practices in
    cooperation with regulators. In the area of pollution prevention, our
    program to minimize hazardous waste through material reutilization is
    implemented in 85 percent of our ships (frigate-size and larger) and by
    more than 75 shore installations. Major efforts fully integrate
    environmental protection into the acquisition process.
        The Department serves as the DOD Executive Agent for Clean Air and
    Clean Water Act implementation. We have achieved a noteworthy record in
    reaching consensus with regulators while preserving the Navy and Marine
    Corps mission capabilities. The Department worked successfully with
    Congress, other federal agencies, regulators, and environmental
    interest groups to amend the Act to Prevent Pollution from Ships. The
    new legislation authorizes the use of specially developed shipboard
    solid-waste processing equipment, which will be procured and installed
    through 1998.
        Protection of wildlife and the land they live on is equally
    important. The Navy and Marine Corps manage a number of federally
    protected plant and animal species on their installations. Working with
    the U.S. Fish and Wildfire Service, endangered species concerns have
    been integrated into training and readiness requirements. Examples
    include: fencing of tern and plover nesting areas at Camp Pendleton and
    the Naval Amphibious Base Coronado, California, to prevent accidental
    entry during breeding season; protection of woodpecker nesting trees at
    Camp Lejeune; and requirements for vehicles to stay on roads in some
    parts of our training areas to protect the desert tortoise. In
    addition, through the Navy-led Department of Defense Partners in Flight
    Program, archived weather radar data was analyzed to determine peak
    neotropical bird migration periods, routes, and stopover locations on
    Department of Defense lands in order to reduce bird/aircraft strikes.
    This data is factored into the scheduling of training flights and
    operational exercises in areas of high bird migrations. These measures
    have led the U.S. Fish and Wildlife Service to conclude that the Navy
    and Marine Corps are providing superior levels of protection for
    sensitive species, thus obviating the need for externally initiated
    land use restrictions being placed on associated installations.
                                    programs
        The budget for fiscal year 1998 marks an important transition year.
    We will be well embarked on our recapitalization strategy to dedicate
    the increasing resource levels necessary to provide modern, capable
    platforms and systems for tomorrow's Navy-Marine Corps team. At the
    same time, we will be reaching the end of our projected resource
    downslope, and will begin maintaining an essentially level fiscal
    profile beyond fiscal year 1998. The current budget attempts to
    negotiate the path from the point Congress will have led us through
    fiscal year 1997, through the necessary reforms and efficiencies
    critical to long-term affordability, and to the continued satisfaction
    of our core warfighting requirements within the President's plan for
    Defense.
    Program summaries
        The following programs are key elements in building naval forces
    capable of protecting U.S. interests around the world today and into
    the 21st century. They represent an unprioritized, yet integrated, view
    of the wide range of capabilities necessary for the Navy-Marine Corps
    team to support and enforce national security objectives.
                Shipbuilding and naval weapons programs
        Aircraft carriers.--Twelve aircraft carriers form the centerpiece
    of naval global forward presence, deterrence, crisis response, and
    warfighting. In addition to their power-projection role, they serve as
    joint command platforms in the worldwide command-and-control network.
    Harry S Truman (CVN 75) is currently under construction at Newport News
    Shipbuilding and is expected to be commissioned in 1998. At that time,
    the Navy's oldest active commissioned ship, Independence (CV 62), will
    transition to the inactive fleet. CVN 76's keel has been laid for a
    2002 delivery, and CVN 77 will enter the fleet in 2008, as the two
    remaining Kitty Hawk-class carriers are retired. CVN 77 will act as a
    transition ship toward CVX, incorporating numerous new technologies and
    process design changes that will move naval aviation to a future
    carrier design. Selection of transition technologies will focus on
    life-cycle cost and manpower reductions. CVX development effort became
    an officially recognized program in 1996, and currently is examining
    the future sea-based tactical air platforms and the aircraft carrier
    that will support those platforms.
        Amphibious lift.--Naval amphibious forces provide the most flexible
    and adaptive combined-arms crisis-response capability today and remain
    the nation's only self-sustainable forcible-entry capability. The
    current modernization plan will provide amphibious lift for 2.5 Marine
    expeditionary brigade (MEB) equivalents. The future amphibious force is
    being shaped in the correct number and types of ships that will allow
    the formation of 12 amphibious ready groups (ARG's) to meet our
    forward-presence, contingency, and warfighting requirements. The plan
    includes the completion in fiscal year 2001 of the seventh Wasp (LHD
    1)-class ship--the centerpiece of the ARG--and the delivery of the
    final Harpers Ferry (LSD 49)-class ship in fiscal year 1998. However, a
    critical piece of our future amphibious force does not arrive until
    fiscal year 2002. This is the San Antonio (LPD 17)-class of ships. LPD
    17 will incorporate a major improvement in command-and-control
    capabilities and enhanced ship self-defense systems, which will
    increase its ability to operate independently of the ARG when required.
    Most important, it is a critical link in completing the goal of a 12-
    ARG amphibious force. LPD 17 replaces the aged LPD 4, LKA, LST, and LSD
    36 classes of ships and is key to regaining the full 2.5 MEB lift
    equivalents. Current amphibious lift is being augmented with a
    combination of Naval Reserve Force and Naval Inactive Ship Maintenance
    Facility assets--ships the LPD 17 eventually will replace. Construction
    of the second ship has shifted from fiscal year 1998 to fiscal year
    1999 with future procurement planned for two ships in fiscal year 2000.
        Through this modernizing and tailoring of the amphibious fleet,
    over-the-horizon launch platforms will be provided for the MV-22
    aircraft, the short-take-off and vertical-landing variant of the Joint
    Strike Fighter, the advanced amphibious assault vehicle and the already
    proven landing craft air cushion--all critical pieces in fully
    executing operational maneuver from the sea. Ultimately, the amphibious
    force will be composed of 12 LHA/D's, 12 LPD 17's, and 12 LSD 41/49's;
    capable of forming 12 ARG's (or operating independently when necessary)
    and lifting 2.5 MEB equivalents in all five lift parameters (vehicle
    square foot stowage, cargo cubic capacity, troop capacity, vertical
    take off and landing capacity, and LCAC capacity).
        New attack submarine (NSSN).--The New Attack Submarine (NSSN) is
    tailored for the 21st century joint littoral operations. The NSSN
    incorporates the best new technologies, is designed for maximum
    flexibility and affordability, and will maintain U.S. superiority over
    all current and projected undersea threats. Its inherent flexibility
    includes space for mission-specific equipment, carry-on electronics,
    and remotely operated or autonomous vehicles. Improved electromagnetic
    and acoustic stealth, along with enhanced sensors and processing, will
    ensure the NSSN's ability to detect and avoid mines and destroy
    advanced-capability submarines. In addition, NSSN will be capable of
    interdicting shipping or defending sea lines of communication, a role
    that will become increasingly important as the number of our overseas
    bases is reduced. NSSN's clandestine strike and significant organic
    special-operating forces capabilities will afford policymakers enhanced
    military leverage.
        The cornerstone of the NSSN program is the design/build process.
    Using computer-aided design, engineering, and manufacturing techniques,
    the design process permits rapid assessment and evaluation of new
    technologies. This innovative process, coupled with new modular-
    construction techniques and contract teaming plan, fundamentally
    changes the way this ship will be produced and is the key to its
    affordability. Other features include:
      --Open systems architecture.--Using widely available public-domain
            standards, the combat, communications, and information systems
            will have industry-standard interfaces that offer portability
            and software reuse and simplify cost-effective future
            technology upgrades.
      --Fiber optic cable systems.--A platform-wide fiber optic cable
            installation will be sized for future growth. The structure of
            the network simplifies the attachment and integration of new
            equipment in a plug-in/plug-out manner.
      --Commercial-off-the-shelf (COTS) electronics.--Use of commercially
            available electronics leverages the growth in signal and
            information processing and display technologies occurring in
            industry.
      --Isolated deck structure.--This design facilitates ease of equipment
            integration, provides shock and acoustic isolation sufficient
            to allow the use of COTS technology, and incorporates emerging
            noise-control technologies.
        NSSN also plays a pivotal role in the Navy's recapitalization plan.
    By the year 2011, Los Angeles (SSN 688)-class submarines will start to
    reach the end of their service lives at a rate of three-to-four per
    year. The Navy needs to achieve a low, continuing, and efficient
    submarine construction rate to build our next generation of quiet
    submarines in adequate numbers to counter the proliferation of advanced
    capability submarines and submarine-related technology worldwide.
    Starting the NSSN construction in 1998 accomplishes this goal,
    effectively counters an increasingly sophisticated undersea threat, and
    is the foundation for future development and technology insertion into
    the submarine force.
        Maritime prepositioning force (MPF).--The 13 ships of the MPF
    continue to be a vital part of the Marine Corps ability to respond
    quickly to crisis worldwide. They also improve operational flexibility
    significantly for combat, disaster-relief, and humanitarian-assistance
    operations. In 1995, to ensure even better response, Maritime
    Prepositioning Squadron (MPS) One relocated forward from the
    continental United States to the Mediterranean. Procurement of three
    additional ships for MPF, known as MPF Enhancement, will provide Marine
    air-ground task forces (MAGTF's) enhanced capabilities in naval
    construction, medical support, and expeditionary airfield construction.
    The first MPF Enhancement ship is planned for delivery by fiscal year
    1999. Funding for the remaining two ships in the program was
    appropriated by Congress in fiscal year 1997. Although the Aviation
    Logistics Support Ships (T-AVB) are not members of the MPF squadrons,
    they are an integral part of the MPF concept. The T-AVB ships provide
    rapid and dedicated sealift for the sustainment and maintenance of the
    MAGTF's aviation combat element, both rotary-and fixed-wing aircraft.
    These ships can provide repair capability onboard or off load their
    equipment to provide shore-based support.
        Arleigh Burke (DDG 51)-class destroyer.--The DDG 51-class ships are
    the finest multimission destroyers in the world. They play an integral
    part in power projection, including precision land attack through
    strike and naval surface fire-support capabilities. The DDG 51 class,
    along with its companion class of CG 47 Aegis cruisers, provide
    battlespace dominance to include joint force air defense for carrier
    battle groups, surface action groups, amphibious ready groups, and
    joint expeditionary forces. To keep pace with advancing technologies
    and stay ahead of emerging threats, the Navy constructs Aegis
    destroyers in flights to introduce improvements in combat capability in
    a disciplined, yet expeditious process. Eighteen destroyers are already
    in commission, and another 20 are authorized or under contract. The
    Aegis destroyers requested under the multiyear procurement plan will
    continue to incorporate Flight IIA warfighting advancements, including
    improved surface-to-air missiles (SM2 Block IV and Evolved Sea
    Sparrow), embarked helicopters, and the battle force tactical trainer.
    The first Flight IIA destroyer, DDG 79, is currently under
    construction. Future ships will include such other essential
    improvements as the AN/SPY-1D(V) littoral radar upgrade, Cooperative
    Engagement Capability, and Theater Missile Defense Capability. The
    Burke-class destroyers will represent the largest component of the
    early 21st century surface combatant force.
        Naval fires.--Fire support requirements for the future are being
    addressed by wedded Global Positioning Systems and gun technologies
    that will enable surface ships to engage targets ashore more than 60
    miles distant. Especially promising are composite-material technology
    breakthroughs, which could enable gun systems to engage targets beyond
    100 nautical miles. Research-and-development funding has been allocated
    to develop these capabilities for future deployment in the fleet.
        The Army's Tactical Missile System, or ATACMS, is a medium-range
    weapon that provides a quick-response strike capability to support our
    expeditionary forces within ten minutes of the call for fire. The Navy
    is evaluating a seagoing version of the Army missile for deployment on
    board surface ships and submarines. The quick-response strike
    capability of a Navy TACMS makes it ideally suited to engage mobile
    command-and-control, air-defense, and cruise-missile launch platforms.
    In the near future, the TACMS missile could provide an effective means
    to counter weapons of mass destruction (WMD) by providing the ability
    to destroy them without warning. A joint Army/Navy project currently
    under way will develop and test a warhead that will give TACMS the
    capability of destroying deeply buried or hardened targets, such as
    those used for WMD production and storage facilities.
        The Navy is also investigating the concept of modifying the
    Standard missile for a surface-to-ground strike role. Studies are under
    way to determine which missile option is the most cost-effective way to
    provide a rapid response, all-weather strike capability in support of
    military power projection ashore.
        Arsenal ship.--Arsenal Ship is a technology demonstration program
    exploring affordable and innovative enhancements to our existing force
    of carriers and strike capable combatants and submarines. Armed with
    missiles and with space for future extended range gun systems, Arsenal
    Ship has the potential to provide massive firepower in the early stages
    of a crisis, and to augment fire support to landing force or other
    ground commanders. These platforms could be continuously forward
    deployed, available for rapid movement upon receipt of warning or
    changes in the tactical situation. Much like our Maritime
    Prepositioning Force, Arsenal Ships could remain on station as required
    for indefinite periods without dependence on host nation support or
    permission. The program is designed to develop technologies for
    incorporation in the SC 21 and other future platform types.
        Afloat prepositioning force (APF).--The APF is divided into three
    groups: 13 Maritime Prepositioning Force (MPF) ships loaded with U.S.
    Marine Corps equipment; 14 Army War Reserve, including 3 ships that
    support a U.S. Army heavy brigade; and 7 prepositioned ships dedicated
    to multiservice requirements such as transporting fuel for the Defense
    Logistics Agency, ammunition for the Air Force, and a field hospital
    for the Navy.
        Seawolf (SSN 21)-class attack submarine.--Seawolf-class submarines
    were designed to operate autonomously against the world's most capable
    submarine and surface threats, and these impressive capabilities
    translate directly into enhanced joint-warfighting performance in high-
    threat littoral areas. These multimission combatants will set the
    standard for submarine technology well into the next century.
        In addition to their strong capabilities in countering enemy
    submarines and surface shipping, Seawolf submarines are ideally suited
    for battlespace-preparation roles. Incorporation of sophisticated
    electronics produces greatly enhanced indications and warning,
    surveillance, and communications capabilities. These platforms are
    capable of integrating seamlessly into a battle group's infrastructure,
    or shifting rapidly into a land-battle support role. With twice as many
    torpedo tubes and a 30 percent increase in weapons magazine size over
    the Los Angeles (SSN 688)-class submarines, Seawolf is exceptionally
    capable of establishing and maintaining battlespace dominance.
        Seawolf's inherent stealth enables surreptitious insertion of
    combat swimmers into denied areas. SSN 23 will incorporate special-
    operations force capabilities, including a dry deck shelter (DDS) and a
    new, specially designed combat swimmer silo. The DDS is an air-
    transportable device that piggy-backs on the submarine and can be used
    to store and launch a swimmer delivery vehicle and combat swimmers. The
    silo is an internal lock-out chamber that will deploy up to eight
    combat swimmers and their equipment at one time.
        Seawolf performed superbly during initial sea trials in July 1996,
    and demonstrated that it is the fastest, quietest submarine in the
    world. The addition of Seawolf to the fleet will significantly enhance
    the U.S. margin of undersea superiority against the most capable
    adversaries.
        Surge sealift.--Surge shipping is the immediate transportation of
    heavy military equipment that our forces will need to meet warfighting
    requirements. The Navy's role in providing surge capability depends on
    a mix of sealift, including eight fast-sealift ships, Ready Reserve
    Force ships, and chartered ships from private industry. As a result of
    the Mobility Requirements Study, the Navy is currently undertaking a
    sealift expansion effort, to increase Department of Defense's ability
    to move military equipment quickly in the event of a contingency or
    war. The study highlighted a strategic sealift surge and afloat
    prepositioning shortfall of five million square feet and recommended
    the acquisition of ships to meet it. A total of 19 prepositioning or
    surge Large Medium Speed Roll-On/Roll-Off ships will be required to
    satisfy the sealift requirements identified by the Mobility Study. Our
    budget reflects our efforts to meet these requirements through
    shipbuilding or ship conversion.
        Surface combatant of the 21st century (SC 21).--SC 21 is more than
    a replacement for ships retiring at the end of their service lives. As
    a land-attack combatant, SC 21 will support the land campaign by being
    able to operate in the littorals, will carry a mix of strike and close
    support weapons, and will be designed for joint interoperability. The
    SC 21 Cost and Operational Effectiveness Analysis (COEA) has begun the
    process of examining future mission requirements and alternative
    approaches to meeting those requirements. The COEA has just completed
    the first part of this effort, characterizing the mission deficiencies
    of the currently planned forces in the years 2015 through 2025. While
    the currently planned forces remain quite capable in the future
    timeframes examined, there are shortfalls in several mission areas,
    especially in terms of affordability. The second part of the COEA will
    evaluate alternative ship concepts that will better meet the
    requirements and affordability measures. Innovative concepts of
    operation, building from Marine Corps and Army planning, will be
    combined with joint initiatives and emerging technologies to tailor the
    new capabilities to the requirements.
        SSN 688 class submarine modernization.--The creation of the
    Acoustic Rapid COTS Insertion (A-RCI) program was based on a detailed
    review of the U.S. acoustic advantage compared to foreign nuclear and
    diesel electric submarines. This program is the centerpiece of the Los
    Angeles (SSN 688)-class modernization effort. SSN 688 class submarines,
    which will comprise 68 percent of the attack submarine force in 2015,
    must be modernized to ensure that they remain effective when operating
    against increasingly sophisticated undersea adversaries. The use of
    COTS and Open Systems Architecture (OSA) will enable rapid (annual)
    updates to both software and hardware, and the use of COTS-based
    processors means that sonar system computing power can grow at the same
    rate as the commercial world.
        A-RCI is a four phased transformation of existing sonar systems
    (AN/BSY-1, AN/BQQ-5, or AN/BQQ-6) to a more capable and flexible COTS/
    OSA-based system. It also will provide the submarine force with a
    common sonar system. The process is designed to minimize the impact of
    fire-control and sonar system upgrades on a ship's operational
    schedule, and will be accomplished without the need for major shipyard
    availabilities. Phase I, which will commence in November 1997, will
    enhance towed-array processing. Phase II will provide additional towed-
    and hull-array software upgrades. Phase III will upgrade the spherical
    array, and Phase IV will upgrade the high-frequency sonar system on SSN
    688I-class submarines. Each phase will install improved processing and
    control and display workstations. The current installation plan
    completes all SSN's through Phase III by fiscal year 2003.
        Mine warfare.--This is an essential supporting warfare capability
    integral to the ability of naval forces to open and maintain sea lines
    of communication and to dominate the littoral battlespace. An imposing
    array of modern mine countermeasures (MCM) systems continues to be
    developed and procured. Our dedicated MCM forces, composed of surface
    MCM ships, airborne MCM helicopters, and explosive-ordnance-disposal
    divers are among the best in the world. With the recent addition of the
    MCM command and support ship Inchon (MCS 12), the United States has a
    true expeditionary mine countermeasures capability.
        We also are aggressively developing MCM systems that will be
    organic to the forward-deployed carrier battle groups and amphibious
    ready groups. Focused science, technology, and developmental efforts
    are producing solutions to some difficult mine-warfare problems. For
    very shallow water, such efforts as the Shallow Water Assault Breaching
    System and the Distributed Explosive Technology Net System are on
    schedule in their development. These two complementary systems are
    designed to defeat mines and obstacles in the difficult surf-zone
    region. Another example is the Remote Minehunting System, which will
    provide a surface ship-hosted, mine-reconnaissance capability.
        Augmenting dedicated and organic MCM capabilities are contributions
    from organizations outside of the traditional mine-warfare community.
    As an example, the Oceanographer of the Navy collects and disseminates
    environmental data that are essential for effective mine
    countermeasures. Mine warfare-relevant emphasis in projects dealing
    with MCM digital-route surveys; maintenance of a global mine-like
    contact database; and development of mine warfare-specific
    environmental databases augment our ability to rapidly access, avoid,
    or neutralize the sea mine threat.
        Tomahawk baseline improvement program (TBIP).--The Tomahawk land-
    attack missile provides Navy surface combatants and attack submarines
    with a potent long-range precision strike capability from the sea. The
    TBIP program was restructured in fiscal year 1996 into a two-phase
    program that will provide a technologically advanced, yet lower-cost
    missile with an initial operating capability in 2000. The Tomahawk
    Block IV Phase I development provides a comprehensive baseline upgrade
    to improve system flexibility, responsiveness, accuracy, and lethality.
    Essential elements of the program include upgrades to the guidance,
    navigation, control, and mission-computer systems of the missile, along
    with the associated mission planning systems and weapons-control
    systems. Phase I will provide a UHF satellite communication data link
    to enable the missile to receive in-flight mission reassignment
    messages, to transfer health and status messages, and to broadcast
    Battle Damage Indication messages. Phase I also includes the
    development of an advanced antijam Global Positioning System receiver
    and antenna system for the missile. The Advanced Tomahawk Weapons
    Control System and Afloat Planning System will improve tactical
    responsiveness by allowing for mission planning and modification
    afloat, thus reducing mission planning timelines in many scenarios.
    Concepts for the Tomahawk Block IV Phase II include a seeker, an
    antiarmor variant, and a possible hard-target-penetration variant.
        Ship self-defense systems.--The confining geography and
    proliferation of antiship cruise missiles combine to make littoral
    operations particularly challenging. Ship-defense systems provide a
    layer of protection that enables battle groups to position themselves
    for successful mission execution. Key programs include:
      --Quick reaction combat capability/ship self-defense system.--The
            Navy developed a plan to integrate and automate the detect-
            control-engage sequence to provide a layered defense of
            electronic warfare and hard-kill weapons. More than 20
            acquisition programs comprise this effort to provide a quick
            reaction combat capability (QRCC) and integrated command-and-
            control system. The QRCC system architecture integrates several
            existing stand-alone systems whose contributions to ship
            defense are combined, processed, and controlled by the Ship
            Self-Defense System. The system provides multisensor
            processing, target identification, and an automated detect-
            control-engage capability. Shipboard sensors are fused to
            establish accurate, correlated, firm-track criteria as early in
            the detection phase as possible. Embedded electronic warfare
            doctrines automate soft-kill and hard-kill weapons to provide a
            rapid, layered defensive reaction to any detected threat. In
            late fiscal year 1996 the program underwent testing and was
            declared potentially operationally suitable and effective. The
            system is scheduled to complete Demonstration/Operational
            Testing and achieve Milestone III approval in fiscal year 1997.
      --The rapid antiship missile integrated defense system (RAIDS), which
            complements the antiship missile defense capabilities of the
            Spruance (DD 963) and Oliver Hazard Perry (FFG 7)-class
            combatants, is in production and has been installed in Spruance
            (DD 963). Installation in Oliver Hazard Perry-class ships will
            commence in fiscal year 1997.
      --The rolling airframe missile (RAM) complements existing point-
            defense systems, providing unique capability in adverse
            electronic countermeasures and advanced threat environments.
            RAM is a lightweight, low-cost system that uses existing active
            and passive ship sensors to augment antiship missile defense
            firepower. RAM, a NATO-cooperative production program with
            Germany, is in production and has been installed in the LHA
            amphibious assault ships. Installations also are ongoing in
            LHD, LSD 41, and DD 963-class ships, and are planned in CG 47
            through CG 51, CV/CVN, DDG 993 and LPD 17 classes.
      --Phalanx provides a fast-reacting final defensive capability for
            surface ships against low-flying and steep-diving, high-speed
            antiship missiles. The High Order Language Computer upgrade
            will increase computer capacity and provide advanced fire-
            control processing against maneuvering targets. The Phalanx
            Surface Mode, which allows engagement of surface craft and low,
            slow aircraft, will complete testing in fiscal year 1997.
      --The advanced integrated electronic warfare (AIEWS) program was
            accelerated by the CNO on 14 May 1996. Increment 1 of AIEWS is
            now scheduled for fleet introduction in fiscal year 2001, and
            Increment 2 will be fielded by fiscal year 2004. As the
            replacement system for the AN/SLQ-32, AIEWS will use open
            architecture to lower investment costs and improve system
            effectiveness. Increment 1 provides improved human-computer
            interface, emitter processing, and a new receiver package.
            Increment 2 will include an advanced electronic attack
            subsystem and off-board countermeasures.
      --The evolved Sea Sparrow missile (ESSM) is a cooperative effort
            among 13 NATO Sea Sparrow nations to improve the ability of the
            Sea Sparrow missile to counter low-altitude, highly
            maneuverable antiship cruise missiles. The program evolves the
            existing RIM-7P Sea Sparrow missile with development of a new
            rocket motor and ordnance (warhead) upgrade. The ESSM will be
            installed on DDG 51, LHD, LPD 17, and CVN-class ships.
        Common missile development/standard missile.--The Navy continues to
    build on the proven Standard missile family by adding capability to
    counter existing and emerging threats. Two new upgrades currently are
    in production:
      --The SM-2 Block IIIB, approved for full-rate production in fiscal
            year 1996, incorporates a dual-mode seeker to provide the fleet
            improved capability against countermeasures, and also will be
            deployed on Aegis vertical launching system (VLS) cruisers and
            destroyers.
      --The SM-2 Block IV will complement earlier SM-2 medium-range
            variants already on board Aegis VLS cruisers and destroyers.
            The newest variant, the SM-2 Block IVA, will build on the Block
            IV missile to provide increased defense against cruise missiles
            and theater ballistic missiles.
        Trident D-5 missile.--The Department of Defense completed the
    Nuclear Posture Review in September 1994. This comprehensive assessment
    of the nation's long-term requirements for strategic deterrence
    concluded that the optimum force structure for the sea-based leg of the
    strategic triad in a Strategic Arms Reduction Treaty (START) II
    environment would consist of 14 Ohio (SSBN 726)-class submarines, all
    equipped with the Trident II D-5 missile. To meet this requirement,
    four Ohio-class submarines currently equipped with the Trident I C-4
    missile will be upgraded to carry the larger and more capable Trident
    II D-5 missile. In addition, under the terms of the START II treaty,
    the Navy's Ohio-class submarines will assume a dominant position within
    the strategic triad by carrying approximately half of the allowable
    strategic warheads.
        Integrated undersea surveillance system (IUSS).--IUSS is comprised
    of fixed, mobile, and deployable acoustic arrays that provide vital
    tactical cueing to ASW forces. The IUSS is a model for innovation and
    the smart use of technology. Work stations, enhanced signal processing,
    and modern communication technologies enable remote array monitoring,
    which reduces manpower costs and improves efficiency.
        The sound surveillance system (SOSUS) provides deep-water long-
    range detection capability. Consolidation of SOSUS by array
    retermination, remoting, or closure will be complete by fiscal year
    1997. Recent closures include Bermuda, Adak, and Keflavik. All other
    arrays will remain operational.
        The surveillance towed-array sensor system (SURTASS), a prototype
    twin-line array, was tested in a variety of locations around the world,
    with outstanding results. It is far superior to any other shallow-water
    passive towed-array system. SURTASS processing is being transferred to
    the AN/SQQ-89 towed-array sonar system to provide an immediate increase
    in detection capability without the need to modify or procure
    additional wet-end hardware. The minimum fleet requirement of eight
    SURTASS ships is funded through the FYDP.
        The fixed distributed system (FDS) currently is operational and has
    successfully demonstrated the ability to detect, classify, and track
    quiet submarines. The outstanding results achieved to date validate the
    fact that acoustic ASW remains feasible against advanced-capability
    nuclear and diesel-electric submarines. New fiber-optic technologies,
    algorithms, and enhanced signal processing are enabling exploitation of
    weak signals in environments of high background noise and provide
    timely and accurate detection and track data to tactical assets.
        The low-frequency active (LFA) system has detected submarines at
    long ranges. The first LFA ship, TAGOS 23, is under construction. In
    the interim, a leased ship, Cory Chouest, is being used as a fleet
    asset to test and validate LFA technologies. In addition, compact
    acoustic source technologies are under development that will provide a
    50 percent reduction in weight and power requirements. Successful
    maturing of these technologies will allow LFA-type arrays to be
    deployed from existing TAGOS 19-class vessels.
        The advanced deployable system is a theater-deliverable acoustic
    surveillance system that will provide continuous acoustic coverage over
    vast ocean areas for an extended period. This is a theater-surveillance
    asset that will provide unique surveillance information to tactical
    forces. It will be capable of detecting quiet nuclear submarines,
    diesel-electric submarines on the battery, ships exiting or entering
    port, or mine-laying operations. The importance of this portable
    capability will intensify as our surveillance requirements increase,
    owing to the Navy's focus on the littorals, the growing popularity of
    diesel submarines, and the downsizing of our own force.
        The current IUSS program satisfies all military requirements and
    has been designed to accommodate future growth and capability expansion
    affordably, as new technologies appear and mature.
        Unmanned undersea vehicles (UUV).--The Unmanned Undersea Vehicle
    (UUV) program will extend knowledge and control of the undersea
    battlespace through the employment of clandestine off-board sensors.
    Although significant progress is being made with onboard sensors, it is
    clearly preferable to have an off-board sensor to accurately image
    tethered, volume, and bottom mines. Knowledge of the full dimension of
    the mine threat, without exposing reconnaissance platforms, is vital to
    exploiting the tactical benefits of maneuver warfare.
        An initial capability, designated the Near-Term Mine Reconnaissance
    System (NMRS), is a mine-hunting UUV, launched and recovered from a SSN
    688-class submarine's torpedo tube. The UUV, in combination with an
    SSN, represents a long-endurance, clandestine, reconnaissance system
    capable of mapping the undersea environment and providing time-
    sensitive information on mining activities to the theater commander.
    The NMRS will provide an effective and much-needed capability to the
    fleet in fiscal year 1998.
        The Long-Term Mine Reconnaissance System (LMRS) will leverage
    developing technologies and lessons learned from the NMRS. The LMRS
    also will be launched and recovered through a submarine's torpedo tube,
    but it will have enhanced endurance, range, search rate, and total
    search-area coverage.
                Ground weapons programs
        Advanced amphibious assault vehicle (AAAV).--Once fielded, the AAAV
    will provide the Marine Corps a weapon system fully capable of
    implementing ship-to-objective maneuver as an integral part of the
    amphibious triad (AAAV, MV-22, LCAC) supporting operational maneuver
    from the sea. The AAAV, currently in the demonstration/validation
    phase, will allow rapid, high-speed maneuver of Marine infantry units
    as they emerge from amphibious assault ships located well beyond the
    visual horizon. The AAAV will insert forces in a single, seamless
    stroke, maneuvering to exploit weak points in enemy littoral defenses.
    Designed to possess more than three times the water speed of the AAV-
    7A1, it will have mobility equal to or greater than the M1A1 tank, will
    be one of only two nuclear-biological-chemical collective protective
    combat vehicle systems in the U.S. inventory, and will have twice the
    present armor protection. The AAAV is targeted for fielding during
    fiscal year 2006.
        Medium tactical vehicle remanufacturing (MTVR).--The MTVR program
    remanufactures the aging medium fleet of M809/M939 series cargo trucks
    to a capability that meets Marine Corps requirements for added mobility
    and cargo capability. Currently in the engineering and manufacturing
    development phase of the acquisition process, this effort will
    integrate industry-standard truck components on the existing five-ton
    truck. Added mobility is required to keep pace with fast-moving
    maneuver elements on the battlefield, and to rearm and refuel them
    without requiring return to a major road network. The combination of
    mobility and capability enhancements increases allowable cargo weights
    up to 8 tons off-road and 15 tons on-road. Significant improvements in
    maintainability and reliability also are expected, as a result of the
    reduced-shock-and-vibration benefit of the independent suspension. When
    fielded, the MTVR will be the world's most capable cargo truck in its
    class.
        Lightweight 155 mm Towed Howitzer (LW155).--The LW155 is a joint
    program, with the Marine Corps as the lead service, and will provide
    organic artillery fires to Marine air-ground task forces. While
    retaining the same range as our current howitzer, the LW155 will have
    significantly improved mobility because of its reduced weight. This
    will result in increased survivability, responsiveness, and efficiency
    of artillery units. Capable of being transported by the MV-22, the
    LW155 is designed for expeditionary operations requiring light, highly
    mobile artillery, as well as for conventional operations. The program
    is in the engineering and manufacturing development phase, with a
    contract expected to be awarded in the second quarter of fiscal year
    1997.
        Javelin.--Javelin, a soft-launched, medium-range, fire-and-forget
    antiarmor system, is a joint Army and Marine Corps program with
    fielding to begin in fiscal year 1999. It will satisfy an antiarmor
    operational requirement for increased range, improved lethality, and
    gunner survivability. The Javelin consists of a reusable Command
    Launcher Unit and a missile, and can be employed as a stand-alone
    thermal sight. The launch motor allows it to be fired from enclosures
    and bunkers to enhance gunner survivability. Three training systems
    have been developed for basic training and field exercises.
        Predator.--Predator is a unilateral Marine Corps antiarmor program
    with fielding to begin in fiscal year 2000. It will fill the Marine
    Corps requirement for a lightweight, man-portable, disposable, short-
    range weapon, lethal against current and future main battle tanks. The
    missile has a soft-launch rocket motor that allows the weapon to be
    fired from enclosures, and travels in a flyover, shoot-down profile to
    facilitate warhead penetration into the top of the target.
                Aviation weapons programs
        F/A-18E/F Super Hornet.--The F/A-18 Hornet is the cornerstone of
    naval aviation strike warfare. This year's budget request includes
    continued funding for warfighting improvements to our existing F/A-18C/
    D aircraft as well as funding for the procurement of 20 F/A-18E/F
    aircraft. Procurement of these first low-rate initial production
    aircraft will begin the orderly transition from the Navy's F/A-18C/D,
    and in fiscal year 2001 the F-14A, to this improved strike fighter
    aircraft. Building on the proven design of earlier model F/A-18
    aircraft, the F/A-18E/F will have greater range and payload
    flexibility, an increased capability to return to the carrier with
    unexpended ordnance, room for avionics growth, and enhanced
    survivability features. It will increase the capability to conduct
    night strike warfare, close air support, fighter escort, air
    interdiction, and fleet air defense. The aircraft program is on cost,
    on schedule, and 800 pounds under specification weight. Most of the
    strike fighter assets on aircraft carriers after 2008 will be the F/A-
    18 E/F.
        MV-22 Osprey.--The MV-22 remains the Marine Corps' most critical
    acquisition priority. A revolutionary approach to power projection
    operations, the MV-22 tilt-rotor capability provides significant
    operational advantages over helicopters. The MV-22 is strategically
    mobile, allowing it to self-deploy globally, enabling greater
    flexibility in planning. The combination of range, speed, and payload
    nearly triples the depth of the present-day battle space, complicating
    a potential enemy's defensive requirements. The designated replacement
    for the aging CH-46E and CH-53D helicopters, the MV-22 will serve as a
    critical element of operational maneuver from the sea. Funds were
    appropriated for procurement of five MV-22's in fiscal year 1997, with
    an initial operating capability by 2001.
        AV-8B remanufacture.--The remanufacture of the AV-8B Day Attack
    Harrier to the AV-8B Radar/Night Attack Harrier configuration will
    increase the service life and multimission capabilities of this proven
    aircraft in the role of offensive air support while saving 23 percent
    of the costs of a new aircraft. The AV-8B remanufacturing program
    extends the service life of 72 older Harriers by 6,000 hours. It
    greatly increases the Harrier's night, reduced-visibility, and poor-
    weather capabilities for close air support, and also improves the
    aircraft's combat utility and survivability through standardized
    configuration and safety enhancements. Still the only tactical aircraft
    capable of operating from small flight decks at sea or unimproved areas
    on land, the remanufactured AV-8B is capable of delivering all future
    smart weapons--such as the Joint Direct Attack Munitions and the Joint
    Standoff Weapon--in support of ground forces. The first flight was
    conducted successfully in November 1995 and delivery of the first three
    remanufactured aircraft occurred this past year.
        Helicopter master plan.--The Navy Helicopter Master plan provides
    for a modernization of active and reserve helicopter forces, while
    reducing operating costs and infrastructure. This plan reduces eight
    Navy helicopter types (H-1, H-2, H-3, H-46, H-53, H-60B/F/H) to three
    (H-53, CH-60, and SH-60R). Antiship and antisubmarine warfare roles
    will be executed by the SH-60R. The Master Plan stipulates 286 H-60B/F/
    H models will be remanufactured into SH-60R's to extend the airframe
    life while upgrading warfighting capabilities to support increased
    surface ship requirements and improvements. Navy logistics, combat
    search-and-rescue, special operations warfare support, and utility
    missions will be performed by approximately 200 CH-60's. Leveraging on
    their commonality, the H-60 programs will simultaneously reduce costs
    and increase flexibility in meeting the Navy's tactical helicopter
    requirements until 2020.
        UH-1N and AH-1W four-bladed upgrade (4BN/4BW).--The Marine Corps
    4BN/4BW program is a comprehensive upgrade designed to remanufacture
    280 existing AH-1W and UH-1N helicopters with identical dynamic
    components. Included in the upgrade is a newly developed four-bladed
    rotor system, a performance-matched drive train and tail rotor system,
    and common T-700 engines. The 4BW (attack version) also will include a
    new, fully integrated cockpit--designed to reduce pilot workload and
    increase situational awareness--and structural modifications to
    accommodate six weapon stations. The 4BN/4BW program reduces life-cycle
    costs, increases operational effectiveness, resolves existing safety
    deficiencies, and extends the service life of both aircraft until a
    joint replacement aircraft is fielded. The Engineering Manufacturing
    and Development (EMD) contract for the 4BW and 4BN development recently
    was approved. The contract calls for the delivery of two 4BN EMD and
    three 4BW EMD helicopters for ground and flight testing. The
    development phase is scheduled for completion by September 2003.
        F-14 update.--The F-14 Tomcat is now being configured as a potent
    precision strike fighter with incorporation of the Low Altitude
    Navigation and Targeting Infrared for Night (LANTIRN) Targeting System.
    With LANTIRN, the Tomcat now has a deadly accurate autonomous
    designation and targeting capability for delivery of laser-guided
    bombs. Beginning in 1997, all forward-deployed carrier airwings will
    have LANTIRN capability. In addition to LANTIRN, two major flight
    safety improvements for the Tomcat are also underway. The Digital
    Flight Control System (DFCS) has demonstrated significant improvements
    in departure resistance/spin recovery as well as much improved flying
    qualities during shipboard recovery. Installation of the DFCS will
    begin in June 1998. The TF30 Engine Breather Pressure Modification
    incorporates a new sensor in the engine that detects an abnormal
    increase in breather pressure and allows the pilot time to take
    appropriate action to prevent catastrophic engine failure. Installation
    began in November 1996 and will be completed in 1997. With these
    warfighting and safety improvements, the F-14 series strike fighter
    will provide Battle Group Commanders with essential warfighting
    capabilities and additional flexibility until replaced by the F/A-18E/
    F.
        EA-6B Prowler.--This year, the EA-6B Prowler assumed its role as
    the Department of Defense's primary standoff radar jammer. The Prowler
    also supports joint operations by providing electronic surveillance,
    communication jamming capability, and employment of the high-speed
    antiradiation missile. The EA-6B's expanding role in joint operations
    requires 125 aircraft and the reestablishment of five additional
    squadrons in fiscal year 1996 and fiscal year 1997. Navy and Marine
    Corps EA-6B squadrons deploy to U.S. and coalition air bases overseas
    in support of joint requirements for tactical electronic warfare. These
    operations will be conducted in addition to the continuing EA-6B
    operations with Navy carrier air wings and Marine air-ground task
    forces. Emphasis in the EA-6B program is on maintaining aircraft safety
    and inventory levels, achieving a standardized configuration, and
    improving its warfighting capability.
        Joint Strike Fighter (JSF).--The Joint Strike Fighter Program,
    formerly the Joint Advanced Strike Technology Program, will develop and
    field a tri-service family of next-generation strike aircraft, with an
    emphasis on affordability. The family-of-aircraft concept allows a high
    level of commonality while satisfying unique service needs. JSF will
    replace both the AV-8B and the F-18C/D, completing the Marine Corps
    neck-down strategy of an all short-take-off-and-vertical-landing fixed-
    wing force. For the Navy, the JSF will provide a survivable strike
    fighter to complement the F/A-18E/F. A primary objective of the JSF
    Program is the reduction of costs associated with development,
    production, and ownership. The program is accomplishing this by
    facilitating the services' development of fully validated, affordable
    operational requirements, and lowering risk by investing in and
    demonstrating key leveraging technologies and operational concepts. In
    November 1996, designs from two contractors were selected to compete in
    the JSF concept demonstration phase. Transition to engineering and
    manufacturing development begins in 2001. This joint approach to
    development is anticipated to produce significant savings, when
    compared to the costs of separate programs. Additional savings are
    provided by the United Kingdom's participation in the concept
    demonstration phase. Participation by other allied countries is
    anticipated.
        CH-53E Super Stallion.--Capable of lifting 32,000 pounds, the CH-
    53E is the only helicopter in production today that satisfies Marine
    Corps heavy helicopter lift requirements. It is the ship-to-shore prime
    mover for the light armor vehicle, M-198 Howitzer, the HMMWV transport
    vehicle, and most Marine Corps engineering assets. Capable of
    transporting 55 Marines or 24 casualty litters, the Super Stallion has
    a secondary assault support mission to augment the medium-lift
    helicopter fleet. Aerial refuelable, the CH-53E has unlimited range for
    over-the-horizon special operations such as anti-terrorist missions,
    embassy evacuations, and other crisis-response missions. Four CH-53E's,
    funded in the National Guard and Reserve Account in fiscal year 1996
    and fiscal year 1997, will continue to provide needed modernization to
    the Reserve Force's Vietnam era RH-53D fleet.
        P-3C Orion.--The P-3C Sustained Readiness Program and Service Life
    Extension Program will extend the operational service and fatigue life
    of existing airframes to approximately 48 years, thereby delaying the
    requirement for delivery of a follow-on production aircraft until 2015.
    The Antisurface Warfare Improvement Program enhances the aircraft's
    ability to perform both autonomous and joint battle group missions in
    the littorals. Improvements will allow the P-3C to collect, correlate,
    and confirm tactical data and transmit information and imagery to the
    Joint Task Force Commander in near-real time. Both the active and
    reserve P-3C fleets are being converted to a common avionics force
    (Update III) that consolidates maintenance, improves training
    efficiency, reduces long term logistic support costs, and maximizes
    reserve forces participation.
        Air-to-ground weapon programs.--The most significant joint air-to-
    ground weapon development initiatives are the Joint Standoff Weapon
    (JSOW), Joint Direct Attack Munitions (JDAM), and Standoff Land Attack
    Missile Expanded Response (SLAM-ER). JSOW is a family of air-to-ground
    glide weapons designed to attack targets from beyond enemy point
    defenses. JSOW is a Navy-led program and will be capable against a
    broad target set during day, night, and adverse-weather conditions.
    JSOW will replace a variety of weapons in the current inventory. JDAM
    is an Air Force-led program to develop an adverse-weather capability
    for general-purpose bombs through the use of strap-on Global
    Positioning System (GPS) guidance kits. SLAM-ER meets the Navy's
    requirement for a Standoff Outside Area Defense (SOAD) weapon. SLAM-ER
    is an adverse weather, precision-guided weapon that simplifies mission
    planning, increases penetration, and nearly doubles the range of the
    original SLAM. The SLAM-ER PLUS will add autonomous capability and
    Automatic Target Recognition (ATR) to the SLAM-ER and will be
    incorporated into all missiles. Joint Air-to-Surface Standoff Missile
    (JASSM) is the Navy's potential long-term answer to its SOAD
    requirement. JASSM is an Air Force-led program focused on developing an
    autonomous, adverse-weather, precision-guided, SOAD weapon with an ATR
    feature. The Navy also is planning to increase the quantities of laser-
    guided bombs through the Skipper conversion program. This program will
    help alleviate the current shortfall in precision-weapons.
        Air-to-air weapon programs.--The AIM-9X Sidewinder and the AIM-120
    Advanced Medium Range Air-to-Air Missile (AMRAAM) continue to be the
    foremost joint air-to-air weapons programs of the Navy and Marine
    Corps. The Navy-led AIM-9X program upgrades the current missile with an
    advanced guidance control section, a highly maneuverable airframe, and
    signal processors that significantly upgrade its infrared counter-
    countermeasures capabilities. The Air Force-led preplanned product
    improvements to the currently deployed AIM-120 weapon include enhanced
    electronic counter-countermeasures and improved kinematics. The AIM-9X
    and AMRAAM missiles will serve Air Force, Navy, and Marine Corps
    aircraft well into the 21st century.
        Unmanned aerial vehicles (UAV's).--Naval Forces currently are
    employing the Pioneer UAV system in support of a broad array of
    expeditionary operations, such as reconnaissance and intelligence
    support in Bosnia. Pioneer's potential replacement as the tactical UAV
    is ``Outrider.'' It currently is in the advanced concept technical
    demonstration phase of development. The new tactical control system
    will enable broad UAV interoperability and connectivity to the naval
    command, control, computers, communications, and intelligence (C\4\I)
    architecture.
        Advanced tactical airborne reconnaissance system (ATARS).--As the
    Naval aviation's only manned tactical reconnaissance system for naval
    combat aircraft currently under development, the ATARS will provide a
    major increase in timely imagery intelligence information to the
    theater, operational, and tactical commanders. The digital data-link
    capability of the system will allow all levels of command to receive
    time-sensitive imagery simultaneously, providing real-time imagery for
    accurate intelligence preparation of the battlefield and pre-strike and
    post-strike planning and analysis. ATARS is a suite of sensors and
    data-link pods that will be installed in the F/A-18D and associated
    ground stations. When fully operational, ATARS will be joint data-link
    capable and will provide support to all services. Due for delivery in
    fiscal year 1998, ATARS will provide high-resolution, real/near-real
    time, digital imagery, day and night, in all weather conditions--
    through infrared, electro-optical and synthetic aperture radar sensors.
    The imagery will be digitally linked via the Joint Services Imagery
    Processing System and Tactical Exploitation Groups. The F/A-18F will
    field reconnaissance capabilities which will capitalize on ATARS off-
    the-shelf advances.
                Command and control and other programs
        Navy-Marine Corps C\4\ISR.--The naval command, control,
    communication, computer, intelligence, surveillance, and reconnaissance
    (C\4\ISR) vision, called Copernicus . . . Forward, is designed to
    support joint and naval warfighting strategies. It enables the Navy-
    Marine Corps team to expand, adapt, and integrate their C\4\ISR
    capabilities to meet the demands of the new strategic environment,
    emerging operational concepts, and evolving information technologies.
    While this vision provides a general naval approach to the
    implementation of Copernicus . . . Forward, there are, by necessity,
    unique requirements for Navy and Marine Corps application which make it
    useful to address these service-unique features in separate development
    and implementation concepts. Copernicus . . . Forward defines four
    essential functions of C\4\I that are being executed and implemented
    successfully in the fleet: connectivity; common tactical picture;
    sensor-to-shooter; and information warfare. The goal in every case is
    achieving technical and operational interoperability with the joint
    Defense Information Infrastructure Common Operating Environment as
    rapidly as possible. Some of the C\4\I systems now operational within
    the Navy or Marine Corps or under evaluation are highlighted below:
      --Connectivity.--The pipes that carry the information to the
            warfighter, to include:
          Joint maritime communications strategy (JMCOMS) is leveraging
            commercial technology to reduce costs and improve bandwidth
            utilization. JMCOMS consists of three technical thrust areas:
            the Automated Data Network System (ADNS), a secure,
            interoperable, multimedia intelligent network management
            system; the Automated Modular Programmable ``Slice'' Radio, a
            programmable commercial hardware technology used with an
            integrated antenna to reduce topside space and weight that
            covers all frequencies up to 2 GHz; and the Integrated Terminal
            Program (ITP), a multiband satellite communications terminal
            covering the frequencies above 2 GHz. ITP exploits commercial
            technology to reduce costs by using common electronics,
            components, and antenna. Two major programs within JMCOMS are
            the Global Broadcast Service (GBS) and Challenge Athena.
          Global broadcast service (GBS) is a revolutionary advancement in
            joint communications, providing high-speed one-way broadcast,
            video and data service. It provides high data rate service to
            many users simultaneously, using point-to-multipoint protocols.
            GBS becomes operational in February 1998, with the launch of
            the UFO-8 satellite.
          Challenge Athena is a Navy program to provide leased commercial
            wideband satellite communications services to the ships.
            Challenge Athena supports near real-time national imagery
            dissemination for precision targeting, mission planning, and
            battle damage assessment; national intelligence data-base
            connectivity; multiple-line telephone connectivity; video
            teleconferencing, teletraining, and telemedicine; tactical and
            public-affairs imagery dissemination; and logistic support to
            numerous other high-volume data systems.
          Base-level information infrastructure (BLII) provides the Navy
            and Marine Corps sustaining base connectivity to the Defense
            Information Systems Network (DISN). It will modernize shore-
            based switches and cable plants and shipboard LANS to
            facilitate seamless connectivity and information flow.
          Single-channel ground and airborne radio system (SINCGARS) is a
            family of VHF-FM, line-of-sight radios built around a common
            receiver-transmitter. SINCGARS provides the backbone for the
            single-channel radio net that will be used by all Marine Corps
            command-and-control and fire-support systems.
          Automated digital network system (ADNS) provides timely data
            delivery service to or from all data user resources. The
            development of ADNS is based on the incorporation of commercial
            and government off-the-shelf hardware and software. Three
            prototype systems are installed in two surface ships and a
            telecommunications station for testing during fiscal year 1997.
          AN/PSC-5 enhanced manpack UHF terminal (EMUT) is a lightweight,
            Demand Assigned Multiple Access (DAMA), manpack, line-of-sight
            and tactical satellite communications terminal that will serve
            as a primary command-and-control single-channel radio for
            MAGTF's and their elements. Employed down to the battalion
            level, it provides range extension and reliability. It will be
            used to transmit intelligence traffic, interface with SINCGARS
            waveforms, and transmit/receive command-and-control traffic.
            Initial operational capability will be achieved in early fiscal
            year 1998.
        Other Marine Corps C\4\ programs.--Several other important programs
    in which the Marine Corps is an active participant are in the
    engineering, manufacture, and development stage, and will increase
    capabilities in numerous areas. The SHF Tri-Band Advanced Range
    Extension Terminal (STAR-T), the Secure Mobile Anti-jam Reliable
    Tactical Terminal (SMART-T), the Digital Technical Control Facility,
    and the Tactical Data Network System are some of the systems that will
    improve the connectivity and interoperability of our communications
    systems internally as well as externally, and in some cases, greatly
    improve the mobility of our forces.
      --Common tactical picture (CTP).--The knowledge and situational
            awareness that enhances combat identification, force
            coordination, and command and control. Associated programs
            include:
          Global command-and-control system (GCCS) is the single most
            important command-and-control initiative in the joint arena
            today. It is the backbone of the ``C\4\I for the Warrior''
            concept. GCCS is a joint system that has reached its initial
            operating capability, replacing the Worldwide Military Command-
            and-Control System (WWMCCS), and will expand with applications
            across all functional areas. Full replacement of current WWMCCS
            capabilities was completed this year, ensuring a strong force
            deployment planning and execution command-and-control system.
          Joint maritime command information system (JMCIS) is the core
            program of the Navy and Marine Corps' part of the Global
            Command and Control System (GCCS). JMCIS, the first Copernican
            program initiated six years ago, combined numerous programs to
            provide the warfighter a common tactical picture on a common
            work station. JMCIS provides timely, accurate, and complete
            all-source C\4\ISR information management, display, and
            dissemination capability for warfare mission assessment,
            planning, and execution. JMCIS is compliant with the Defense
            Information Infrastructure Common Operating Environment and
            incorporates the MAGTF C\4\I software baseline.
          Advanced combat direction system (ACDS) is a centralized,
            automated command and control system, collecting and
            correlating combat information. It upgrades the Naval Tactical
            Data System (NTDS) for non-Aegis surface warships, aircraft
            carriers, and amphibious ships. A core component of non-Aegis
            combat systems, ACDS provides the capability to identify and
            classify targets as friendly or hostile, prioritize and conduct
            engagements, vector interceptor aircraft to targets, and
            exchange targeting information and engagement orders within the
            battle group and among different service components in the
            joint theater of operations.
          Tactical combat operations (TCO) system is an automated
            capability for processing battlefield information. Achieving
            its initial operating capability in fiscal year 1996 with a
            purchase of 334 units, the TCO System provides the Marines the
            same automated operations system currently used by the Navy.
            This system is built around JMCIS, which brings a major
            increase in interoperability to the services. Currently, the
            Marine expeditionary force and Marine expeditionary unit
            headquarters element have an interim capability, with a full
            operational capability expected at the end of fiscal year 1998.
          SABER provides situational awareness and automatic GPS position
            reporting for tactical mobile units. SABER information is
            injected directly into the JMCIS picture.
      --Sensor-to-shooter.--The process by which connectivity and the
            common tactical picture combine to provide near real-time
            targeting information to the shooter, including:
        --Cooperative engagement capability (CEC).--The increased
                complexity of emerging threats in the air defense arena
                makes it necessary to link geographically dispersed sensors
                of differing capability with all potential firing
                platforms. CEC harnesses the technology, known as sensor
                netting, that makes this possible. With CEC, it appears to
                each shooter's combat system as if every netted sensor is
                that unit's own sensor. Engagement using remotely provided
                track data is possible for the first time. In addition, the
                ability to develop composite tracks means that every
                participating unit has an identical, real-time picture of
                the battle space, as well as identical identification
                information. With the addition of the airborne element of
                CEC in the E-2C Hawkeye, scheduled for fiscal year 1999,
                the reach of CEC will be dramatically increased, and the
                potential for overland engagement of cruise missiles
                greatly advanced. CEC technology continues to mature. In
                January and February 1996, CEC was an integral part of the
                Cruise Missile Defense Advanced Concept Technology
                Demonstration, known as ``Mountain Top,'' in which the Navy
                demonstrated, for the first time, an over-the-horizon
                engagement of a cruise missile through the use of remotely
                located sensors and illuminators on a simulated airborne
                platform. Subsequently, in September 1996, the initial
                operational capability of the first shipborne system was
                attained. Also during fiscal year 1996, the Army and Air
                Force each undertook extensive studies aimed at determining
                the potential application of CEC to their service-unique
                systems.
        --Theater ballistic missile defense (TBMD).--Sea-based TBMD is
                considered essential to protect expeditionary, forward-
                deployed elements of our armed forces and coalition allies,
                including population centers. The Navy Area TBMD System,
                which will field a user operational evaluation system
                capability in fiscal year 1999, is critical to support
                littoral warfare and provides for engagement of theater
                ballistic missiles (TBM's) in the terminal phase of flight.
                It serves to protect the nation's forcible-entry capability
                from a TBM attack. The Navy Theater-Wide TBMD System will
                add ascent and mid-course intercept capability, providing
                defense of the theater of operations. The Navy TBMD will
                be: able to operate independently of constraints; highly
                survivable; rapidly relocatable; self-sustainable; and
                dramatically cost effective, by leveraging existing
                capabilities and engineering bases. Both programs, as
                currently designed, are compliant with the Anti-Ballistic
                Missile Treaty.
        --Marine Corps aviation C\4\ improvements.--Quantum improvements
                continue in systems that support the aviation combat
                element of the MAGTF. Phase One's initial operational
                capability (IOC) of the Advanced Tactical Air Command
                Central (ATACC) occurred in fiscal year 1996, and is the
                integrating link between the aviation element command and
                control (C\2\) and the MAGTF's C\2\. The ATACC provides
                planners and operators with the automated assistance needed
                to effectively supervise, coordinate, and direct the
                execution and planning of all MAGTF tactical operations.
                IOC's also were met during the year for the Improved Direct
                Air Support Central (IDASC) Product Improvement Program
                (PIP) and the Tactical Air Operations Center (TAOC). The
                ATACC provides great enhancements for interoperability with
                the Navy's Joint Maritime Command Information System and
                the Air Force's Contingency Theater Automated Planning
                System, while mobility is considered the key feature in the
                IDASC PIP.
        --Joint tactical information distribution system (JTIDS).--Critical
                to the ability of Navy tactical aircraft, ships, and Marine
                air-command-and-control systems to operate in a joint
                environment, JTIDS is an advanced radio system that
                provides secure, jam-resistant information distribution,
                position location, and identification capabilities in an
                integrated form for tactical military operations. Nineteen
                have been acquired to date, with five more scheduled for
                fiscal year 1997. A prototype system for High Mobility
                Multi-Wheeled Vehicle (HMMWV)-mounted modular JTIDS
                terminal currently is in the engineering and demonstration
                stage. JTIDS will be integrated into aircraft carriers,
                surface warships, and amphibious assault ships and
                submarines, F-14D and E-2C aircraft, the Marine Corps
                Tactical Air Operations Center and Tactical Air Command
                Center. In addition, JTIDS has been identified as the
                preferred link for Theater Ballistic Missile Defense
                programs.
        --Marine Corps fire support C\4\ improvements.--The Fire Support
                Command and Control System (FSC\2\S) is an interim system
                providing semiautomated tactical fire support and technical
                artillery fire-control functions for MAGTF operations. The
                follow-on Advanced Field Artillery Tactical Data System,
                which will completely automate fire support C\2\, is
                scheduled for fielding in fiscal year 1998. The Target
                Location, Designation, and Hand-Off (TLDH) is a man-
                portable tool for fire support observers and controllers to
                locate targets with GPS accuracy, designate them with a
                coded laser as appropriate, and pass them to the
                appropriate fire-support system for resolution. This is a
                key enabling capability, which will maximize the
                effectiveness of supporting fires by accommodating current
                and planned laser-seeking precision-guided munitions. TLDH
                will provide the interface with the Advanced Field
                Artillery Tactical Data System and with digital delivery
                systems on board aircraft, and will use existing and
                planned communication assets for message transmission and
                receipt.
        --Advanced Tomahawk weapon control system (ATWCS).--Is a
                significant upgrade to the current system, and will reduce
                overall reaction time, enhance training capabilities at all
                levels, reduce operator workload, and improve Tomahawk
                strike effectiveness. Improvements will include software,
                hardware, and firmware modifications that will introduce
                new capabilities, such as contingency-strike operations
                planning, embedded training at all levels, and a simplified
                man-machine interface. ATWCS incorporates an open
                architecture to provide for future growth, eliminates
                stand-alone Tomahawk desk-top computers, and enhances
                command and control interoperability.
      --Information warfare (IW).--Actions taken to access or affect
            information and information systems, while defending one's own
            systems. The goal of these activities is to achieve information
            superiority, the degree of dominance in the information domain
            that permits the conduct of operations without effective
            opposition. Programs supporting this objective include:
        --Common high band data link-shipboard terminal (CHBDL-ST).--
                Provides a common data terminal for the receipt of signal
                and intelligence data from remote sensors and the
                transmission of link and sensor control data to airborne
                platforms. CHBDL-ST will interface with shipboard
                processors of the Joint Services Imagery Processing System-
                Navy (JSIPS-N) and the Battle Group Passive Horizon
                Extension System-Surface Terminal (BGPHES-ST). CHBDL-ST
                will process link data from BGPHES or Advanced Tactical
                Airborne Reconnaissance (ATARS) aircraft configured with
                modular interoperability data link terminals.
        --Joint deployable intelligence support system (JDISS).--As a
                segment of JMCIS, JDISS provides common intelligence,
                communication, and office automation applications not only
                for U.S. naval and joint operations, but NATO and coalition
                operations as well. JDISS provides a responsive, secure
                exchange between and among intelligence centers and
                operational commanders, including access to national and
                theater data bases, and imagery. JDISS gives commanders
                what they need, when they need it, by providing ``demand
                pull'' as well as ``smart push'' intelligence, and delivers
                a broad base of training and user support to Fleet
                Commanders and naval components worldwide who operate in
                the joint domain.
        --Intelligence analysis system (IAS).--Is an all-source fusion
                center that is the hub of the Marine air-ground
                intelligence system. Operational testing of the system
                occurred during the year, with an initial operational
                capability expected in fiscal year 1997. It is a completely
                mobile system with multiple analyst work stations, which
                can be configured for the higher commands or down to the
                battalions and squadrons. IAS hosts the Secondary Imagery
                Dissemination System and is able to link with other
                systems, such as Department of Defense Intelligence
                Information Systems.
        --Tactical intelligence information exchange subsystem-phase II
                (TACINTEL II+).--Is a computer-based message communication
                system for automatic receipt and transmission of special
                intelligence (SI) and special compartmented information
                (SCI) messages geared primarily to contact reports and
                other tactically useful information. TACINTEL II+
                implements the Copernicus vision for joint C\4\I
                interoperability using open-architecture standards. The
                full capability will include voice, message, and data
                transfer among SCI-capable ships and aircraft, with
                gateways to shore nodes.
        --MAGTF secondary imagery dissemination system (SIDS).--Currently
                undergoing an Operational Assessment with the 15th and 26th
                Marine Expeditionary Units, the manpack SIDS device
                provides the capability to electronically collect,
                manipulate, transmit, and receive imagery products
                throughout the MAGTF, as well as to adjacent, higher, and
                external commands and other theater commands, and to
                receive secondary national collector's imagery. The MAGTF
                SIDS software is resident in all versions of the
                Intelligence Analysis System. An initial buy of ten
                occurred in fiscal year 1996 with an initial operating
                capability expected in fiscal year 1997.
        --Battle group passive horizon extension system-surface terminal
                (BGPHES-ST).--Extends the battle group's line-of-site radio
                horizon and enhances joint interoperability by controlling
                remote sensors in an aircraft's sensor payload to relay
                radio transmissions to the ship's surface terminal via the
                Common High Bandwidth Data Link (CHBDL). The primary
                aircraft employed for this task is the Navy's ES-3A Viking;
                additionally, BGPHES will be interoperable with the Air
                Force's U-2 reconnaissance aircraft.
        --Marine Corps intelligence programs.--The Marine Corps' research,
                development, and acquisition of tactical intelligence
                systems, as well as aggressive manpower and training
                initiatives, continue to provide MAGTF commanders and their
                staffs with enhanced intelligence support. In 1996, the
                Navy-Marine Intelligence Training Center graduated its
                first class of multidisciplined MAGTF intelligence
                officers. MAGTF intelligence and force-protection
                capabilities will be strengthened with the creation in
                fiscal year 1997 of the Marine Corps' first
                Counterintelligence/Human Intelligence Company, by
                consolidating into one unit the existing Marine
                Expeditionary Force Counterintelligence Team and
                Interrogator-Translator Team personnel and equipment
                assets. Under the joint umbrella, the Marine Corps
                continues to install the Joint Worldwide Intelligence
                Communication System (JWICS) at its major bases and the
                Marine Corps Intelligence Activity, to gain access to the
                national intelligence community.
            Improvements in tactical intelligence capabilities are being
                addressed through research, development, test, and
                evaluation and procurement investment in programs within
                the Joint Military Intelligence Program and Tactical
                Intelligence and Related Activities. The Marine Corps is
                addressing shortfalls in its imagery intelligence
                capabilities. The Joint Services Imagery Processing System
                National Input Segment provides deployed Marine forces with
                national imagery support. In addition, each MEF will
                receive a Tactical Exploitation Group to receive, process,
                and disseminate imagery from F/A-18D ATARS-equipped
                aircraft, and imagery downlinked from UAV's and U-2's, as
                well as other theater and national collectors. The Marine
                Corps also is completing acquisition of a manpacked digital
                camera and secondary imagery dissemination systems, to
                enhance tactical access to imagery and imagery-derived
                products.
            Marine Corps signals intelligence (SIGINT) improvements include
                procurement of the Radio Reconnaissance Equipment Program
                SIGINT Suite-1 and product-improvement upgrades to the
                Mobile Electronic Warfare Support System, the Technical
                Control and Analysis Center, and the Team Portable COMINT
                System. We are also pursuing systems that will help the
                Marine Corps benefit from the latest commercial technology
                and maintain our signal exploitation advantage over
                potential adversaries, in projects such as the Navy's
                Cryptologic Carry-On Program and the Marine Corps/NSA Radio
                Battalion Modernization and Concept Exploration Project.
        --Information warfare (IW) education and training.--In fiscal year
                1999, the Department of the Navy will reassess its
                priorities to further improve Defensive IW readiness, in
                response to the Naval Research Advisory Committee
                recommendations. Education and training are critical to IW
                awareness, and the Navy is the joint lead for IW training.
                IW education and training is conducted at Naval
                Telecommunications Training Center Corry Station, Florida,
                at the Fleet IW Center, and at the Naval Postgraduate
                School.
        Norway air-landed Marine expeditionary brigade (NALMEB).--The
    NALMEB is the Marine Corps' only land-based prepositioned stock and is
    a cost-effective deterrent to assist in the protection of NATO's
    northern flank. Through burden-sharing agreements with Norway (renewed
    this year), the program cost is minimal and the agreement serves as a
    tangible reaffirmation of U.S. commitment to NATO and to our Norwegian
    allies.
        Asset tracking logistics and supply system (ATLASS).--ATLASS is the
    Marine Corps operational and retail level supply, maintenance, and
    material readiness system and is interoperable with joint systems.
    ATLASS provides comprehensive connectivity to higher, adjacent, and
    supporting headquarters. This improves asset visibility and logistics
    status for commanders. The development of ATLASS included functional
    and technical integration of Marine Corps ground maintenance and supply
    systems with the Navy maintenance and supply systems under the Naval
    Tactical Command Support System (NTCSS) umbrella. Subsequent ATLASS
    initiatives will continue on a migratory path with NTCSS, further
    standardizing Navy-Marine Corps business processes and resulting in
    greater levels of interoperability.
        Nonlethal weapons.--On 22 March 1996, the Secretary of Defense
    designated the Marine Corps as the executive agent for the Nonlethal
    Weapons (NLW) program. Since that date, the Marine Corps has
    established an integrated product team to develop the framework for a
    NLW program that will ensure unity of effort among the services and
    enhance the timeliness of fielding NLW systems to users. To this end,
    the Marine Corps developed a mutually supportable memorandum of
    agreement, which addresses the overall conduct of the NLW efforts and
    codifies responsibilities for NLW management cells, to include: a NLW
    Directorate, a Joint Concepts and Requirements Group (JCRG), and a
    Joint Acquisition Group (JAG). The Commandant's Warfighting Laboratory
    (CWL) continues to coordinate NLW testing within the Sea Dragon
    Advanced Technology Concept Demonstration, to identify areas of
    applicability. As a result of the unified effort of all participants,
    and the coordination of the JCRG, JAG, and CWL, a funding profile has
    been established to support NLW efforts in the out years.
        Nuclear, biological, and chemical (NBC) defense programs.--Numerous
    enhancements are being pursued that will increase the effectiveness for
    Marines to operate in an NBC environment. Some of these are: Light NBC
    Reconnaissance System (LNBCRS); Joint Service Lightweight Integrated
    Suit Technology; Small Unit Biological Detector; and Joint Warning and
    Information System.
        These programs, in concert with the latest standup of the Chemical-
    Biological Incident Response Force (CBIRF), highlight the importance
    the Marine Corps is placing on the future NBC threat to our forces.
                                   conclusion
        The ultimate value of any organization lies in its ability to
    perform when required. In 1996, the Navy-Marine Corps team responded
    successfully around the globe and across a full range of employment--
    from peacetime presence, through humanitarian assistance, to crisis
    response and combat. On any given day, approximately 30 percent of the
    Navy and Marine Corps' operating forces--more than 50,000 men and women
    and 100 ships--are deployed worldwide, with nearly half of our ships
    underway for training or directly supporting our national security
    goals. For example, the bold movement of carriers Nimitz (CVN 68) and
    Independence (CV 62) into the South China Sea during March 1996
    provided the appropriate level of national resolve to contain a crisis
    between China and Taiwan. Simultaneously, George Washington (CVN 73)
    surged from the Mediterranean Sea into the Indian Ocean to maintain
    vigilance in the volatile Persian Gulf region. In the Eastern Pacific,
    Carl Vinson (CVN 70), completing final training exercises in
    preparation for deployment, was ready to sail on a moment's notice had
    the Taiwan Strait crisis continued to escalate. In April, the Guam (LPH
    9) amphibious ready group and 22d Marine expeditionary unit rapidly
    repositioned from the Mediterranean Sea on short notice to provide
    embassy protection and coordinate evacuation operations as the joint
    task force commander in two separate West African countries. In
    September, forward-deployed surface ships and a submarine were called
    upon to attack targets with cruise missiles in a coordinated response
    to Iraqi aggression. Throughout the year, naval forces provided vital
    support for U.N. peacekeeping efforts in Bosnia and counterdrug
    operations in the Caribbean and Eastern Pacific. Within the continental
    United States, our Navy explosive ordnance detection teams and Marine
    Corps Chemical-Biological Incident Response Force supported special
    requirements of the 1996 Atlanta Summer Olympic Games. Likewise,
    Marines immediately deployed manpower and equipment to fight forest
    fires in California, and the Navy supplied the core resources to
    conduct the recovery operation of TWA Flight 800 off Long Island, New
    York. As in past years, the Navy-Marine Corps team, with its inherent
    mobility, firepower, flexibility and self-contained sustainability,
    showed its ability to respond successfully to a diverse range of
    missions.
        The Department of the Navy has charted a course for the future
    which combines the finest Sailors and Marines in the world with the
    proper tools and training to execute our National Security Strategy and
    National Military Strategy. Because of our continuing emphasis on
    people, readiness, efficiency, and technology, the Navy-Marine Corps
    team is on-station, on-call, and provides enduring impact . . . From
    the Sea: today, tomorrow, and into the 21st century.

        Senator Stevens. Thank you very much, Mr. Secretary.
        Admiral, do you have an opening statement?

                       opening remarks of Admiral Johnson

        Admiral Johnson. Just a few remarks if I could. Mr.
    Chairman, Senator Inouye, members of the subcommittee:
        I, too, appreciate the opportunity to appear before you
    today in my maiden visit. I would just underscore Secretary
    Dalton's remarks with three brief points. First, as he
    described, the Navy is, in fact, answering all bells and I
    believe we are doing that as well as we have ever done.
        I can base that on lots of data, lots of things, but I base
    it mostly on my personal assessment. In the 8 months I have
    served as CNO, I have spent a great deal of that time out
    around the world with the fleet, seeing firsthand how they are
    doing. I, like you, have found them to be very much
    operationally focused. They are also very much upholding their
    reputation as the premier maritime fighting force in the world.
    I also find them to be intensely proud of what they are doing.
        The support that this subcommittee has given them is
    fundamental to all of those things I just described, and on
    their behalf I would like to thank this subcommittee.
        Second, our budget submission. I believe we have submitted
    a good and a reasonable budget. It will sustain our operational
    primacy. It will provide for improved quality of life for our
    sailors and their families, and it will allow us to
    recapitalize the Navy for the next century at what I would call
    a prudent pace.
        I do not underestimate for a moment the magnitude of the
    challenge that lies ahead in balancing the needs of today with
    the obligation to build the Navy of tomorrow. But I am
    committed to you and to the Navy to see that we indeed strike
    that proper balance, and the help of this committee will be
    most important in that endeavor.
        Finally, I would like to tell you how strongly I feel about
    the bond that exists between Gen. Chuck Krulak and myself and,
    more importantly, among the Navy-Marine Corps team that the two
    of us proudly represent. Because of the strength of our
    personal and our professional relationship, we really are able
    to work the tough ones together, and in so doing I believe we
    better serve the Secretary, our naval service, and the country.
        I thank the Chair for your consideration and I look forward
    to your questions.
        Senator Stevens. Thank you, Admiral.
        General.

                       opening remarks of General Krulak

        General Krulak. Sir, I will be very brief, but I would be
    remiss if I did not thank the committee for their support in
    three specific areas. The first one is you supported my young
    marines last year when you plused up by about $27 million the
    request for initial equipment. That got them Goretex rain gear,
    boots, and body armor. I can tell you, and you probably saw it,
    you go out there and $27 million made more of an impact than
    many of the things that are the big ticket items to those young
    troops in the trenches. So, thank you very much for that, sir.
        Along the same line, the support for the big ticket items,
    what we call our leap-ahead technology, the AAAV and the V-22,
    and we thank you so much for that continued support.
        Then one on a very personal note, your support for our
    warfighting laboratory. We promised you that we would give you
    results, and I think we have certainly kept that promise. There
    are two areas that I would like to highlight briefly. The first
    one is the chemical-biological incident response force, the
    Nation's only consequence management capability. We did not
    have that. You supported our efforts in that area and, as you
    know, we stood that unit up.
        It went to the Olympics, it went to the inauguration. We
    are now working hand in glove with the U.S. Air Force to
    improve its mobility around the country. They have two 141
    aircraft basically on alert at all times in order to support
    this chemical-biological capability for the Nation. Without
    your support, we would have never been there.
        The second is the Sea Dragon warfighting experiments. An
    example of one of the things that came out of that experiment
    was, we went off the shelf, got a small drone called the X
    drone, modified it by putting TV cameras in the nose of it, and
    flew it out in our latest experiment called Hunter Warrior on
    the west coast. It provided to the small unit leader, the
    battalion, and regimental commander a capability to literally
    see the battlefield over the next couple of hills.
        That capability has been shared with the Army. They are now
    using it in some of their experiments that they are conducting
    on the west coast. Again, none of that would have been possible
    without your support. So we thank you so much.
        With that, I am prepared to answer questions, sir.
        Senator Stevens. Thank you very much.
        Mr. Secretary, Admiral, General, we have a full house here
    this morning and I know well enough to keep my questions short
    so they can participate here. Let me ask you to help cooperate
    with us as we limit each member to 10 minutes during this time,
    to see if we can get through in the period that is available to
    us.
        My opening comment would be that the trip we have just come
    back from shows the great facility of having really capable
    CINC's, such as Admiral Prueher and the Chief of the Navy in
    the Pacific, Archie Clemins. Those people are doing a
    magnificent job for our country in the Pacific, not just in
    running their particular organizations, but as really being
    outreach people into the Russian far east and into the areas
    that we visited beyond that.
        But I will tell you, we want to talk to you a little bit
    further about what we might do to help them cooperate with the
    Russian navy in terms of the disposal of the nuclear
    powerplants that will come off of the submarines to be
    decommissioned there from the Soviet navy. That is a subject
    for later consideration and we will visit with you on that.

                        multiyear Procurement authority

        Let me first start off the questions, though, Mr.
    Secretary. We understand you intend to ask us to modify the
    multiyear procurement authority we have already given you for
    the four submarines, the new attack submarines, and I want to
    ask you, how will that be different from the traditional
    multiyear authority we have given you in the past?
        Mr. Dalton. Mr. Chairman, after last year's congressional
    decision with respect to our submarine program, which called
    for competition, the GAO did a study that showed that the cost
    of that program would exceed $3 billion more than the original
    proposal that we made to the Congress.
        About that time, Newport News and Electric Boat were
    working together on a teaming approach on the LSV and so we
    approached them with the idea of considering teaming for the
    new attack submarine. They found and we have found in working
    with them that we could save about $500 million over the course
    of the FYDP in this approach, and thought that it made sense to
    pursue it based on that.
        It meets the requirements of the Joint Chiefs of Staff by
    having 10 to 12 submarines that meet Seawolf stealth quietness
    characteristics. It maintains the industrial base of those two
    important shipyards, and it is a cost-effective way to produce
    quality submarines with great capability.
        It also gave us the opportunity to afford the whole
    shipbuilding plan that we have before you in this year's
    program. Last year we did not have the CVN-77 fully funded. In
    this year's program we do. We also have the program that
    includes the multiyear buy for the DDG's and the LPD-17, and it
    gave us the opportunity to fit in everything.
        But specifically with respect to teaming, what it does
    gives us the opportunity to have one learning curve instead of
    two at the two different shipyards. This is possible because
    one shipbuilder will in most cases build the same modules for
    each submarine in a successive fashion and one shipyard will be
    the expert in the bows, if you will, and the other will be the
    expert in engine rooms, and they will work together in teaming
    and cooperation and have the benefits of the expertise of both
    yards.
        It will also allow us to eliminate the development and
    maintenance of two independent design and construction data
    bases to support the construction activity. We think the
    construction efforts will be efficiently focused on exploiting
    the strengths and the experience of both of these shipyards.
        So it's a combination of meeting the requirements, of
    saving taxpayer money, and getting the ships built in a cost-
    effective capable manner.
        Senator Stevens. Admiral, is it going to be cost-plus or
    fixed contract price?
        Admiral Johnson. I believe, sir, that it is fixed contract
    price. Mr. Secretary?
        Mr. Dalton. Yes.
        Admiral Johnson. That is correct, sir.
        If I could just add one point to what the Secretary told
    you, the key from the requirements standpoint is that it will
    help us meet the requirements for the overall ship construction
    plan in a way that, quite frankly, I could not see my way
    through with the competition. The money we save through this
    teaming arrangement enables the entire ship construction plan
    to happen, and that is very important to us, sir.
        [The information follows:]

        The proposed procurement process for the first four New
    Attack Submarines (NSSN) will incorporate the use of a cost-
    plus incentive fee contract.

                                      V-22

        Senator Stevens. Thank you.
        General, one of my great interests has been the V-22, and
    we saw that as one of the first real innovative changes in
    aviation technology available to the military and, if it proves
    out, one that is really going to have staggering impact upon
    our national economy.
        We gave you advance procurement funds to buy 12 MV-22's for
    1998. But the budget before us now only covers five. We had the
    advance procurement for 12. It only covers five. Now, I know a
    lot of things happen after you make up your shopping list and
    before you get to the grocery store. What happened to my other
    seven MV-22's?
        General Krulak. Sir, they did not meet the cut on the top
    line. We were unable to fund them. There is no question that
    that aircraft in my opinion is critical, not just to the Corps
    but to the Nation. As an example, we just flew the first
    engineering, manufacturing, and development [EMD] aircraft. It
    flew from Dallas-Fort Worth Airport to Patuxent River in 4
    hours and 24 minutes. That is with a mandatory stop halfway,
    shutting the engines down, refueling it, turning the engines
    back on, and flying the rest of the way.
        To give you a comparative, if a national airline jet flew
    from Dallas-Fort Worth to Baltimore-Washington International,
    it takes 3 hours and 5 minutes. This V-22 made almost the
    identical trip in 4 hours and 24 minutes with a stop. This is a
    tremendous capability.
        We would love to have it. We just did not have the dollars,
    sir.
        Senator Stevens. A lot of my young friends went into the
    Marine Corps and were on ships and they then went onto beaches
    in very small craft, and I know how many of them did not come
    back. I view the V-22 as being the vehicle that would take the
    marines over the beach and put them behind the people that were
    on the beach and would save lives before the whole thing was
    over with, God forbid we have to do it again.
        I consider it to be the No. 1 priority. I notice you made
    it one of the top priorities for you. Is it still one of the
    top priorities?
        General Krulak. It is the No. 1 aviation priority for the
    Marine Corps, without a doubt.
        Senator Stevens. Well, I have some other questions,
    gentlemen. But I prefer to let these members ask them, and I
    will probably submit many of mine to you.
        Senator Gregg. We follow the early bird rule. That gets
    people here. Senator Gregg, you are first.
        Senator Gregg. I would be happy to have Senator Inouye go.
        Senator Stevens. Pardon me.
        Senator Gregg. He is the ranking member, and then I can go
    after Senator Inouye.
        Senator Stevens. Well, as a courtesy to our friend I am
    glad you would do that. But he was not one of the early birds
    this morning. [Laughter.]

                                Recruiting goals

        Senator Inouye. Mr. Secretary, there has been much
    publicity about the difficulty the services are having in
    meeting their recruiting goals. For example, the high school
    pool continues to decline. The propensity to enlist level is at
    an all-time low. Are you preparing to lower your acceptance
    standards to include category IV's?
        Mr. Dalton. No, sir, we are not, Senator Inouye. This is an
    issue that was raised, frankly, in 1994 when we were having a
    very difficult year with recruiting. Frankly, I had a
    recommendation that we lower the standards. There was a study
    done by the Bureau of Naval Personnel that, based on the
    criteria we had, we were not going to be able to meet our goals
    without lowering the standard.
        But I did not accept that. I sent them back and said: Look,
    come back and tell me what you need in order to meet our goals
    without lowering our standards. And we asked this body for
    additional funds for advertising, and you were supportive in
    doing that. We have an excellent advertising campaign today,
    including emphasizing our core values of honor, courage, and
    commitment.
        But we also did some innovative things. For example, I
    wrote every high school principal in the country twice that
    year and the following year, making them aware of, for their
    career counselors and people that advise young people on their
    future careers, about the opportunities that exist in the Navy
    and the Marine Corps.
        We asked the Reserves, gave the Reserves some incentives to
    assist our recruiters. We incentivized our Back to School
    Program where flag and general officers, Presidential
    appointees, and senior executive service personnel in the Navy
    Department went back to their high schools and talked to people
    from schools from which they had come to let them know of what
    their career opportunities had been and how they had progressed
    in our service by joining the Navy and Marine Corps upon
    finishing their education.
        We also have visited recruiting stations on a regular
    basis. When we are out in the field, we go by recruiting
    stations. I was just at the fourth Marine Corps recruiting
    district 2 weeks ago to talk with them and encourage the people
    that are doing this very tough job.
        But it is a tough challenge. The kids today, unlike what
    many of us experienced, do not have parents or uncles or
    cousins who are in the military and as a result their
    propensity to enlist, as you pointed out, is low. We have a big
    job to accomplish.
        But we are meeting our goals. We have not lowered our
    standards. We have no intention to lower our standards. We are
    going to do what it takes to continue to get the people, young
    men and women, to come into the service that we need in order
    to man the required force levels in the Navy and the Marine
    Corps.
        The Chief of Naval Operations and the Commandant have done
    a fine job in showing strong leadership from the uniformed
    military with respect to this, and this is something that we
    watch very closely. We really, I think, have done a good job
    and I am pleased with where we are. But we have worked it
    really hard and we are meeting our goals.

                               Sexual harassment

        Senator Inouye. Mr. Secretary, recent publicity suggests
    that you are having problems integrating women in your
    services. What steps have you taken to educate and train your
    sailors regarding sexual harassment?
        Mr. Dalton. Senator Inouye, we had the benefit of an early
    wakeup call, if you will, with respect to this issue. We
    recognized that we had a problem when, 6 years ago, we had an
    event where people were walking around wearing tee shirts that
    said ``Women are Property'' and that was accepted. We knew we
    had a problem.
        We recognized it and we attacked it, and I think that we
    recognized that there was a problem in our culture and we have
    gone full-bore to address it. We have set up a Standing
    Committee on Military and Civilian Women in the Department of
    the Navy. That was established in late 1992. We set up
    prevention training, which involved training sailors and
    marines to prevent sexual harassment from the day they come
    into the service.
        Second, we have annual training, so that everyone is
    trained with respect to this issue on a regular basis. We came
    out with a booklet, an informal resolution, the red light,
    yellow light, green light type of thing, that was considered
    somewhat of a joke by some when it came out, but now we have
    seen that it really has made a difference in terms of what is
    acceptable and what is unacceptable with respect to behavior.
        We have commanders' handbooks that make how the command
    deals with this issue clearly understood by commands throughout
    the Navy and Marine Corps. We also set up a Department of the
    Navy equal opportunity-sexual harassment advice line or hot
    line, and that line has had over 3,000 calls since we have set
    it up. Sometimes people are just asking for advice, sometimes
    people asking what to do either as a victim or in command in
    terms of the proper way to deal with this issue.
        We have also set up victim assistance programs in both the
    Navy and Marine Corps. The Navy's is called the sexual assault
    victim intervention, or the SAVI program. In the Marine Corps
    it's the Family Advocacy Program. These programs provide places
    for victims to go to get advice on how to deal with a
    complaint.
        We also realized that many of these problems were somewhat
    related to alcohol. We found that over 80 percent of the
    problems we were having somehow involved alcohol abuse. So we
    emphasized our Right Spirit Program for the Navy and Semper Fit
    in the Marine Corps. We have had positive results from these
    programs.
        There is a DOD survey that is done on this issue every 2
    years, and we have seen from that survey that we have indeed
    made progress. In 1991, 44 percent of the enlisted women
    personnel in the Navy complained of having experienced sexual
    harassment. In 1993 that number was down to 35 percent. In the
    last survey, in 1995, it was down to 29 percent. For officers
    it went from 26 percent in 1991 to 19 percent in 1995.
        Now, am I satisfied with 29 percent and 19 percent? No; I
    am not. But I am pleased with the trend and the fact that we
    are indeed making headway in this regard.
        When the problem occurred at Aberdeen, rather than relying
    on surveys, we sent focus groups into the field in both the
    Navy and Marine Corps to have people sit down and talk with our
    sailors and marines in informal settings and find out from them
    exactly how this program was working. I was gratified by the
    results. Over 85 percent of the people that were surveyed in
    these focus groups showed that their commands do, in fact, take
    these complaints seriously and when a complaint is filed, it
    gets handled by the chain of command in an effective way.
        I think the key is to make sure the word gets out. The key
    is that when there is improper behavior that the discipline is
    appropriate, effective, expeditious, and fair. The key thing is
    for the word to get out that we just simply have no room in the
    Navy Department for anybody that treats their shipmates with
    anything less than dignity and respect.
        In the sixties we had a major problem with race riots
    aboard ships. Today I think we are a model for equal
    opportunity in society. In the late seventies and early
    eighties we had major drug problems. On some commands more than
    50 percent of our people tested positive with drugs. Today we
    have essentially a drug-free Department of the Navy, because
    people know the standard. If they get tested positively they
    are going to be disciplined appropriately.
        Finally, our goal is to have that same success by having
    men and women work together professionally in the Department of
    the Navy, and I think we are on the right track. I feel good
    about the success that we have enjoyed.
        Senator Inouye. Thank you.
        Do I have time?
        Senator Stevens. Take mine.
        Senator Inouye. Admiral.
        Admiral Johnson. Yes, sir.

                                  Health care

        Senator Inouye. Whenever I visit the men and women of your
    service, in the question period the first question is always on
    health care. They are all concerned about health needs of their
    dependents, for example. And I note in the budget that in the
    budget that in the last 2 years you have reduced your civilian
    medical work force by 1,000. Will you be able to provide this
    type of support for your personnel?
        Admiral Johnson. Senator Inouye, I share your concern. My
    answer to you today is yes. I would caveat that by saying that,
    in my opinion, the TRICARE system being implemented right now
    will be a good system when we get through full implementation.
    We are not there yet. I believe--and I speak for myself--we
    could have done a better job educating the force as to exactly
    what TRICARE means to the members and their families.
        We are hard at work right now to reinvigorate that process
    to make sure that we demystify TRICARE. We will be very
    supportive of our sailors and their families. But we are in a
    period of transition now and I get the exact same resonance
    when I go out and talk to the sailors.
        In fact, I met with the Navy Surgeon General the day before
    yesterday on that very subject, how to do a better job of
    articulating exactly what it means, what the options are, and
    how it relates to them and their families. We are very much
    committed to doing that, sir.
        Senator Inouye. I thank you, sir.
        Mr. Chairman, I have many other questions. I have several
    questions for General Krulak on the V-22 Osprey and also on
    recruiting. If I may, I would like to submit them.
        Senator Stevens. Yes, sir.
        Senator Gregg.

                                Industrial base

        Senator Gregg. Thank you, Mr. Chairman. I would like to
    join with yourself and the ranking member in congratulating the
    Navy and the marines, and specifically the Secretary of the
    Navy, who I think has done a superb job of managing the
    Department and who has brought it continued success and
    respect, as it deserves.
        Mr. Secretary, I was wondering if we could go back to the
    question which the chairman talked about, which was industrial
    base. This is a bit of a parochial question, which you might
    expect. But I am interested in knowing what your thoughts are
    on the Government shipyards, specifically as they relate to
    Portsmouth as you look out into the future, and how you
    expect--if you intend to maintain these shipyards, how you
    expect to do that and keep them modern and keep them
    participants in a strong Navy.
        Mr. Dalton. Senator, we monitor the workloads of the
    shipyards, and the Portsmouth shipyard has done a fine job with
    the overhauls that it has done on the 688's. We are monitoring
    those workloads. When there have been needs to downsize due to
    the workload, we have tried to emphasize voluntary programs and
    avoided RIF's to the maximum extent possible and will continue
    to do that.
        But there is a workload issue with respect to the shipyards
    and we are certainly monitoring that, and the outlook for
    Portsmouth is positive in that that shipyard is doing a fine
    job on the work we have assigned to them and we anticipate that
    will certainly continue.
        Senator Gregg. Do you see Government shipyards as being an
    integral part of the Navy structure as you look out into the
    future?
        Mr. Dalton. Yes, sir, I certainly do. We have come down
    significantly in the number of shipyards, Government shipyards
    that we have. We certainly anticipate we will continue to have
    the need for that work in the future.

                             Antiterrorism activity

        Senator Gregg. I was wondering in the area of antiterrorism
    activity, can you give me a sense of how much money you are
    spending on antiterrorism activity? First, how much money is
    being spent, how it is being structured, and the information
    which you are evolving, what sort of sharing you do with
    nonmilitary agencies such as the FBI and the CIA and the State
    Department as you anticipate issues, and what type of sharing
    you get back from the FBI, the CIA, and the State Department as
    they see issues that are coming at you, and whether there is a
    structured way of approaching this or whether this is done sort
    of on an issue by issue event.
        Mr. Dalton. Senator, I will be glad to respond for the
    record in terms of the dollar amount. I do not remember the
    figures.
        [The information follows:]

        The Department of the Navy's fiscal year 1998 request
    includes $873.2 million for combating terrorism (which includes
    Force Protection). The appropriation breakout of this funding
    is as follows:

                            [In millions of dollars]

                                                                 Fiscal year
                                                                        1998

    Military Personnel, Navy.......................................... 257.6
    Reserve Personnel, Navy...........................................  11.5
    Operations and Maintenance, Navy.................................. 270.1
    Operations and Maintenance, Navy Reserve..........................   6.0
    Research, Development, Test and Evaluation, Navy..................   3.8
    Military Construction, Navy.......................................  25.0
    Military Personnel, Marine Corps.................................. 290.5
    Reserve Personnel, Marine Corps...................................    .2
    Operations and Maintenance, Marine Corps..........................   8.5
                            -----------------------------------------------------------------
                            ________________________________________________
          Total....................................................... 873.2

        Mr. Dalton. But I know that this is an area of increasing
    concern for us. In this past year we have set up the CBIRF, the
    chemical-biological incident response force, in the Marine
    Corps with the help of this committee. As the Commandant
    referred in his remarks, that was used at the Olympics, it was
    used at the inauguration. I have met with the Director of the
    FBI and have had conversations with representatives of the CIA
    and the State Department.
        I think the exchange of information is positive. But this
    is an area of continued concern and increasing concern because
    of the type of things that we all know we have experienced,
    both domestically and abroad just in the past year. So we are
    going to have to devote more attention to this issue and have
    increased dialog with the other agencies that you mentioned.
        Senator Gregg. Is there any formal meeting process that
    goes on that involves senior Navy personnel with the FBI, with
    the CIA--well, probably the CIA I am sure there is, but with
    the FBI, with the State Department, that is on a regular basis,
    and the purpose of which is to exchange anticipated--
    information about anticipation of events versus events which
    have already occurred?
        Mr. Dalton. I know that is done at the OSD level, and the
    Commandant has a point he would like to make with respect to
    that.
        General Krulak. Yes, sir, it is done at the OSD level. We
    on a regular basis, meet with representatives from FEMA and the
    FBI on this particular issue. We are in the process of trying
    to put together a memorandum of understanding that would
    establish what I call a JIATF. Instead of your normal joint
    task force, this would be a joint inter-agency task force that
    looks specifically at things like terrorism, counterterrorism,
    and the CBIRF.
        The discussions we have had with the FBI would be that
    probably the headquarters of that JIATF would be down at
    Quantico, collocated with their school system and our Combat
    Development Command. We are getting good support from the
    Department of Defense in working this very issue, because we
    believe that this whole environment is not going to get better,
    it is going to get worse, and the better we are at exchanging
    information and, more importantly, putting together
    headquarters that can go out and attack the problem, the better
    off we are going to be.
        Senator Gregg. This chemical-biological incident team,
    which is obviously a major step forward, I congratulate the
    marines and the Department for organizing it. To what extent is
    that structured to anticipate threat, or is it simply
    structured for the purpose of responding to an incident?
        General Krulak. It is a consequence management capability.
    Hopefully, we will operate on the intelligence system, which we
    are, in fact, tied into. Its No. 1 capability is it is the only
    organization that can take a victim and turn that victim into a
    patient, and that is where its strength comes from.
        So it would--hopefully, if something happened in a New York
    subway, we would know about it, and another unit would go in
    and make sure that the incident did not take place. But if that
    incident took place, this response force would literally be
    able to go in there with the medical capability to turn the
    victim into a patient.

                            Depot maintenance funds

        Senator Gregg. Just to get back on the issue of what the
    Navy's spending, specifically on the depot maintenance funds,
    94 percent of the requirement for 1997, but it is projected it
    will be 88 percent in 1998 and 91 percent in 1999 for the
    active force requirement. What is the effect on readiness of
    this reduction?
        Mr. Dalton. Senator, we have a backlog right now of
    aircraft which we need to work down. We plan to work it down. I
    know the CNO has done some work on it. Let me ask him to talk
    about depot maintenance for a minute.
        Admiral Johnson. With respect to ship and aircraft
    maintenance, Senator Gregg, in terms of the percentage of
    funding that is allocated to that, I am the new guy in town, so
    I asked a similar question as to why we fund ourselves at a
    higher percentage in the execution years than we do in the out-
    years.
        I will tell you that right now inside the Navy we are
    relooking at that to see if it makes more sense to fund to a
    higher profile all the way out. People who know the system
    better than I say that that may not be the answer. But I take
    the point seriously.
        What we are doing right now, though, is we are looking on
    the ship maintenance side at a plan in execution for fiscal
    year 1997 that by fully loading the capacity at our public
    yards and reconfiguring what we put into our private yards,
    will allow us to essentially eliminate the ship maintenance
    backlog for fiscal year 1997. This was not the picture that we
    were looking at even a few months ago. So that is a giant step
    forward.
        We will do the same thing next year. In fact, it is already
    in work with Adm. Archie Clemins and the other fleet commanders
    to deal with that in fiscal year 1998. With respect to the
    aircraft depot maintenance piece, Secretary Dalton mentioned
    that we have a backlog measured in numbers of airframes and
    numbers of engines. We are not convinced today that that metric
    is the right one. So we are looking at those backlogs in terms
    of readiness, rather than counting airframes. And we are going
    to put our focus into specific aircraft type, model, series
    that will allow us to maintain a higher readiness across the
    force.
        What does that mean in other terms? It means that we are
    going to put an investment into the aircraft depot maintenance
    that will bring overall readiness to a higher level, and then
    we will see what the airframe count is after that. It will be
    less than it is right now. I think it will probably end up
    being less than 100 in terms of backlog airframes.
        Then, quite frankly, we are going to look at that backlog
    and see if there is a message there in terms of the number of
    aircraft we are carrying in our inventory. So a long, somewhat
    convoluted answer, but we are well up on the problem, I think.
        Senator Gregg. Thank you. I appreciate it.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you very much.
        Senator Bond.
        Senator Bond. Thank you, Mr. Chairman. And as I said, I
    will join with you in welcoming the Secretary, the Admiral, and
    the General.

                                   F/A-18E/F

        I was most interested to hear the Secretary's comments on
    the Super Hornet. I thought, Admiral Johnson, I would ask you
    to describe from an operator's viewpoint why the E/F version of
    the F/A-18 Hornet seems to fulfill your needs. How do you view
    it from the operational standpoint?
        Admiral Johnson. Well, sir, I view it--and I say this very
    sincerely--I view it as the cornerstone to the future of naval
    aviation. By the middle of the second decade of the next
    century, I see our aircraft carrier flight decks filled with F/
    18-E/F's and Joint Strike Fighters.
        As Secretary Dalton mentioned, the program is doing
    extremely well. It is a model of acquisition reform. It is also
    a model in terms of going to school on a system that we are
    very pleased with, and that is the F-18A through D, applying
    the lessons that we learned there in a very positive way and
    putting that into a new system.
        That airplane looks, as you well know, like a straight-
    stick Hornet, but it is a very different airplane. I flew it
    1\1/2\ weeks ago. I spent a lot of time with the test pilots
    and the people who are working the systems. It is a bigger
    airplane with a smaller radar cross-section. It brings us great
    combat enhancement in terms of radius of action.
        Also, we talk about the range a lot, but the other thing
    that I like to mention is the endurance piece of it, because
    endurance to me conveys being able to support troops ashore,
    staying on top of troops ashore. So both of those are
    significant. Nominally, it is a 40-percent increase in the
    range of the airplane.
        You know about the growth capability in the airplane. The
    C/D for us has 0.2 cubic feet of volume growth available to it.
    This airplane has over 17 cubic feet. The C/D grew at a rate of
    1 pound every 3 days over the extent of the program. So that
    growth is significant. The payload flexibility with two more
    stations is significant, and the carrier bringback, which is
    very important to us, is in the neighborhood of 3,500 pounds of
    carrier bringback.
        So the survivability--it is a balanced, integrated approach
    to survivability, and the description I give is one that has
    that centered right in the middle of what I call the
    affordability box. It takes the enhancements that are on the
    airplane and uses active and passive sensor combinations, which
    we call multisource integration. It is a less vulnerable
    airplane. It has countermeasures in various stages that will
    keep it more than equal to the threat for at least the next two
    decades.
        So operationally it is our answer.
        Senator Bond. How does it rank in terms of affordable
    stealth?
        Admiral Johnson. I think it ranks very well, sir. In this
    forum, I would say that we do believe----
        Senator Bond. I realize that there are constraints.
        Admiral Johnson [continuing]. Very sincerely that it will
    be ahead of the threat for at least the next two decades.
        Senator Bond. Secretary Dalton, there was a rumor running
    around Washington a couple of weeks ago. I got a call that the
    Office of the Secretary of Defense was tentatively considering
    staying with the C's and D's, did not think we need the E and
    F. Can we count the decision to proceed with the low rate
    initial production as a strong indication that this rumor was
    unfounded?
        Mr. Dalton. Senator, as you know, there have been a lot of
    rumors about various aircraft over the past few years. But I
    can tell you that the Navy Department----
        Senator Bond. That one ruined my lunch.
        Mr. Dalton. As the CNO stated, we are very, very excited
    about the E/F and its capability. It is the aircraft for the
    Navy for today and tomorrow and the future. Clearly, we plan to
    move forward with it. We were very pleased with the decision
    that was made by the leadership of the Defense Department with
    respect to the low-rate initial production issue just in the
    last couple of weeks. We clearly are moving forward with the E/
    F. It is the next generation aircraft.
        It has been doing very well in the test phase and we plan
    to move forward with production as scheduled.
        Senator Bond. On that line, I ask you, or maybe the
    question is more appropriately addressed to the Admiral. But as
    you know, the congressional defense committees have asked the
    services to define additional programs identified as
    requirements above and beyond the fiscal year 1998 budget. Can
    you tell us where additional F/A-18E/F versions would fall on
    the unfunded requirements list and what would be the cost of
    the four additional aircraft needed to reach the level
    identified in last year's budget for fiscal year 1998? Admiral
    Johnson?
        Admiral Johnson. The number I believe for the four is $375
    million. I can refine this number for the record. But my answer
    to the first part would be that it ranks very high on the list.
    But I would tell you, sir, honestly, that how it ended up
    stacking to me would be dependent on what the amount of the
    overall enhancement to the budget would be. I would have to
    look at it in balance with everything else.
        [The information follows:]

        The cost for four additional F/A-18E/F aircraft in fiscal
    year 1998 is $375 million. This is the No. 1 priority on the
    CNO's Priority List of unfunded requirements. The procurement
    of four additional F/A-18E/F aircraft in fiscal year 1998 would
    significantly reduce risk for meeting the September 2000
    Initial Operational Capability (IOC) and would mitigate the
    risk for providing fully operational F/A-18E/F aircraft for
    First Fleet Deployment (currently scheduled for mid-2002).
    Providing additional aircraft in fiscal year 1998 will ensure
    that adequate aircraft are available for the Fleet Replacement
    Squadron (FRS) and will provide greater flexibility to the
    programs developing systems required for first deployment. If
    authorized and appropriated for fiscal year 1998, the $375
    million should be applied to P-1 line number four.
    Approximately $308 million would be sent to McDonnell Douglas
    Aerospace (MDA) for the LRIP airframe contract, $45 million
    would go to General Electric (GE) for the LRIP engine contract,
    and $22 million would fund various Government Furnished
    Equipment (GFE) items and government efforts.

        Senator Bond. One of the things that I think we need to
    look at is the likelihood of cost increases when we do not
    maintain the production rates. I think that has to be taken
    into account. If the efficient production rate is 24 and we buy
    at 20, we could lose an airplane, and I think that is something
    that we need to consider. I would appreciate knowing your views
    on what the impact on the cost per unit would be for buying
    fewer.
        [The information follows:]

        The following table shows the impact of varying procurement
    rate on a buy of 1,000 Super Hornets.
        These figures are in constant fiscal year 1997 dollars and
    assume the current LRIP profile prior to achieving indicated
    procurement rate.

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                              Annual Procurement Rate
                                                              ------------------------------------------------------
                                                                   18         24         36         48      Current
    ----------------------------------------------------------------------------------------------------------------
    Average recurring flyaway cost...........................       46.9       45.2       43.2       42.0       41.4
    ----------------------------------------------------------------------------------------------------------------
    Note.--Current procurement rate is approximately 48/year until fiscal year 2007 when the rate goes to 60/year.
      This was the program of record prior to the Quadrennial Defense Review reduction in program size.

                                 AV-8B Harriers

        Senator Bond. I guess I would have the same question for
    General Krulak on the budget request for 11 reman AV-8B
    Harriers. The program plan has long been at a steady rate of 12
    reman Harriers per year. Is there any reason other than just
    the budgetary constraints that the rate requested for 1998 dips
    to 11 and then returns to 12 in 1999?
        General Krulak. Absolutely no reason other than the fiscal
    reason, sir. We need that aircraft desperately.
        Senator Bond. And have you looked at the cost that might be
    incurred when in essence you would have to shut down the
    production line for 1 month to limit--since they are producing
    one a month, instead of buying 12 months, you only buy 11
    months; have you looked at the cost of that?
        General Krulak. There is obviously an increased cost per
    aircraft, sir. I can get you the exact number.
        Senator Bond. That would be helpful.
        [The information follows:]

        The recurring flyaway cost for an 11 aircraft buy in fiscal
    year 1998 is $23.4 million; the recurring flyaway cost for a 12
    aircraft buy would be $23.1 million. Therefore, AV-8B
    Remanufacture unit cost will increase by $.3 million with an 11
    aircraft buy.

                                SLAM-ER Program

        Senator Bond. Mr. Secretary, what is the status of the
    SLAM-ER program? Or Admiral Johnson?
        Admiral Johnson. I would be happy to. The SLAM-ER program
    right now, sir, is more than a gleam in our eye. It is doing
    extremely well. We like what we see. It hits the target. It is
    meeting the specs, and we are very much interested in the
    downstream potential as we get into SLAM-ER and SLAM-ER-Plus.
    We believe that it is a very solid program and we are going
    forward with it.
        Senator Bond. How do you view the SLAM-ER as opposed to the
    JASSM?
        Admiral Johnson. I would qualify it somewhat, but I would
    put it to you this way, sir. We believe, with what we see right
    now, that SLAM-ER may very well satisfy the complete ORD for
    the joint air-to-surface standoff missile, or JASSM, and we
    have made that suggestion through the Joint Requirements
    Oversight Council. We believe that everybody ought to be
    looking at SLAM-ER right now, quite frankly, just because of
    the time. It is well ahead, as you know, on the timeline
    relative to JASSM and it is working so well. We think it is
    going to answer the bill for JASSM.
        Senator Bond. Thank you very much, Admiral.
        Thank you, Mr. Chairman. I will give back the seconds
    remaining.
        Senator Stevens. Yes, sir.
        Senator Hollings.

                                    Staffing

        Senator Hollings. Thank you, Mr. Chairman.
        Mr. Secretary, I think the Navy and the marines are doing
    an outstanding job and I am supporting your request generally.
    But let me ask, Secretary Dalton, relative to the news report
    in the morning paper to the effect that you are perhaps looking
    for 20 more admirals. I remember on this committee some 20
    years ago we said we had 12 million men under arms in World War
    II and at that time with 3 million we were having three times
    the admirals, three times the generals.
        So today we have got 391,000 sailors compared to 4 million,
    and back in the war we had 3,600 ships and we are going down to
    346. The ratio works out to where we used to have 1 general
    officer for each 10,226 in the Navy, now we are going to have 1
    general officer for every 1,100, almost a 10-to-1 ratio.
        You have got 290 admirals. With 20 more where are you going
    to put them?
        Mr. Dalton. Senator, where we are with respect to that is,
    at the end of the cold war there was about a 25-percent
    reduction that was taken with respect to flag and general
    officers. I do not remember the year exactly. I think it was
    the 1990 timeframe. The request for the 20 flag officers to
    which you referred is to meet the requirements of staffing
    joint, combined, and Department billets. We have 68 billets and
    can only fill 48 of those today.
        But I do not think anything will be done with respect to
    this issue until we complete the quadrennial defense review and
    see where we are precisely with force structure. I think that
    issue will be addressed at that point.
        Senator Hollings. I think the point to be made is that at
    this subcommittee we are at the tail end of the whip when we
    finally get to the National Guard and marines. I have found
    from my experience that that is where we get the real support
    for the regular Army, Navy, and Air. And when we get to the
    tail end of the whip, crowding out all those generals and
    having to get all those billets that you say and get all of
    those commands, they keep cutting back on the Guard and the
    Reserve.
        So the real concern I have is that we are losing that
    general support. You look over the floor of the Senate, there
    are less men in combat, much less in uniform. And that is
    getting to be a problem, and we are cutting back too much on
    defense. So it goes right to the heart of support for national
    defense when you keep adding these admirals.

                                      V-22

        Specifically, General Krulak, in this limited time, I know
    I never have made a landing in a V-22. I take it you have not
    either?
        General Krulak. No, sir, I have not.
        Senator Hollings. I waded ashore in North Africa and I
    waded ashore in Corsica. I waded ashore in southern France. But
    I was listening to your wonderful analysis of the capability of
    the V-22. Instead of wading ashore in southern France, we could
    have landed in Berlin according to you.
        What in the world are we going to do with that? You get too
    overequipped. I was with General Wald up at the DMZ several
    times. Have you ever seen a North Vietnamese helicopter? I had
    not, either.
        And I can tell you here and now, the distinguished
    chairman--I saw you all have the love-in over the V-22, but the
    truth of it is that you are not going to land over onto the
    officers club, I mean with the V-22.
        General Krulak. Let me answer that, sir, if I may.
        Senator Hollings. Explain this V-22 to me.
        General Krulak. I will, sir. I would love to, because this
    is a critical, critical issue. Right now we have got the Nassau
    on Simba Station off the coast of Africa in order to conduct a
    noncombatant evacuation either in Zaire or in the Bengui
    Central African Republic. We had to move a carrier out of the
    Mediterranean, down off the coast of Africa, in order to pull
    this off.
        If you had the V-22, that carrier could have remained
    supporting the noncombatant evacuation in Albania and still
    been able to pull that off in either Bengui or Zaire. That kind
    of capability is remarkable and is going to change literally
    not just the operational and tactical level of war, but in my
    mind far more importantly, the strategic level.
        The chairman and the Senator just came back from the
    Pacific. As an example in the Pacific, for that PACOM commander
    to influence his area of operation he could literally have a
    marine rifle company lifted off of its location on the island
    of Okinawa and, instead of training in the northern training
    area of Okinawa, in the same amount of time could fly to
    Vladivostok and train with the Soviet naval infantry.
        It is this type of strategic use of an asset that,
    heretofore, was only an operational and tactical capability,
    that is going to make all the difference in the world. The
    issue is to not have to go and fight. The issue is to manage
    the instability in a manner that keeps you from having to
    fight. And when you have that kind of capability that is
    demonstrated day in and day out with this system, I think it is
    going to be a tremendous impact, not only on us, but far more
    importantly, on our enemies.
        Senator Hollings. Well, our enemies. You said you could
    lift off and train with the Soviet troops at Vladivostok. That
    is training. But I am talking about the mission of the marines
    is not to just go around and train with each other quickly, but
    rather to take the area and hold it. You folks are not running
    around just to save civilians. They ought to go ahead and
    listen to the State Department when we give them warning to get
    out. They just sit there and wait and wait and do not move and
    everything else of that kind.
        I think there is a fundamental mission here, and I know the
    cost. You folks in the marines never ask for enough in my
    opinion. But when you get off on this sophisticated equipment
    that really does not fit to the basic mission, I would like to
    see--I know how many helicopters we lost in Vietnam. I can see
    how many V-22's we are going to lose in the next engagement,
    because you are not going to fly to train. You are going to
    have to fly to fight sustained and be supported. We were
    running around saving the equipment for 10 years out there in
    Southeast Asia. I do not want to get into that again.
        General Krulak. Well, from the tactical standpoint, the
    ability to have an amphibious ready group 30 to 40 to 50 to 60
    miles offshore, out of either surface to surface missile range,
    and be able to fly your troops deep in, around the enemy, so
    that you are not having to do an across the beach forcible
    entry, but that you are using this as an operational maneuver
    capability, the ability of that system to operate over those
    distances at the speed allows you to do just what the Senator
    is talking about--be tactically extremely effective.
        The days of being able to fly into the teeth of the enemy
    are over. They are going to get you if you cannot maneuver. And
    this system allows that type of maneuver like nothing we have
    ever had.
        Senator Hollings. And they will get you 60 miles offshore.
    I understand.
        Thank you very much, Mr. Chairman.
        Senator Stevens. Some time we ought to discuss that,
    Senator, because think of the mobility it takes in terms of
    moving from several different ships rather than from one main
    troop ship, too. It spreads the attack force out.
        Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.
        I would just add to what General Krulak said to Senator
    Hollings, that if you look at the hostage rescue, the Iranian
    hostage rescue operation, I think that is much more the kind of
    warfare we are going to have in the future. And rather than
    ship helicopters in and have to put them together, and then
    they did not work very well, it just seems to me had we been
    able to fly in and land that it would have been a much smoother
    capability.

                              Joint Strike Fighter

        General Krulak, I would like to get your views on the Joint
    Strike Fighter. I think that we know that we have this joint
    effort, but I think the Marine Corps issues are somewhat
    different, and I wanted to see if you feel like it is a high
    priority.
        General Krulak. Yes; the Joint Strike Fighter, particularly
    the STVL version, is critical to our Corps' future aviation
    needs. The fact of the matter is we have for now 15 years been
    trying to neck down our fixed wing aircraft to one single type,
    model, series, and that would be the STVL version of the Joint
    Strike Fighter. We believe that it is going to be the aircraft
    for us in the future. As I think everybody in this committee
    knows, we have, not because we do not think the E/F is a
    greater aircraft--it is a great aircraft, but for fiscal
    reasons we have not stepped up to the plate on the E/F. We have
    not stepped up to the plate on buying a new STVL, such as the
    AV-8.
        We have remanufactured the AV-8 and we are holding the C's
    and D's because we believe the Joint Strike Fighter is so
    important to us. It is critical.

                                   F/A-18E/F

        Senator Hutchison. Well, building on that--and I do not
    want to put you all at loggerheads exactly, but it does seem
    that many people are beginning to question the E/F as the best
    expenditure when we all know that the Joint Strike Fighter is
    the future for everyone. I would just like to ask either the
    Secretary or you, Admiral Johnson, if there is some efficiency
    in using the C/D and adding capabilities to the C/D that would
    be much more cost beneficial and saving some of that money for
    an early deployment of the Joint Strike Fighter?
        Mr. Dalton. I will just say a word on that and I will ask
    the CNO, being an experienced aviator, to address that issue in
    more depth.
        The F/A-18E/F is what we need for the future for longer
    reach, for greater stealth capability, for greater growth.
    There is no more growth left in the C and D. That aircraft is
    jam-packed. There is room for additional growth with the E/F
    and it has greater capability.
        It is an aircraft that we need today. And looking at the
    future--the E/F is here today and it is an advanced capability
    over the C and D that we need to have. We are looking toward
    the Joint Strike Fighter at 2010 and beyond timeframe. But we
    are moving forward with it as well.
        Let me ask the CNO.
        Admiral Johnson. I agree with the Secretary's comments. For
    us, the E/F is very important. Chuck Krulak and I talk a lot
    about the C/D versus E/F and why it is OK for him and not for
    us. The truth is that I believe we are mutually supportive of
    all this. They have taken the bold step to go directly to the
    Joint Strike Fighter. We do not believe that we can do that
    with the legacy systems that we have, and the mission sets that
    we are asked to cover around the world 365 days a year as the
    Nation's forward presence strike force.
        So E/F is critical, in my view, to our naval aviation plan
    between now and 2005 to 2010, which is the stage of the game
    when Joint Strike Fighter is in the fleet.
        The way I would describe it, Senator, is that--and I really
    do believe this sincerely--I believe that this is not the time
    to make any terminal moves on these tactical air programs
    because the Joint Strike Fighter, while it looks wonderful to
    all of us, it is paper right now and we are not there yet.
        As we get through the concept demonstration phase, which is
    happening between now and 2001, that is when we are going to
    learn the realities of the Joint Strike Fighter. Then I think
    we will be in a much better position to render those kinds of
    decisions. But for us, the strength in our program is the E/F
    because it carries us all the way through for the next two
    decades.
        Senator Hutchison. I would just like to ask you to look
    carefully at enhancements that would give you more capability
    with the C/D's, and looking at possibly fewer buys, just in the
    name of efficiency of dollars, because I know there is going to
    be a squeeze in the budget. And when you look at all of the
    airplanes that are coming down the line, the sense that I get
    from most people is that the most likely one to be able to be
    let go is the E/F. I hope you will look at that in terms of a
    priority spending of dollars.
        Admiral Johnson. Well, you and I would agree to disagree on
    that last point, I am sure.
        Senator Hutchison. I am sure. I understand. But I hope you
    will just keep an open mind.
        Admiral Johnson. Yes, ma'am, we will. We have looked at it.
    We will continue to look at it. But my comment would be, to go
    back to what Secretary Dalton said: For us the C/D is out of
    room. You cannot hang 480-gallon drop tanks on the C/D. It does
    not work. They carry 330-gallon drop tanks. That is all they
    can carry. That is all they will ever be able to carry.
        That and other realities cause us to come back to E/F every
    single time. And there is the business of the threat.

                   Family of medium tactical vehicles [FMTV]

        Senator Hutchison. Let me turn to General Krulak. I am also
    concerned as we are trying to do more joint things with
    services agreeing to one model, the 5-ton truck requirements
    for the Marine Corps being so vastly different from the Army
    medium trucks, the FMTV. I just wondered if you had looked and
    will you consider looking at your requirements, with the
    thought that if you and the Army could get together perhaps
    there could be significant cost savings in the use of the FMTV.
        General Krulak. The FMTV is really just what the name
    implies. It is a family of trucks. The Marine Corps has never
    utilized a family of trucks. We are trying again, in the
    interest of the economics, we are trying to have one truck. It
    is a rebuild of our current truck. The beauty of it is, it goes
    on-road at 8 tons, off-road at 5 tons.
        The Army's requirement is based upon the European theater
    and more on-road capability than off, and so when we got down
    to taking a look at the trucks and the costing the reality was
    that we could, and we both agreed, we could build a truck,
    rebuild a truck for the Marine Corps, that would save in the
    vicinity of $73 million over our entire program.
        It was so good that the National Guard is now interested in
    doing the same thing. So I think we are trying to save the
    taxpayers dollars. Our numbers compared to the totality of the
    family of tactical vehicles that the Army is talking about
    building is really a drop in the bucket. I think that we have
    got a good system.
        We will look at it again, but I will tell you, we are going
    to save the taxpayers money and we are going to get the right
    requirement, and it has been recognized by certainly the
    National Guard because they are going to come on board with us.

                                    TRICARE

        Senator Hutchison. I would like to just ask one question
    back to Admiral Johnson, and that is I know we are going to
    have a health care hearing, but in Corpus Christi we are very
    concerned that the Navy hospital has been signaled to be
    closed, and we are having a lot of trouble with TRICARE in
    other parts of my State. I do not know what the result is in
    other States, but the slow pay and the low pay to the outside
    doctors is causing a real hardship on our military families.
        We are looking at building up the Mine Warfare Center and
    closing the hospital at the same time. So I am very concerned
    about the whole issue of health care for our military families,
    and particularly would you respond to what your thinking is in
    Corpus Christi?
        Admiral Johnson. Yes, ma'am, I would be happy to. I have
    talked to Mr. Ortiz. I have talked to Craig Reynolds, a retired
    Navy captain who is working that issue very hard for the
    community down there. You know, I believe, that the whole
    relook at the DOD hospitals was what caused the Navy to have
    four sites to be considered for downgrading or transition from
    naval hospitals, as you say, to ambulatory care centers.
        Part and parcel of that was an investment within the
    community for the local hospitals then to establish linkages so
    that there would be no degradation of service. That is the
    plan, and it was based on lots of things, not the least of
    which was the inpatient load at those naval hospitals, which
    for Corpus Christi averaged, in spite of the cachement area, it
    averaged less than, I believe, four patients a day.
        But I very much accept the concern of the community. I
    believe that the Navy Surgeon General has re-engaged this
    issue. I know there will be no final decision rendered until we
    do a lot more dialog with the community, get a lot better
    understanding of the specific concerns in the Corpus Christi
    area. And I just assure you that we are not going to do
    something dumb or something that is counterproductive for the
    community.
        Senator Hutchison. My time is up. I do not mind TRICARE as
    a concept. I think it is terrific. It just has to work if we
    are going to have this.
        Admiral Johnson. Yes, ma'am. My points to Senator Inouye
    convey there. We have some education to do and some informing
    to do, in better ways than I think we have done thus far.
        Senator Hutchison. Thank you, Mr. Chairman.
        Admiral Johnson. It is complex enough and different enough
    where everybody needs a little more reinforcement than I think
    we have perhaps given them thus far.
        Senator Hutchison. Thank you.
        Senator Stevens. Senator Shelby.
        Senator Shelby. Thank you, Mr. Chairman.

                                     CH-53E

        General Krulak, I read with interest in your statement that
    the CH-53E is the only helicopter in production that satisfies
    the Marine Corps heavy lift mission. Is that true?
        General Krulak. That is correct, sir.
        Senator Shelby. The Congress has added money to buy at
    least two of these to modernize the Marine Corps Reserves.
    Could you tell me how these aircraft are performing and how
    many are needed to complete the Marine Corps requirement?
        General Krulak. We need 19, sir, to complete the
    requirement. We are obviously trying to make our total force,
    in fact, total force in reality, and that is we want our
    Reserves to be equipped the identical way that our regulars
    are. So it is important that we continue on in the purchasing
    of those aircraft, and we have 19 left to go, sir.
        Senator Shelby. And if you can move faster than two a year
    that would help matters in terms of cost, too, would it not?
        General Krulak. Yes, sir.

                               Smart ship systems

        Senator Shelby. Admiral Johnson, I understand that smart
    ship systems recently were installed in the U.S.S. Yorktown for
    an operational assessment.
        Admiral Johnson. Yes, sir.
        Senator Shelby. What is the assessment, if you know, at
    this time of the Yorktown's commanding officer of this smart
    ship system?
        Admiral Johnson. Senator Shelby, it is ongoing right now,
    so I do not have that answer. I look forward to being able to
    give you that answer.
        Senator Shelby. Would you give that to me and the
    committee?
        Admiral Johnson. You bet. It is about 6 to 8 months of at-
    sea evaluation, which we are in the middle of right now, and we
    are very anxious to get the lessons learned and we would be
    happy to share them with you, sir.
        [The information follows:]

        Navy's Smart Ship Project (SSP) is focused on rapidly
    identify commercial technology which could reduce manpower
    requirements on our future surface combatants and other ships.
    Results of a pilot program aboard the designated test ship,
    U.S.S. Yorktown (CG-48), are being evaluated, and a full report
    should be available in September 1997. Our initial assessment
    is that SSP systems and policies introduced in U.S.S. Yorktown
    performed satisfactorily during deployment and subsequent at-
    sea evaluations. In the near-term, Navy will evaluate test
    results with the long-term expectation of implementing many
    Smart Ship concepts, both technology and policy, into the rest
    of the Fleet.
        To accomplish this, Smart Ship Project will continue to
    solicit ideas for initiatives from within Navy as well as from
    industry, academia, and other institutions. The intent is to
    become self-sustaining by using a portion of resources saved
    through implementation of approved initiatives with labor-
    saving potential.

        Senator Shelby. If this works out on the U.S.S. Yorktown,
    then you would--and I will ask this of the Secretary, too--be
    looking forward to maybe seeing if it would go to other ships?
        Admiral Johnson. Yes, sir.
        Senator Shelby. Mr. Secretary, do you want to address that?
        Mr. Dalton. Yes, sir, Senator Shelby. This is a pilot
    program, if you will, on the Yorktown. We are very positive
    about what we see happening, in that we are finding that we can
    reduce watch stations and we can reduce the numbers of
    personnel aboard that ship.
        Senator Shelby. Saves a lot of money, too.
        Mr. Dalton. Yes, sir, absolutely. And as the CNO said, it
    is not done yet, but the early returns are very positive and we
    are very hopeful that we can look toward a 15- to 20-percent
    reduction in manning of ships. You know, when you go to sea and
    you see one of our ships pass a merchant ship and we have got
    15 people on the bridge and they pass the merchant ship that
    has 2 or 3--granted, they are not a man of war, but there is
    some savings in there probably. The Yorktown is helping us to
    see how we can indeed keep our warfighting capability where it
    needs to be and also do it in a cost-effective manner. We hope
    we can learn some very positive lessons from this smart ship,
    and similarly from the arsenal ship as we go to the SC-21
    program for the future.
        Senator Shelby. You mentioned efficiency, but it could mean
    a lot of dollar savings?
        Mr. Dalton. Absolutely, yes, sir.
        Senator Shelby. Millions, could it not?
        Mr. Dalton. Yes, sir, end strength. Our people are our
    greatest asset and our No. 1 resource. It is also any time we
    can do things smarter with less people, we are saving money.
        Senator Shelby. So you like what you see thus far?
        Mr. Dalton. Yes, sir, I do.
        Senator Shelby. Secretary Dalton, last year, in a different
    area--this is about helicopters now.
        Mr. Dalton. Yes, sir.

                                     CH-60

        Senator Shelby. This committee provided an additional $7.3
    million to begin the CH-60 program that you are very familiar
    with. I understand that the Navy is requesting $32 million for
    the CH-60. With this additional funding, if you were to get it,
    I understand the Department of Defense will accelerate the
    schedule and procurement quantities of the CH-60.
        With that in mind, is the $32 million included in the
    budget sufficient, sufficient, Mr. Secretary, to accelerate the
    CH-60 schedule or would you need more money?
        Mr. Dalton. We think that what we requested is adequate,
    Senator. The CH-60 is an important program for us. The rapid
    procurement of the CH-60 is essential for the program's
    success. But we think that what we have requested is proper,
    consistent with our other priorities.
        Senator Shelby. Admiral Johnson, it is my understanding
    there is a requirement for at least 134 CH-60's. I understand
    you have been working with the Army to execute a multiyear,
    multiservice H-60 aircraft contract; is that true?
        Admiral Johnson. Yes, sir; I believe that is still in the
    works.
        Senator Shelby. That is being negotiated?
        Admiral Johnson. Yes, sir; and we are very anxious, as the
    Secretary said, to get the CH-60.
        Senator Shelby. How critical is that to the Navy?
        Admiral Johnson. The CH-60?
        Senator Shelby. Absolutely.
        Admiral Johnson. It is integral to us, sir. It is going to
    replace our H-46 fleet, which, as the Commandant could tell you
    from his standpoint, is very much an aging airframe. So we are
    very focused on getting CH-60's into the fleet.

                           Mobile offshore base [MOB]

        Senator Shelby. General Krulak, focusing in on the mobile
    offshore base concept.
        General Krulak. Yes, sir.
        Senator Shelby. Does that play a role in the future
    operations of the Marine Corps?
        General Krulak. I believe that the mobile offshore base is
    a concept that needs to be looked at.
        Senator Shelby. To be developed maybe?
        General Krulak. Yes, sir; I think that we need to look to
    the future in ways that maybe are a little bit different than
    we look right now. One of them is the ability to use what I
    would call a lily pad approach, and that might very well be a
    mobile offshore base.
        Senator Shelby. How does that work?
        General Krulak. Well, not as a substitute for a surface
    combatant, but as almost a staging area for equipment, a
    place--as an example, you might have a mobile offshore base
    sitting off of the Philippines. You could utilize that as your
    basing train in the Philippines. It would be moveable. It could
    move down off the coast of, say, Australia, do some training
    there, and keep away from having to put a footprint on somebody
    else's sovereign territory.
        So I think it is something that is at least worth looking
    at, and we have been supportive and I know Admiral Johnson and
    I have talked about this on several occasions.
        Senator Shelby. Is that perhaps more important that you
    look at this in the future because of our shrinking bases
    around the world?
        General Krulak. I think that it has the potential for
    helping us in that area. I think it has the potential also in
    the issue of force protection in areas that are a little bit
    more hostile than the ones I just mentioned.
        Senator Shelby. Admiral, do you want to comment on that?
        Admiral Johnson. Only to say, sir, that we are indeed
    studying that MOB concept right now in terms of--and I can get
    you the proper name of the study, but essentially we are
    looking at the maritime prepositioning force for the next
    century. And it is also being looked at as part of the carrier
    developmental [CVX] cost/operational effectiveness analysis
    [COEA], as it is called.
        So I think the proper course of action is the one we are on
    right now. Let us go ahead and do the study, do the analysis,
    see what we learn from that, and then we will make some
    investment decisions.
        Senator Shelby. I think that makes sense.
        Thank you, Mr. Chairman.
        Senator Stevens. Thank you, Senator.
        Senator Cochran.
        Senator Cochran. Mr. Chairman.

                                  Shipbuilding

        Mr. Secretary, in your statement you make the comment that
    you are pleased with your shipbuilding plan, and I quote
    another sentence: ``Our shipbuilding plan is an extremely
    positive and balanced program.'' But in the next sentence you
    say: ``There is still a long way to go to ensure we have the
    funding necessary for our ship and aircraft modernization
    requirements coming into the next decade.''
        To me that is the most telling statement of all because the
    budget request, if you believe the Shipyard Chronicle's
    analysis of the Navy's budget request, says the budget averages
    five new ships per year for fiscal years 1998 through 2003. It
    says over the next 2 fiscal years the Navy intends to order
    only nine new ships, at a total estimated cost of $11.07
    billion. If you look at this year's budget request, you are
    asking for only $7.438 billion for new ship construction.
        So it just does not add up. Even though we talk about the
    plan being optimistic and modernizing the Navy and you are
    proud of the shipbuilding plan, you are not asking for the
    dollars to get there.
        Mr. Dalton. Senator, we have a relatively young fleet. We
    were building a lot of ships in the early eighties to build up
    to the 600 ship Navy, and we are taking advantage of the fact
    that we do not request ships before we need them. We have, I
    think, a balanced shipbuilding plan that we presented to the
    Congress, that includes funding for the CVN-77, which last
    year's budget request did not have, the multiyear buy for the
    DDG's, the four submarines in the FYDP, and the LPD-17.
        I do think it is a well-balanced plan, and I think that
    what we are doing is taking the lessons that we are learning
    from the smart ship that Senator Shelby talked about and the
    arsenal ship demonstrator that we have coming down the pike. We
    are going to be building more SC-21's and learning from the
    modular technology that will be part of that. There will be
    more of those built.
        The first SC-21 is in the year 2003. We think our
    shipbuilding plan is on target, it does make sense, and we
    think we have requested the dollars to fund it.
        Senator Cochran. We know that the Secretary of Defense has
    announced the formation of a program management advisory group.
    This was back in February, with Admiral Sterner heading up a
    group to analyze what to do about the problems of meeting the
    needs of the Navy. The 300-ship Navy, 330, 340, is not going to
    be met under the plan that is the Navy's shipbuilding plan
    right now.
        The industrial base is going to suffer. There is no
    question that we cannot sustain the shipyards now building
    ships for the Navy at this rate of shipbuilding.
        Do you know what the review of this industrial base problem
    has concluded in terms of any new strategies or any new plans
    or any supplemental requests that we might see submitted to
    this committee?
        Mr. Dalton. Senator, the PMAG, or the program management
    assessment group, did visit shipyards and their view is that
    the shipyards they visited do look positive for the near term.
    They did not have any recommendations for change with respect
    to the review that they conducted recently.
        Senator Cochran. One of the real concerns in our State was
    a recent decision by the Navy to choose a group that presented
    a bid to build the next generation of amphibious ships for the
    Marine Corps some $100 million over the bid submitted by a
    group that involved Ingalls Shipbuilding. People cannot
    understand why that decision was made like it was, and they
    worry about the impact that it is going to have on the shipyard
    in our State.
        Have you analyzed that and do you have anything you can
    tell the committee to explain the justification for that kind
    of decision?
        Mr. Dalton. Yes, sir; Senator Cochran, the RFP, the request
    for proposal for those ships, was reviewed by the shipyards and
    they gave us their input prior to issuing the RFP. There was
    about a 1-year process of working through the bids that were
    submitted. In several cases they were sent back and offered the
    opportunity to enhance or improve their bids.
        The program has been reviewed by the Assistant Secretary of
    the Navy for Research, Development, and Acquisition. It was
    also reviewed by the Under Secretary of Defense for Acquisition
    and Technology, Dr. Paul Kaminski, and he thought that it was a
    proper decision based on best value.
        There was a 1.6-percent difference in price, but the RFP
    was done on the best value in the overall life cycle cost of
    the production of the ships. It was a process that we think was
    done properly. But as I am sure you are aware, the process was
    one that was protested as far as the contract award. The
    General Accounting Office reviewed that decision and earlier
    this week found that it was, in fact, a properly awarded
    contract.
        Senator Cochran. According to an article that I have seen
    in Defense Week, one estimate is that over the life of this
    nine-ship contract, if nine ships are involved as they may be,
    the Navy is going to end up paying about $1 billion more than
    it would have if it had taken the lower cost proposal. That is
    a concern if we are looking for ways to become more efficient
    and make our dollars go further, and that is why I raise the
    subject.

                                      T-45

        Admiral Johnson, I notice that in your plan for providing
    trainers and air pilot training there are T-45's that are being
    purchased to replenish and replace older trainers that have
    been used and are wearing out. This purchase rate has been at
    12 per year and that has been in place since fiscal year 1996.
        Admiral Johnson. Yes, sir.
        Senator Cochran. I have heard that the Navy could justify
    an 18- or a 24-plane buy for 1998, and my question is how many
    T-45's are needed to keep the pilot training rates up to meet
    the Navy's requirements?
        Admiral Johnson. Well, Senator Cochran, I could justify in
    my own mind an increased rate of production for the T-45's. But
    again, this is all part of a balanced aircraft procurement
    program, and we felt that 12 was an acceptable number for us.
        I will tell you that the T-2's have caused us some concern
    of late in terms of relooking at the maintenance on those
    airplanes, and that has disrupted our pipeline flow a little
    bit. We are in the process right now of looking at that whole
    balance, if you will, to see if we need to reassess it in our
    next program review.

                               Upper tier program

        Senator Cochran. I understand, too, that there is some
    concern about the content and the wording of the statement that
    Presidents Clinton and Yeltsin issued on the subject of theater
    missile defense and the demarcation discussions that are going
    on in Geneva, as to what impact that might have on the Navy
    upper tier program. I wonder whether you have had a chance to
    look at that statement and analyze its possible impact on a
    demarcation agreement and whether or not the Navy upper tier
    program would be treaty-compliant if there is an agreement
    reached, based on the statement that the Presidents issued.
        Admiral Johnson. Yes, sir; we are in the process of
    analyzing that right now. What I would tell you this morning,
    sir, is that the snapshot that I have right now says that both
    of our systems, the area and theater upper tier systems, are
    compliant.
        Senator Cochran. If they are, is there any necessity for
    reaching an agreement on demarcation?
        Admiral Johnson. I think I am probably not the person in
    the position to answer that question, sir. But quite frankly,
    my concern is compliance for the two Navy systems that we feel
    so strongly about, and that has been my focus of effort.

                                KC-130 aircraft

        Senator Cochran. General Krulak, I know that you have
    talked before about the KC-130's and the need to purchase new
    KC-130J aircraft. Congress provided $210 million last year to
    begin the process of purchasing four of these aircraft. But the
    fiscal year 1998 budget does not provide for additional planes.
        What is the status of the need? Is there a justification
    for additional KC-130J aircraft?
        General Krulak. Sir, there is. It is obviously a far more
    capable aircraft than the one that we currently have. The one
    we have now is extremely old. The KC-130J's offer increased
    speed, range, better avionics. Of the four that we have on
    order right now, we will get, we are sure, three of those. The
    fourth, we are looking right now to utilize that money to help
    with the parts issue that would come with a normal packup of
    the 130J's.
        Once again, the requirement is there. The money, the top
    line, was not, sir.
        Senator Cochran. Thank you very much.
        My best wishes for fair winds and a following sea to
    Captain Worley. We are going to miss you a lot, Captain.
        Captain Worley. Thank you, sir.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Senator Domenici.
        Senator Domenici. Thank you very much, Mr. Chairman. I will
    try very hard in the future to get here early. [Laughter.]
        Senator Bumpers. The last time I am going to be late.
    [Laughter.]
        Senator Domenici. Well, I just wanted to share with the
    committee members that are left and you military leaders that
    the visit we made to eastern Russia under the leadership of
    Senator Stevens as our chairman and Danny Inouye as his ranking
    member, which also took us to North Korea, as you know, that
    all of you would have been proud of Senator Stevens. He did a
    remarkable job, and believe you me, it is not easy to talk 5 to
    6 hours with North Korean leaders, with the kind of paranoia
    and redundancies that seem to be in their vocabulary. It is a
    good thing it was he and not me. He did a very good job and I
    compliment him for that.
        Senator Stevens. Thank you very much, Senator. Thank you.
        Senator Domenici. Let me say, obviously I do not have a lot
    of Navy in New Mexico. We could not get any of you up the Rio
    Grande River under any circumstances.
        Mr. Dalton. We are considering a submarine base there,
    Senator. [Laughter.]

                                Quality of life

        Senator Domenici. But I do have a few questions, only one
    of which is parochial. I have kind of taken it upon myself to
    come to these hearings, where I do not have a parochial
    interest, but I am concerned in the big picture, to perhaps
    become an advocate for the quality of life of the men and women
    in the military.
        I note--I have pushed my staff to get me more information,
    and I want to compliment you on your 1997 posture statement.
        Mr. Dalton. Thank you.
        Senator Domenici. Obviously, it contains much beyond
    quality of life. But I note a couple of interesting facts, and
    I just want to take off on them for just a moment and then move
    to a couple of other things.
        In 10 short years from 1980 to 1990, it says here that your
    number of Navy and marine personnel that are with families has
    dramatically increased. I am not sure I have the year right,
    but the last year you cite in here 60 percent are with families
    as compared with just a few years ago with 42 percent.
        I gather it is fair to say, from what I have read here and
    what I found out, that you are both very, very concerned about
    maintaining the quality of life for these families. Is that a
    fair statement?
        General Krulak. Yes, sir.
        Admiral Johnson. Yes, sir.
        Mr. Dalton. That is correct.
        Senator Domenici. Now, I note that you apparently are
    having a degree of success, because some who are not married
    are complaining that they are not getting as much attention,
    and you are at least willing to state that here. I would not be
    as worried about that right now, but I am sure you are
    concerned about that also.
        Having said that, let me suggest that there are some things
    that I am reminded of, having heard the distinguished
    Commandant of the Marines talk about small things and their
    impacts, and he made a great point of that. Small amounts of
    money frequently have big impacts. I think in the quality of
    life, as I tour bases--they are not all Navy bases; I have only
    been to one of those--it seems to me that the quality of life
    on these bases is frequently enhanced by very small kinds of
    things--building a center for the teenagers to participate and
    have fun together, rather than roaming all over the place, and
    make it a thing that is modern. Those are not big ticket items.
        I compliment the military for going along with the
    commanders and heads of those bases, and I hope you are all
    aware that those are very, very important.
        But I also think there are a couple of items, like food
    stamps, that kind of stick in our craw, at least mine. I have
    been trying very hard to get the military to tell us how we are
    going to get rid of food stamps as a part of the compensation
    for men and women in the military. Frankly, I believe we ought
    to do that.
        I do not know whether there is 12,000 now or what the
    number is; 12,000 seems to fit in my mind at this point. Now, I
    do not want a long explanation. I would just like to ask you,
    Mr. Secretary: Is the Navy part of an effort to try to change
    compensation patterns and housing patterns such that fewer and
    fewer men and women are entitled to food stamps, with a goal of
    having none on food stamps?
        Mr. Dalton. Yes, sir, we are. We are certainly concerned if
    one of our sailors or marines is in that position. The fact is
    we really do have a different military today than we had when I
    was on active duty in the sixties or in the Reserves in the
    seventies. Then about 30 percent of our personnel were married
    with families. As you point out, it is 60 percent today. So it
    really has changed a lot.
        The personnel that are on food stamps today are the young
    enlisted in the E-3, E-4 category that have larger families,
    three and four dependents. That is the area that qualifies for
    food stamps.
        We clearly are looking at it. As your goal is to have none
    on food stamps, we certainly think that these are outstanding
    young men and women that are serving our country and they
    certainly need to be able to hold their heads high and be proud
    of wearing the uniform and being proud in the Navy and Marine
    Corps. I know that they are and we certainly would like their
    compensation to reflect that.
        I will say that this is the first time ever that budgets
    are being submitted that include a pay raise in every year of
    the FYDP, the future year development plan. The maximum pay
    raise allowable by law is part of our budget. Every sailor,
    every marine, knows that if they stay on active duty they are
    going to get a pay raise whether they get promoted or not.
        Now, you know, you do not come into the service for large
    compensation. But we are taking care of our people in that
    regard and they know that they are going to get that pay raise.
    We are not certain that is going to address the 12,000 that you
    speak to, but we are certainly looking at that and have the
    same goal that you have described.
        Senator Domenici. Well, let me say, Mr. Secretary, at least
    from my standpoint as one member of this committee, I would not
    like to see policies that would approach men and women with
    families and say, you know, you are better off if you keep your
    family small. I do not think that is our business.
        Mr. Dalton. I understand that.
        Senator Domenici. So somebody with four kids ought not to
    be getting short shrift because you have got a policy that
    helps those with one kid better. At least I think that. I do
    not know how the rest of you feel.
        Senator Stevens. I have got six kids. Figure it out.
    [Laughter.]
        Senator Domenici. Well, I have eight, so I have got you
    beat by two.

                              Aircraft replacement

        But anyway, let me talk a minute with you about these very
    expensive new aircraft. And General, Commandant of the Marines,
    I am not opposed to the V-22. In fact I have studied and I
    think your analysis is right.
        But I am going to tick off a few: the V-22, $40 million a
    copy; the AV-8B remanufacture, $30 million each; the F-18E/F,
    $60 million each. Now, I could have some more if I went through
    the other, the whole aircraft inventory.
        I guess I am concerned in this respect. These are replacing
    airplanes of one type or another that are still very good,
    still the best in the world, the ones we are replacing. There
    is nobody who has got better than what we are replacing right
    now at this moment in history.
        What worries me is as we replace the older ones, which are
    still very good, with new ones that are very expensive, the
    buys seem to be rather puny. The numbers we are buying are
    rather small. Have you analyzed that from the standpoint of
    what is going to happen in 8 or 10 or 15 years if we do not
    have any of those that are still good, but then replaced by
    these brand-new high cost per copy inventory items? What are we
    going to do?
        Are we then going to say we are going to have to build as
    many of those new expensive ones, or are we going to get by
    with fewer? Because we still have budget problems, you know.
    They are not going away, it seems to me.
        Could you just comment for a moment on it, any of you?
        Mr. Dalton. Go ahead.
        Admiral Johnson. We are looking very hard at that, sir. And
    I would tell you that in the case of the F-18E/F, for instance,
    we have, as you have heard, approval for low-rate initial
    production, which builds 62 aircraft over a period of 3 years.
    Beyond that, the plan we have carries us to a maximum
    production rate of 60 aircraft a year. That is the rampup.
        Part of the reality--and you touched on it, Senator
    Domenici--is that the legacy systems we have today are
    wonderful machines in most cases, but the timeframe we are
    talking about is at least a decade away from us, in many cases.
    So we have to project ourselves out to look at the threat and
    the age of the legacy systems out there.
        I would say the rampup for the E/F right now is appropriate
    for us. We are looking at that buy rate and we do share your
    concern.
        Mr. Dalton. Senator, I certainly agree with what the CNO
    said. The E/F is technology that we do need. It is the aircraft
    that we need. The C/D it is replacing just does not have the
    growth room, as the CNO pointed out.
        The AV-8B reman is a cost-effective way to enhance an
    existing aircraft, as opposed to going to a new one. The V-22
    is replacing the CH-46, which is over 30 years old. The
    airplanes are older than the pilots that are flying them. So we
    need this new generation of aircraft.
        Senator Domenici. I do not argue that point. All I am
    saying is that when you get out here you are not replacing old
    ones, how many are we going to have in our inventory of these
    new expensive ones? And I think that is a pretty important
    issue.
        Mr. Chairman, could I ask a parochial question? Their
    answers were too long, so I got cheated. [Laughter.]
        Senator Bumpers. I am the only one here that can squawk. It
    is OK, go ahead.

                          EF-111 versus EA-6B Prowler

        Senator Domenici. I just want to raise a parochial issue,
    the EF-111 versus the Navy's EA-6B Prowler. Now, this committee
    has been rather concerned about whether you can do with that
    Prowler and other things what the EF-111's were doing. Now, I
    am going to tell you on this trip we heard from one of the four
    star generals that in the Korean theater it was questionable
    whether we had capacity under the EA-6B to do what we were
    doing with an EF-111 assigned to the mission.
        I would like very much for you to find out about that and
    for you to tell us, because we have been trying to keep enough
    EF-111's in the inventory so that we are absolutely certain you
    have got, the military has its capacity replaced. So would you
    do that for us.
        Admiral Johnson. We would be happy to.
        Senator Domenici. We are on a collision course. It looks
    like you want to get rid of the EF-111 quicker, at least the
    Air Force does, and we would like to know--I would like to
    know, and I assume the committee would--what the situation is
    on that.
        Senator Stevens. I think that requires really a written
    answer.
        Admiral Johnson. Yes, sir.
        Senator Domenici. Yes, sir, I agree.
        [The information follows:]

        In August 1996 the Secretary of Defense and the Service
    Chiefs approved a plan to replace 24 Air Force EF-111A Raven
    aircraft with 24 Navy EA-6B Prowler aircraft. This plan was the
    result of a Joint Staff sponsored study which concluded the
    consolidation to a single type radar support jamming aircraft
    would provide sufficient capability to meet the CINC's
    warfighting and operations other than war requirements. The
    Department of the Navy is pleased to report the progress we
    have made with the EA-6B Prowler assuming the role as the
    Department of Defense radar support jammer. I would like to
    address three aspects of this consolidation of the radar
    support jamming mission into the EA-6B: interservice
    coordination, force structure increases, and aircraft
    inventory.
        First, in February 1997 the Vice Chairman of the Joint
    Chiefs of Staff, Air Force Chief of Staff, the Commandant of
    the Marine Corps, and I signed a Memorandum of Agreement (MOA)
    on EA-6B Support which is the foundation for a transition to an
    all EA-6B force as the EF-111A retires. The MOA provides
    procedures concerning operational and training scheduling,
    inter-Service aircrew augmentation, and employment of tactical
    jamming aircraft. The Navy has been abiding by the provisions
    of this MOA since embarking on the Secretary of Defense
    approved plan to assume this mission. The following procedures
    are used to schedule EA-6B expeditionary squadrons: (1) the
    unified Commanders-in-Chief determine their requirements for
    radar support jammers, (2) USACOM/PACOM develop a deployment
    plan, (3) the CINC's and Services approve the plan. In
    situations where the plan does not meet all the CINC
    requirements, the Joint Staff (J3), and if necessary, the
    Office of the Secretary of Defense, arbitrate the plan.
        Next, the Navy has already established four of five planned
    EA-6B squadrons necessary to assume this role. These squadrons
    are standing up at an aggressive rate with only a 6 month
    interval. The first squadron stood up the month following
    SECDEF approval, deployed seven months later, and returned this
    last November. The second squadron has similarly stood up and
    is deployed today. The third squadron has replaced a Marine EA-
    6B squadron previously assigned to an aircraft carrier air
    wing; now allowing all four Marine Corps EA-6B squadrons to
    support the joint expeditionary mission. The fourth new
    squadron just stood up on 1 April, and the last squadron is on
    track to stand up on 1 October 1997.
        Finally, 24 Prowler aircraft, which would have been parked
    in storage in the desert, are being refurbished to support the
    mission. We recently contracted Northrop Grumman to upgrade 20
    aircraft to the Block 89 configuration with fiscal year 1996
    Congressional funding, provided to assist the Navy in assuming
    the new role. While these aircraft are being refurbished the
    Navy is meeting all operational commitments through innovative
    management of the entire EA-6B inventory.
        The Department of the Navy is committed to making the EA-6B
    Prowler program a success as we assume the role as DOD radar
    support jammer. Today 21 Air Force aircrew have already begun
    or completed training in the Prowler. The EA-6B community is
    the epitome of jointness in the Department of Defense; today a
    fully qualified Prowler crew of four Air Force officers is in a
    Navy EA-6B squadron forward deployed overseas to a Marine Corps
    air station, supporting a unified CINC in Korea. We have not
    yet completed our transition to an all EA-6B jamming force, but
    have met all our milestones and continue to track on the
    approved plan to meet the Department of Defense needs.

        Senator Domenici. Thank you, Mr. Chairman.
        Senator Stevens. Thank you, Senator Domenici.
        Senator Bumpers.

                      Army tactical missile system [ATACM]

        Senator Bumpers. Thank you, Mr. Chairman.
        Mr. Secretary, first of all let me say that I totally agree
    with your unfunded request for $20 million to develop a Navy
    tactical missile system [TACM]. When we go to markup on this I
    will do my very best to persuade the chairman and the ranking
    member that that is going to be money extremely well spent.
        What are you spending this year on that program, $10
    million?
        Mr. Dalton. Yes, sir; I think that is the number.
        Senator Bumpers. And then there is money programmed for
    Navy TACM's in 1999. So if we do not put $20 million in for
    1998 you are going to have a gap there.
        In that connection, do you know how many ATACM's the Army
    fired in Desert Storm?
        Mr. Dalton. No, sir; I do not know that number, but I will
    certainly provide it for the record.
        Senator Bumpers. General Krulak, do you have any idea?
        General Krulak. No, sir; I do not. I can get that number.
        [The information follows:]

        Thirty-two Block 1A, ATACM's were fired during Operation
    Desert Storm.

        Senator Bumpers. It was relatively few, I know. I think we
    fired over 300 cruise missiles, but I do not think we fired
    that many ATACM's. But ATACM's is a very fine weapon and the
    Navy ought to have it, and I will support you on that.
        Mr. Dalton. Thank you, sir.

                              Trident retrofitting

        Senator Bumpers. Second, Mr. Secretary, I am sort of like a
    Johnny one note on this. I have questioned the desirability of
    taking four of our Trident submarines that now have C-4
    missiles on them, and retrofitting them to carry D-5 missiles.
    It is going to cost $4 to $5 billion to do that.
        C-4's are getting up in years and I understand that. But
    under START III we are going to be limited to, I guess, about
    2,000 warheads, and presumably about one-half of those will be
    on submarines. You are planning on having 14 Trident submarines
    at that time. But the START II Treaty may permit you to keep
    only 10 Trident subs.
        Of the 14, 10 are now equipped with D-5 missiles and 4 are
    equipped with C-4's. Now, the C-4 is a perfectly good weapon.
    There is not any question about it. And as I say, the
    comparison of the D-5 and the C-4 is minuscule when you are
    talking about a nuclear weapon with multiple 100 kiloton
    warheads.
        So why are we going to spend that $4 billion, $5 billion,
    to retrofit those submarines? And then you are also going to be
    spending an additional $1 billion to redo the power reactors on
    the submarines.
        Mr. Dalton. Senator Bumpers, the request that we have for
    the D-5's supports the START II limits for the 14 submarines. I
    think we have asked for over the FYDP 55 D-5's, for a total of
    $2.4 billion. The nuclear posture review determines the number
    and the force structure that we need with respect to those
    missiles.
        As you point out, the C-4 is an older missile, and to have
    the deterrence that is called for, the D-5 is the appropriate
    system.
        Senator Bumpers. Well, as I say, you are going to be
    spending all this money. There is a very good possibility you
    are going to be dismantling those same submarines by the year
    2007 in order to come into compliance with START III.
        I will not pursue it. I pursued it here for 3 or 4 years
    and have not gotten anywhere with it, so I do not expect magic
    to happen next year.
        Senator Stevens. Senator, I want to assure you that we have
    got to look for some places here now. And Mr. Secretary, I
    think that we ought to start listening to the Senator on this
    one. It is time we started----
        Senator Bumpers. Mr. Chairman, I am exhilarated by your
    response. [Laughter.]
        Senator Stevens. Well, if you want 20 V-22's you are going
    to have to stop spending money on things that are going to be
    dismantled just 4 years later.
        Mr. Dalton. Yes, sir, I agree. If we had some certainty
    that START III was going to be ratified, I think that would
    clearly affect our decisionmaking for the future. But at this
    point we have not come to closure with START II. I think we are
    limited, with the world that we live in today and the way
    things stand today.
        Clearly, if we have confidence that we are going to reach a
    level of agreement with respect to arms control with other
    nations, then it would definitely affect our procurement.
        Senator Bumpers. The last one of those backfits is going to
    go into service in 2007, the same year START III begins. Surely
    to God we are going to have a START III, if not in 2007,
    hopefully, not very long after that. These are the backfits:
    2002, 2003, 2006, and 2007. And I say, $4 billion I think is
    the calculated cost right now.
        Well, I will not pursue that. I am very pleased to hear the
    chairman's response to that, because we are looking for money
    any place we can find it.
        Mr. Dalton. Yes, sir.

                               Aircraft building

        Senator Bumpers. And that brings me to the next subject of
    money, and that is I am very pleased, Mr. Secretary, with your
    comments about the F-18E/F, and I agree totally. I am not all
    that captivated with the E/F, but I can tell you I agree with
    you there is going to be no fighter threat to the E/F over the
    next 15 to 20 years. You said two decades. I will certainly
    accept that.
        Mr. Dalton. Yes, sir.
        Senator Bumpers. Now, here is the timeline we are looking
    at. We are going to do the E/F now, which is going to be
    superior to any enemy fighter in the world for two decades. And
    incidentally, the intelligence community says that also. That
    is not just the Navy's opinion.
        Then in 2000, the year 2000, the Air Force is going to
    start building the F-22. Now, Mr. Chairman, I hope you will
    listen carefully to this. In the year 2000 we are going to
    start building 438 F-22's, which is going to cost $86 billion.
    And I will not be able to stop it; I might get 25 votes if it
    is a clear day and everybody's thought processes are working
    OK.
        You count R&D, cost of production--which incidentally,
    according to the Pentagon's own in-house study, the cost
    analysis improvement group, is going to be $16 billion more
    than the Air Force said it would be. When you add that $16
    billion in, and the cost of R&D, that is $190 million plus per
    plane. We are going to start that in 2000.
        And what are we going to do in 2005? We are going to start
    building the Joint Strike Fighter, and we are going to build
    somewhere around 3,000 to 4,000 of them, at about one-third of
    the cost of the F-22.
        I am not knocking the F-22. I know it will be a magnificent
    airplane. They are going to roll that sucker out this
    afternoon, you know, with banners waving and television
    everywhere, and everybody is going to ooh and ah and say, is
    that not a wonderful airplane. Well, count me in on that. I
    could not agree more.
        But I am going to debate an Air Force general this
    afternoon on CNN right after they roll the F-22 out, and I
    relish the thought.
        Incidentally, GAO says the F-15 will be superior to any
    enemy fighter in the world through the year 2015, despite that
    magnificent colored brochure the Air Force has put out to the
    contrary.
        So my point is this. The chairman has said we are looking
    for money. We are not looking for money; we are desperate for
    money. If we are going to balance the budget and restore
    people's confidence in the American system of governing, we are
    going to have to balance the budget. I cannot think of anything
    other than public financing of campaigns and balancing the
    budget that will finally get this Nation and its people back on
    track where they have confidence in the people seated around
    this table and confidence in our democracy.
        You know, it is fine for the Air Force to want the F-22. I
    would probably want it too if I were an Air Force pilot. But
    when I look at the superiority we are going to have with the F-
    15, the F-18E/F, and the Joint Strike Fighter, I see no need to
    buy an additional fighter plane that is absolutely
    prohibitively expensive.
        We are planning to build 1,000 E/F's. General Krulak, I
    understand the Marine Corps does not want to take their 300; is
    that correct?
        General Krulak. That is correct, sir.
        Senator Bumpers. Because you cannot afford it?
        General Krulak. Because we believe that the end game for
    us, as I have mentioned before, is a single type, model, series
    that will allow us to have a STVL variant of Joint Strike
    Fighter. In order to do just what the Senator is saying, be
    fiscally responsible, we have, one, said we will stick with the
    C/D, and two, we will remanufacture our AV-8B's, all of them to
    get to that system.
        Senator Bumpers. Mr. Chairman, if I may, just two quick
    questions.
        Senator Stevens. You are entitled to such time as you want,
    Senator.
        Senator Bumpers. Thank you very much.
        Mr. Secretary, what is this going to do to the cost of the
    E/F, if we build 700 rather than 1,000?
        Mr. Dalton. I will provide that answer for the record,
    Senator. Obviously, the cost per aircraft will be higher if we
    are building the lower number. But in terms of what it would be
    precisely, I will provide that for the record.
        [The information follows:]

        The average Unit Recurring Flyaway Cost of the F/A-18 E/F
    based on 1,000 aircraft is $42.2 million and will increase by
    $3.06 million in constant year fiscal year 1997 dollars should
    the Department of Defense procure 700 total aircraft vice the
    1,000 currently planned. In then year dollars, the Average Unit
    Recurring Flyaway cost based on 1,000 aircraft is $55.3 million
    and will increase by $0.22 million should the Department
    procure 700 total aircraft vice the 1,000 currently planned.

        Senator Bumpers. Admiral Johnson, if I ask you--this is a
    difficult question. It is probably an unfair question, but if
    you want to take a crack at it. How would you compare the
    advance of the E/F over the C/D, technically, performance,
    everything, as a percentage? Or however you want to evaluate
    it.
        Admiral Johnson. I would put it this way, Senator Bumpers.
    I have flown them both. You feel--as you walk up to an E/F, you
    feel like you are walking up to a Hornet aircraft. As soon as
    you light the afterburners for takeoff and get airborne and
    feel the flight controls and look at the system response, you
    know you are not in a Hornet any more; you are in a Super
    Hornet.
        It is a magnificent flying airplane. And I have described
    the systems enhancements to that airplane that make it truly a
    different airplane. It is the right airplane for the Navy. So I
    am very comfortable operationally with what that provides the
    country, again, for the next two decades?
        Senator Bumpers. Admiral, are you familiar with the Air
    Force statement that the F-18E/F may be a fine airplane, but it
    does not provide the air dominance, that it does not provide
    the suppression of ground forces, such as radar systems and so
    on, that the F-22 would? How would you respond to that?
        Admiral Johnson. Well, I would respond this way, Senator
    Bumpers. The E/F--I described the combat enhancements of the E/
    F in terms of a combination of a significantly upgraded
    airplane with stealth capabilities built into it. It is not an
    all-stealth platform. We all know that. But it does have
    enhancements.
        It is a combination of that enhanced aircraft and the
    ability of the new weapons systems that we will have in
    service, the joint weapons systems that we will have in
    service, the munitions that will allow us to stand off, it is
    the combination of those, it is the balanced, integrated
    approach to survivability that I described earlier. I believe
    very sincerely that that will make us equal to or better than
    the threat for at least the next two decades.
        It is a different approach than General Fogelman's air
    dominance approach. He and I understand that. We talk about it
    a lot. But for what the Navy needs, we believe this is the
    right answer.
        Senator Stevens. Senator, you are again back in some areas
    that I think when we really get to the time--and I want to
    assure you we are going to take the time to go upstairs or go
    into our own facility over here and talk about the classified
    aspects of these planes, because there are some classified
    aspects that we would have to discuss to really get to it. But
    I want you to know, as I said before, I am in agreement with
    you in terms of--and I think the cochairman is too--in terms of
    finding some way to get across this bridge to have the
    modernization we want.
        In my judgment, it is possible to go ahead with the F-22
    and to then have what amounts to the same things, the C/D
    change to E/F, to have the V-22 change into JSF. And we have
    got to find--if we could bridge that, we could pick up the
    money we need to meet the difference.
        But I want you to know, it would not be a reduction in the
    budget. We would then be able to fund the things that are in
    the budget that have to come out now if we do not do something
    like that.
        So it is something that would require consultation with the
    Secretary and his people and with the service chiefs. But we
    want to do something like that. But I would urge you, if we are
    going to get into the differences here, that we keep in mind
    the classified aspects of some of the things we are talking
    about.
        We will have another meeting. You recall the first one we
    had up in 407.
        Senator Bumpers. Yes.
        Senator Stevens. We will have another meeting to pursue
    that further, and the Department's on notice that we intended
    to have another meeting after that first one to see if we
    cannot find some common ground before we go to the markup of
    the bill this year.
        Senator Bumpers. Finally, let me just say this for the
    record. This is not a question to any of you gentlemen. I
    assume that you all saw the letter that Secretary Cohen wrote
    Senator Thurmond, who is chairman of the Armed Services
    Committee, on the F-22. Maybe you did not. I want this for the
    record anyway. I think, Mr. Chairman, as unanimous consent,
    that that letter be inserted in the record for the purposes of
    this.
        Senator Stevens. Without objection.
        [The information follows:]
                        Letter From Secretary Bill Cohen
                                      The Secretary of Defense,
                                         Washington, DC, April 2, 1997.
    Honorable Strom Thurmond,
    Chairman, Committee on Armed Services,
    United States Senate, Washington, DC.
        Dear Mr. Chairman: Section 217 of the Fiscal Year 1997 National
    Defense Authorization Act required that the Secretary of Defense direct
    the Cost Analysis Improvement Group (CAIG) in the Office of the
    Secretary of Defense to review the F-22 aircraft program, analyze and
    estimate the production costs of the program, compare this estimate
    with an earlier program estimate, and describe major changes that have
    occurred since the earlier estimate. The report containing this
    estimate and analysis is attached.
        The CAIG estimate concludes that the production cost for 438 F-22's
    of the currently approved configuration, procured on the currently
    planned schedule, will be $64.4 billion. Adjusted for numbers of
    aircraft, this estimate is about 11 percent higher than the CAIG's 1992
    Milestone II estimate. The more recent estimate presented in the
    attached report makes extensive use of the costs incurred in production
    of the first aircraft built in the ongoing development program.
        The CAIG estimate is well above the current Air Force estimate of
    $48.3 billion. Let me explain briefly the difference between the
    estimates, and how the Department is dealing with this difference. The
    primary difference between the estimates has to do with the credit
    given for the success of a number of cost-reduction initiatives planned
    by the Air Force. The CAIG has concluded there is currently
    insufficient evidence to justify adjusting its estimate based on these
    initiatives. The Air Force, on the other hand, believes the cost
    reductions are achievable and that its contracting approach will
    motivate the contractor team to achieve them. While I support this
    initiative by the Air Force to minimize the cost of these expensive,
    yet critically important aircraft, we nevertheless must budget
    prudently and take account of the possibility that such reductions
    might not be achieved, or that other factors might cause the cost to
    increase.
        The CAIG's estimates have proven to be reliable guides to program
    costs in the past, so we must accord serious weight to this new
    estimate. However, we will not know for some time whether the CAIG or
    the Air Force estimate is more realistic. We will get our first
    indication this fall, when the Air Force plans to negotiate target
    prices for the first six production lots. We will learn more in the
    following year or two, as we begin to see some benefits from the cost-
    reduction initiatives, and as we see results from initial flight-tests.
        The Department will submit the F-22 Selected Acquisition Report
    reflecting the Air Force's estimate of $48.3 billion. This is
    consistent with the Air Force's budget, which, over fiscal years 1998-
    2003 is within six percent of the CAIG's estimate. If we determine that
    cost savings cannot be achieved, we will, consistent with our cost as
    an Independent Variable approach, make changes to the program content--
    quality and/or quantity--so as to keep the program both stable and
    affordable. We are also in the process of developing a Department
    policy aimed at improving program stability, perhaps by providing
    within our outyear budgets and planning projections some reserve funds.
    We will provide more information on this concept at a later time.
        Finally, I note that we have our major tactical aircraft
    modernization programs under review in the Quadrennial Defense Review
    (QDR). The CAIG cost estimates for the F-22 will be taken into account
    as we evaluate alternative tactical aircraft programs in the QDR. Our
    QDR report will indicate our conclusions with regard to the F-22's need
    and affordability in the context of that review.
        A similar letter has been sent to the Chairmen and Ranking Members
    of the other congressional defense committees.
                Sincerely,
                                                            Bill Cohen.

        Senator Bumpers. It is not totally proper, because the Air
    Force is not here and we are talking about an Air Force
    airplane.
        But Secretary Cohen did something I have never seen before,
    and I applaud him on the one hand for it and on the other hand
    it causes me to pause, and I will tell you why. He wrote to
    Senator Thurmond and said that the cost analysis improvement
    group, an in-house cost study group at the Pentagon, has
    determined that the costs of the F-22 has escalated by $16
    billion.
        Now, the Air Force says: Well, no problem. We will find
    that. We have got all kinds of things in mind. We can get
    together with Lockheed Martin and we will find that money. And
    that is all fine and good.
        But the Secretary went ahead to say that--and incidentally,
    the Air Force finds all kinds of flaws in the so-called CAIG
    study. But Secretary Cohen says to Senator Thurmond: ``We have
    found this group to be very reliable in their cost studies.''
        And I want to say that, of course, this takes the cost of
    production up by $16 billion. So if you add that, as I said a
    while ago, to R&D and all the other costs of the F-22, you are
    up to $86 billion, over $190 million per airplane.
        And Secretary Cohen says: If the CAIG study proves to be
    correct and we do not have additional cost overruns, just the
    $16 billion they have identified so far, that we are not going
    to spend that money. We are not going to spend the $16 billion.
    We will cut the quality and/or quantity of this airplane to
    stay within the dollars we have said we are going to spend.
        Now, on the one hand I applaud him. That is a very gutsy
    thing for the Secretary to say. On the other hand, I have to
    question. If we wound up building 200 at a cost of $70 billion,
    instead of 438, that is going to take the cost of that plane to
    somewhere between $300 and $400 million each. Of course, once
    it is underway I know these things never stop. As a matter of
    fact, I am sure there are exceptions to what I would say--I
    said on a television show the other day--I was probably in
    error on it--I have never known the Congress to kill a weapon
    system the Pentagon wanted.
        Senator Stevens. That is not so.
        Senator Bumpers. Well, I say it probably is not.
        Senator Stevens. There are at least two that I can name
    right now.
        Senator Bumpers. I can think of a couple that we killed,
    rather insignificant ones. But by and large--it is like I say
    on the F-22. I know I am going to lose that battle. We are
    going to build it. We are going to be $86 billion worse off,
    and we are going to start it in the year 2000, even though we
    have got planes that will be superior until the year 2015. And
    we are going to start building the Joint Strike Fighter in
    2005, and by the year 2015 we will have almost 1,000 of them.
        Senator Stevens. Senator. Senator, with due respect, this
    is the Navy you are talking to now.
        Senator Bumpers. I know.
        Senator Stevens. And I promised them we would be finished
    15 minutes ago.
        Senator Bumpers. They were nodding their heads in agreement
    with me. [Laughter.]
        Senator Stevens. Well, we do appreciate your concern, and I
    want you to know we are going to work with you and with the
    Navy and the Air Force to see we can get what they want and
    what they need, that we can afford.

                         Additional committee questions

        Gentlemen, we appreciate your courtesy. I will be
    submitting the other questions that I had. Again, I want to
    commend you. I remember when I first sent two of my kids over
    to Russia and they came back, and when they got off the plane
    out there at Dulles the first thing they did was to kiss the
    ground. We felt like kissing the ground when we got out of
    North Vietnam--I mean, North Korea.
        But we do appreciate everything that you all have done to
    help us out there and to give some hope to the people there,
    particularly in the Russian far east, that they will be able to
    work with us to maintain stability in the North Pacific in the
    years to come. That is a great relationship we are building,
    and it is to the absolute credit of the naval forces and the
    marines that have been out there. They have done a tremendous
    job as ambassadors of the United States there. We came home
    very proud of all that they are doing. So thank you very much.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                Questions Submitted to Secretary John H. Dalton
                   Questions Submitted by Senator Ted Stevens
        Question. The Committee understands the Navy intends to ask
    Congress for ``modified'' multi-year procurement authority for the
    first four new attack subs. Can you tell us when we will receive this
    request and how this multiyear authority will be different from
    traditional multiyear authority?
        Answer. The Navy is seeking one-time authority to procure multiple
    New Attack Submarines on a single ship contract beginning in fiscal
    year 1998. No extended waiver or permanent change in the law is sought.
    Proposed language to authorize a single contract for the first four
    submarines will be provided to Congress by the Navy.
        The fiscal year 1998 President's budget request balances the
    Congressional requirement to retain two submarine shipbuilders with the
    Navy's requirement to fund a balanced shipbuilding plan within limited
    resources. A key element of the Navy's fiscal year 1998 Shipbuilding
    Plan is the shipbuilders' proposal to team for the construction of New
    Attack Submarines. The Navy estimates teaming and a single contract for
    four ships over five years avoids costs of $450 million to $650 million
    over like construction profiles without construction teaming and
    retains two submarine shipbuilders as directed by the Congress.
        A single contract for four ships provides a reasonable commitment
    from the government that four submarines will be procured over the next
    five years. This commitment provides the business incentive to team,
    which allows substantial cost avoidance by:
      --Allowing the contractor team to economically order multiple ship
            sets of contractor furnished material;
      --Providing the assurance necessary to gain and sustain sub-tier
            supplier base interest in participation;
      --Providing the flexibility necessary for the shipbuilder to level-
            load schedules and avoid the cost inefficiencies of lay-offs
            and rehiring/retraining that will be associated with the
            production gap in fiscal year 2000.
        The most prudent approach to the single contract concept is use of
    a cost-plus incentive fee contract for all four ships. Specific reasons
    for selection of this type of contract include:
      --A cost-plus incentive fee contract avoids problems experienced in
            1970's with lead ship fixed-price contracts, which led to
            massive contract claims and extra contractual relief to settle;
      --A cost-plus incentive fee contract will allow negotiation of
            provisions to change the shipbuilder's focus on data revisions
            from increasing revenue to mitigating impact on overall ship
            construction;
      --The Navy has put in place effective, demonstrated cost control
            measures;
      --Neither the shipbuilders nor the Navy have return cost data on
            which to base a fixed price contract;
      --Although there is still cost risk, it can be better managed by a
            cost-plus incentive fee contract (lead ship and teaming risks).
        While a lead ship contract with three options allows future
    flexibility by Congress, it provides no government commitment to build
    four ships over five years. It is not reasonable to require the
    contractors to share proprietary production and construction methods
    and engage in full and open disclosure to construct just one ship
    without providing an assurance that they will not have to compete for
    follow-on ships. Consequently, it is doubtful that the shipbuilders
    would team unless economic order quantity (EOQ) funding and fiscal year
    2000 industrial base funding are provided up-front, along with a large
    termination liability being negotiated into the lead ship contract. The
    estimated additional cost to the fiscal year 1998 budget to procure the
    EOQ and advanced construction is more than $350 million. Additionally,
    if the three options were to be fixed price, it would be premature for
    the builders to make a fixed price offer with a sufficient high level
    of confidence. The proposed prices might not be affordable, as the
    shipbuilders would include a large contingency costs to cover
    unforeseen costs.
        Question. Secretary Dalton, what is the status of the 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. Mr. Secretary, when do you expect this case to be
    completed and should a judgment be made against the Government, what is
    the range of likely dollar values involved and how will this judgment
    be paid?
        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. The judgment to be
    entered against the United States is likely to be 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 Contract 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.
                                     ______

                 Questions Submitted by Senator Mitch McConnell
        Question. Mr. Secretary, as you know, Naval Ordnance Station
    Louisville, DOD's premier naval gun facility, was privatized in place
    last fall by the Navy, working with industry and the Louisville
    community. The Louisville privatization initiative is certain to lower
    the cost of overhaul and repair of naval guns by right-sizing the
    workforce and facilities needed for those product lines. Regrettably,
    the Navy was unable to provide a long-term commitment of workload to
    the privatized Louisville facility, and contractor rates have been high
    initially at Louisville because the Navy has provided less workload
    than originally planned. Adequate funding of the workload contracts
    executed at Louisville are therefore critical to the long-term success
    of this first-ever initiative. What funding does the President's fiscal
    year 1998 budget provide for the important naval gun work now being
    conducted by private industry in Louisville?
        Answer. The President's budget contains $6.6 million for the fiscal
    year 1998 overhaul of naval guns. All naval gun overhauls are conducted
    by private industry in Louisville.
        Question. Will the Navy place the originally intended work as well
    as the new gun overhaul work identified by LANTFLT and PACFLT in
    Louisville if the Navy's fiscal year 1998 budgets are sufficient?
        Answer. Louisville is the only place where Navy gun overhaul work
    is performed. Any gun overhaul work that is required and funded will be
    done by the Louisville contractors.
        Question. What are the Navy's specific objectives and expectations
    for the Louisville privatization project in the next fiscal year? Over
    the next five years?
        Answer. The Navy's objectives and expectations for the Louisville
    privatization effort are to achieve the goals the Navy has had for
    entering into this arrangement: namely to retain the technical
    capability to support the Fleet, to shrink Navy owned infrastructure,
    and to save money. The Navy is working with all of the parties
    associated with the Louisville privatization to achieve these goals.
        Question. Cost savings was certainly one of the Navy's key goals in
    the Louisville privatization. What plans does the Navy have to
    consolidate other naval gun work at the privatized Louisville facility
    in order to realize cost savings from the overhead reductions and other
    efficiencies that such consolidations would effect?
        Answer. All naval gun overhaul work is being done currently in
    Louisville. We have consolidated all of our gun overhaul work there in
    order to retain the technical capability to support the Fleet, to
    reduce Navy infrastructure, and to save money.
        Question. According to the Office of Naval Research the Military
    Technology Transfer Center (MTTC) at the Naval Ordnance Station
    Louisville is fulfilling all aspects of its current contract. Why then
    has it not received the $6 million earmarked for MTTC in the Defense
    Appropriations Bill for fiscal year 1997? Please provide a specific
    date this money will be released to MTTC.
        Answer. $3 million of the $6 million has been released, and the
    remaining $3 million is in-process in OSD. That funding will be
    forwarded to the Navy Surface Warfare Center when it is made available
    to the Navy.
        Question. I understand that the Atlantic and Pacific Fleets have
    stated a need for more gun overhauls of the type conducted at
    Louisville. Would additional funding effectuate the overhaul of
    adequate numbers of the MK 45 5 inch/54 caliber naval guns to assure
    the readiness and safety of those weapons and the sailors who operate
    them?
        Answer. The current condition of Gun Weapon Systems (GWS),
    resulting from previous funding streams, is adequate. However,
    reductions in overhaul capability resulting from budget reductions and
    increases in overhaul costs, would necessitate reducing the number of
    planned overhauls. In a stable population, this has potential negative
    impact on gun readiness and safety. If the proposed additional funding
    were applied primarily to GWS overhauls, fleet readiness of GWS could
    be improved. In addition, all GWS maintenance, whether depot (overhaul)
    or organizational (shipboard), is also designed to expose and solve
    safety problems as well as readiness issues. As part of the Navy's
    continuing priority emphasis on safety, maintenance and overhauls are
    critical elements.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                             modernization demands
        Question. Mr. Secretary, in your posture statement, you list
    acquisition reform, savings from base closings, and overhead savings as
    the primary ways you will get the money you need for your modernization
    programs. Do you think these will be sufficient, or will the Navy
    budget need to be increased to provide for necessary modernization?
        Mr. Secretary, is it the Department of the Navy's position that it
    requires additional procurement funds in fiscal year 1998 to meet its
    modernization objectives?
        Answer. The fiscal year 1998 budget adequately funds the immediate
    modernization needs of the Navy. However, if additional funds for
    modernization were to be made available by the Congress, accelerating
    procurement of certain platforms and systems already in our long-range
    program would be desirable in order to further improve the readiness of
    our forces in the next century.
        Question. Admiral Johnson, do you concur with the Secretary's view?
        Answer. Yes.
                                  v-22 osprey
        Question. Mr. Secretary, I am concerned with the price of the V-22.
    Can the Navy allocate more resources to the program over the next five
    years to reduce the unit price?
        Answer. The Department of the Navy, in the fiscal year 1998 budget
    submit, increased the planned procurement of MV-22 to 74 aircraft in
    the FYDP. This plan will procure 24 MV-22 aircraft per year starting in
    fiscal year 2003. This is an increase of approximately $1.1 billion
    (then year dollars) and 15 aircraft in the FYDP over the Defense
    Acquisition Board's approved profile.
        Given fiscal realities, the Department would find it difficult to
    program the additional $4 billion to $5 billion (then year dollars)
    through fiscal year 2000 to achieve a 3 percent to 7 percent recurring
    flyaway cost reduction, which would not begin to accrue until at least
    ten years hence. At this time, the Department has achieved what we
    believe is the best balance of priorities, resources and requirements.
    The Department continually evaluates and adjusts resources to achieve a
    balanced war fighting capability needed by the Naval Service.
                    navy missile defense testing at the pmrf
        Question. Secretary Dalton, I understand you just visited PMRF.
    Could you tell the Committee what you learned at the site regarding the
    advantages to completing Navy missile defense testing at the range?
        Answer. PMRF is the ideal operational test facility for Navy Area
    and Navy Theater Wide theater ballistic missile defense (TBMD) weapons.
    At other test sites, there are a number of problems arising from
    increasing ship traffic and growing pressure from businesses to utilize
    closed sea and air space, which in turn limit test times and flight
    envelopes. This problem will worsen as the need to test longer range
    cruise missiles, hypersonic weapons and various ballistic missile
    defense weapons materializes in the next decade. PMRF provides the
    largely unrestricted missile firing and flight test space the Navy
    needs to test our complex ship and aircraft combat systems.
    Additionally, PMRF is the only training and test range that is
    instrumented from the ocean's floor to space, allowing simultaneous
    employment of air, surface, and underwater targets. Moreover, PMRF's
    topography plays a dual role, providing a permanent, line-of-sight view
    to all parts of the range, its elevation permits the stationing of tons
    of equipment at an altitude that otherwise requires heavy-lift aircraft
    serving as sensor platforms--this is critical in the complex test
    scenarios envisioned in advanced ballistic and cruise missile defense
    system test and evaluation. Additionally, its long-range radars were
    designed to provide midcourse monitoring of ballistic missiles fired
    from Vandenberg AFB landing in the Kwajalein Atoll, these same radars
    will play a key role in Navy TBMD testing. All of these factors make
    PMRF the best choice for Navy TBMD system test and evaluation.
                             ship depot maintenance
        Question. Mr. Secretary, can you tell the Committee if the ship
    depot maintenance funding shortfalls will cause additional personnel
    reductions at the Navy shipyards in 1997?
        Answer. The planned workload at the naval shipyards in fiscal year
    1998 is fully funded. No personnel reductions at Naval Shipyards are
    caused by funding the overall ship depot maintenance program at less
    than 100 percent.
                                     ______

                   Questions Submitted to Adm. Jay L. Johnson
                   Questions Submitted by Senator Ted Stevens
        Question. Admiral Johnson, ship procurement rates for the Navy are
    at their lowest point in 50 years. To maintain a 350-ship force, the
    Navy must build nine to ten ships per year, twice the rate requested in
    your fiscal year 1998 budget request. Does this rate get any better in
    the out years?
        Answer. I am satisfied with my procurement plan today. Eventually,
    the DON needs to be buying about 10 ships per year once the ships
    procured back in the 1980's reach the end of their service lives. The
    current 5 ship per year budget is 4-5 ships per year below that 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. Admiral Johnson, the Navy is facing a crucial period of
    transition in aircraft and shipbuilding programs--the introduction of
    the F/A-18E/F and the MV-22, the development of the Joint Strike
    Fighter and the start of several new shipbuilding programs like the
    Arsenal Ship. Do your outyear budgets fully fund all of these program
    starts or will something have to slip or be terminated?
        Answer. The F/A-18E/F, MV-22 and the Joint Strike Fighter programs
    are all fully funded in the outyears. The Arsenal Ship, while not a
    shipbuilding program, is funded to produce a technology demonstrator.
        Question. Based on the conclusions of a March 1995 Navy study which
    stated, in part, that an active Ready Reserve Fleet would cost two to
    three times less than the current Inactive fleet, Congress appropriated
    $50 million in fiscal year 1996 to begin the National Defense Features
    program. What is the status of this program and how much of the fiscal
    year 1996 funds have been obligated?
        Answer. The Military Sealift Command (MSC) is currently in source
    selection on the National Defense Features program procurement. A
    Request for Proposals was issued on 13 September 1996. In response to
    the solicitation, several offers were received which are under
    evaluation. MSC expects to make an award or multiple awards in June. At
    this time, the $50 million is in the National Defense Sealift Fund
    (NDSF), available for expenditure for the immediate solicitation. To
    date, none of the fiscal year 1996 funds have been obligated.
        Question. Admiral Johnson, why do we need the Arsenal Ship? Is
    there some urgent requirement to build it now?
        Answer. We need Arsenal Ship as an affordable way to station
    massive firepower in forward areas as an enhancement to our existing
    forces. The initial product of the Arsenal Ship Program will be the
    Maritime Fire Support Demonstrator (MFSD). With MFSD, we anticipate
    that substantial benefit in terms of acquisition reform and technology
    advances will accrue to Navy's next surface combatant, DD-21, our
    transition carrier, CVX, and future classes of combatants. We are
    seeking revolutionary advances in joint connectivity and responsive,
    precise delivery of ordnance in support of land and littoral
    engagements. There are many technologies approaching maturity which can
    be incorporated into this ship, and timing allows the Maritime Fire
    Support Demonstrator to provide a technological bridge to DD-21. Delay
    of the MFSD would eliminate the best opportunity we have to test key
    DD-21 technologies together, at sea, in a timely manner. Additionally,
    the Maritime Fire Support Demonstrator program is a premier example of
    Navy acquisition reform. Conducting this research and development
    project under DARPA's Section 845 authority will enable us to learn
    from this effort and to incorporate successful aspects of acquisition
    reform in subsequent acquisitions.
        Question. Admiral Johnson, 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
    will 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. Admiral Johnson, does the Navy have the funds available
    in future procurement budgets to buy all the weapons the Arsenal Ship
    will require?
        Answer. Weapon quantity requirements are derived from CINC
    contingency and warfighting plans, rather than VLS cell availability.
    Arsenal ships, if produced, would allow for a significant forward
    redistribution of weapons in each theater. Funds will be made
    available, as necessary, for weapons to support CINC requirements.
        Question. Admiral Johnson, do you believe the current and future
    threat require the Navy to have a stealthy air-to-air fighter?
        Answer. The F/A-18E/F has countermeasures that will keep it more
    than equal to the threat for the next two decades. Introduction of the
    Navy variant JSF will complement the F/A-18E/F air-to-air capability.
        Question. Admiral Johnson, with only limited numbers of JSF's, are
    you concerned that the Navy may not be able to prosecute deep strike
    missions against heavily defended targets?
        Answer. No. The improved range, payload and survivability of the
    Super Hornet, combined with the assets of the carrier battle group,
    including Tomahawk, SLAM-ER+, HARM, EW, and electronic attack (EA),
    will enable the Navy to successfully conduct deep strike missions
    against threats anticipated through the 2015 timeframe. The Navy's
    current plan is to begin procuring JSF around 2010 to replace older F/
    A-18C's resulting in a carrier air wing mix of three F/A-18E/F
    squadrons and one 14 aircraft JSF squadron. With its improved RF and IR
    signature reduction, the JSF will most likely be employed against the
    more heavily defended or the deep strike targets in the early part of a
    campaign. However, in 2010 and beyond, JSF will not be the only weapon
    system capable of striking deep targets. All air wing strike fighters
    will be employed as a system of systems within the carrier battle group
    providing great flexibility in the prosecution of any mission. There is
    also flexibility in the Navy's acquisition plan which allows for future
    modification of the procurement quantities of JSF and the Super Hornet
    in order to achieve the optimum air wing mix based on threat, mission
    requirements, and affordability.
        Question. Admiral Johnson, are you concerned that other elements of
    the Navy force structure will suffer if the Navy devotes a historically
    high percentage of its budget to tactical aircraft?
        Answer. Operating within a total Navy funding level that is not
    likely to increase in the foreseeable future, force structure could be
    pressured when the funding requirements for tactical aviation build,
    especially once the Joint Strike Fighter begins procurement. That is
    why it is critical action be taken now, in the fiscal year 1998
    President's Budget, and then in the budgets that will follow decision
    made in the Quadrennial Defense Review, to drive down the shore
    infrastructure and force structure operating costs of the Navy. Unless
    funding can be freed from the support ``tail,'' the force structure
    ``teeth'' of the Navy will have to be sacrificed.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                 budget issues
        Question. Both the Navy and the Marine Corps have submitted add-on
    lists that total $3 billion. Do any of the items on these lists have a
    higher priority than any item contained in the President's original
    request for 1998? If so, please explain.
        Answer. No. The President's budget request for 1998 represents the
    highest priority programs of the Navy. The add-on list to which you
    refer contains high priority programs that were simply not affordable
    given the total funding available to the Department of the Navy.
        Question. What 1997 items have you identified, or would you
    identify, if Congress approves the President's request for broad
    authority to reprogram $2 billion for Bosnia operations? What programs
    have you identified, or would you identify, to permit the $2.8 billion
    rescission package the President has requested? What are the
    implications for the 1998 spending for these programs?
        Answer. The Navy has not been asked to identify programs for the
    reprogramming or rescission proposals noted. At this time, we expect
    these matters to continue to be addressed within the Office of the
    Secretary of Defense.
        Question. In an analysis for the Budget Committee, CBO and GAO
    identified up to $50 billion in ``underfunding'' in the next four to
    five years of the defense budget. What actions can you tell us about
    that the Quadrennial Defense Review is undertaking to address this
    problem?
        Answer. The Quadrennial Defense Review (QDR) was a threat and
    strategy-based review looking at the Department of Defense's ability to
    carry out its mission in the early twenty-first century. The QDR looked
    at strategy, force structure, readiness, modernization programs,
    infrastructure, intelligence, and human resources. Although the QDR was
    not a budget-based review, the fiscal realities of affordability and
    living within our means were significant factors in all the QDR
    reviews. The final QDR decisions have not yet been made, but they will
    address this issue.
                             quality of life issues
        Question. The Navy and Marine Corps continue to operate in
    peacekeeping and other international operations at a historically high
    rate. What indicators do you use to register the stress that this high
    operating tempo puts service men and women under?
        Answer. In 1985, Navy established the PERSTEMPO program for our
    Sailors to ensure a proper balance existed between family and the time
    they spend away from home. The program consists of three established
    guidelines: a maximum deployment of six months (portal to portal); a
    minimum Turn Around Ratio (TAR) of 2:1 between deployments (the ratio
    between the number of months a unit spends between deployments and the
    length of the last deployment, e.g., a nominal 12 months non-deployed
    following a 6 month deployment); and a minimum of 50 percent time a
    unit spends in homeport over a five-year period (three years back/two
    years forward).
        The Navy sets 50 percent time in homeport as the goal for our
    units. However, these units periodically make cyclical forward
    deployments for up to six months. During the preparation and deployment
    period, they are not able to achieve the desired goal of 50 percent
    time at home. This is why we use the five year average. Units which
    have recently completed a deployment typically spend a greater
    percentage of their time at home, which balances the time spent away
    during deployment, and allows them to meet the 50 percent goal over the
    five year period. Because the average assignment for our sailors is
    three to five years, all who complete their entire tours should receive
    the benefits of the program.
        It should be noted that scheduling conferences take place to
    coordinate the order of what units will deploy next. Additionally,
    deployment decisions regarding high demand/low density units such as
    EA-6B, EP-3, special forces (SEAL's) are determined by Global Military
    Force Policy (GMFP).
        The time our people spend away from home and the stress it may
    cause is of great concern. Maintaining the proper balance between work
    and family is a quality of life issue that warrants our utmost
    attention. Navy leadership is briefed monthly on the status of the
    PERSTEMPO program. I believe this program is the best method of
    achieving a balance between home and sea.
        Question. What measures do you use to measure the stress of their
    families?
        Answer. We are acutely aware of the stress family separation might
    cause our Sailors and their families. That is why we place extremely
    high emphasis on our quality of life programs, maintain an OMBUDSMAN
    program to foster better communication between Navy families and their
    respective commands, and offer counseling through our Family Service
    Centers (FSC's). Routinely, FSC counselors are requested to visit
    deployed units, just prior to their return home, to provide counseling
    to all Sailors in order to ease the transition of returning home.
    Additionally, the Family Advocacy Program Management Office is required
    to provide data on reported/substantiated spouse and child abuse
    incidents on a routine basis to Navy leadership. In addition to
    counseling, Family Service Centers also provide education and training
    courses on stress management. In fiscal year 1996, Navy Family Service
    Centers reported over 12,000 attendees at stress management courses.
        Question. What do these data show?
        Answer. The data shows that substantiated spouse and child abuse
    incidents combined have recently declined 30 percent. The following is
    the data for the past five years:
        Question. What lessons have been learned from Operation Desert
    Storm and more recent peacekeeping activities to reduce this stress?
        Answer. An important lesson learned from the Gulf War is the
    ongoing need to coordinate post-deployment medical surveillance
    programs (i.e., systematic health assessment of all returning service
    members) with comprehensive treatment for sick veterans identified
    using such surveillance. In response to this need, the Department of
    Defense directed the development of ``Specialized Care Programs''
    designed to offer high quality, multidisciplinary, and coordinated
    medical treatment for Gulf War veterans who, after full medical
    evaluation, still suffer from persistent disabling physical symptoms of
    indeterminate cause.
        Since March 1995, the Specialize Care Program at Walter Reed Army
    Medical Center's Gulf War Health Center has provided a 3-week intensive
    multidisciplinary outpatient treatment for persistently symptomatic
    Gulf War veterans. These veterans are referred from the Comprehensive
    Clinical Evaluation Program, DOD's Gulf War illness evaluation program.
    Additionally, the Specialized Care Program is active in research
    exploring potential causes and improved systems of health care for
    veterans' unexplained illnesses. Scientists have now recognized that
    unexplained illnesses have been prevalent among war veterans dating
    back at least to the Civil War. This would suggest that the Specialized
    Care Program concept would benefit veterans returning from future
    deployments.
        Discussions have occurred regarding the merit of a ``Deployment
    Medicine Treatment Center.'' The mission of a Center for Deployment
    Medicine would be to: provide treatment for veterans to persistent
    physical symptoms after any military deployment; define, refine and
    export systems of health care for ill veterans; and design and
    implement research into the causes of deployment-related illness.
        Question. In past years there was an attempt to reprogram money out
    of programs to assist military families to pay for operations in
    Bosnia. Is there going to be any similar attempt to pay for 1997 Bosnia
    operations with funds intended to help alleviate family stress?
        Answer. The Navy has no plans to finance fiscal year 1997 Bosnia
    operations by realigning funds out of programs to assist military
    families.
        Question. I am concerned that high operating tempos can put stress
    on military families and can result in higher rates of child and spouse
    abuse among military families. What trends do the most recent data show
    on this issue? How do these data compare to recent trends in civilian
    life?
        Answer. High operating tempos may exacerbate dysfunctional family
    situations, however, there is no evidence that high operating tempos
    increase rates of child or spouse abuse.
        Navy child and spouse abuse incidents reported and rates of
    reported incidents (per 1,000 children and spouses) have declined each
    year since fiscal year 1993. Total reported Navy abuse cases increased
    by 10.3 percent from fiscal year 1991 to fiscal year 1992, remained
    constant from fiscal year 1992 to fiscal year 1993, decreased 13
    percent from fiscal year 1993 to fiscal year 1994, decreased 11 percent
    from fiscal year 1994 to fiscal year 1995 and decreased 35 percent from
    fiscal year 1995 to fiscal year 1996. The decline in incident reports
    from fiscal year 1993 to fiscal year 1996 is partially due to
    downsizing, improved screening of cases through use of Navy's Risk
    Assessment Model and/or fear of career consequences. The Abuse Victim
    Study, required by the Defense Authorization Act for Fiscal Year 1993
    (Public Law 102-484) indicated that fear of negative impact was a major
    disincentive to reporting--this is exacerbated by downsizing.
        Family Advocacy Program abuse incident data fiscal year 1991
    through fiscal year 1996 follows:

    ----------------------------------------------------------------------------------------------------------------
                                                                              Fiscal year--
                                                   -----------------------------------------------------------------
                                                       1991       1992       1993       1994       1995       1996
    ----------------------------------------------------------------------------------------------------------------
    Spouse Abuse:
        Cases Reported............................      5,605      6,345      6,344      6,057      5,228      3,424
        Substantiated.............................      3,998      4,323      4,277      4,053      3,586      2,558
        Substantiated Deaths......................          5          4          1          5          2          3
    Child Abuse:
        Cases Reported............................      4,997      5,351      5,368      4,122      3,822      2,435
        Substantiated.............................      2,152      2,051      2,179      1,967      1,747      1,356
        Deaths....................................          6          7          5          7          5          3
    ----------------------------------------------------------------------------------------------------------------

        Navy Family Advocacy Program reported/substantiated abuse rates:

                                              [(Rate/1,000) by fiscal year]
    ----------------------------------------------------------------------------------------------------------------
                                                          Reported cases                  Substantiated cases
                                               ---------------------------------------------------------------------
                                                 1992   1993   1994   1995   1996   1992   1993   1994   1995   1996
    ----------------------------------------------------------------------------------------------------------------
    Child abuse:
        Navy..................................   13.1   13.5   13.8   10.5    7.1    4.9    5.3    4.9    4.8    3.9
        DOD...................................   14.2   15.2   15.0   13.8  ( \1\
                                                                                )    6.2    6.6    7.3    6.3  ( \1\
                                                                                                                   )
        Civilian \2\..........................   39.0   43.0   43.0   43.0  ( \1\
                                                                                )   16.0   15.0   16.3   14.7  ( \1\
                                                                                                                   )
    Spouse abuse:
        Navy..................................   24.0   25.2   24.5   22.4   13.9   16.6   17.2   14.4   15.4   10.4
        DOD...................................   23.4   24.7   26.1   25.8  ( \1\
                                                                                )   17.8   18.1   18.8   19.0  ( \1\
                                                                                                                   )
        Civilian \3\..........................  .....  .....  .....  .....  .....  .....  .....  .....  .....  .....
    ----------------------------------------------------------------------------------------------------------------
    \1\ Unknown.
    \2\ Civilian rates are taken from National Child Abuse/Neglect Data System.
    \3\ National level data base is not available.

        Question. I recently wrote to Secretary Cohen supporting his
    comment that it is ``unacceptable'' for Military Families to be on Food
    Stamps. What is your view on this issue? How many Navy/Marine Corps
    families receive Food Stamps? What actions would you find acceptable
    and affordable to address this problem?
        Answer. It is always unacceptable to have a service member rely on
    public assistance of any type. Because food stamp eligibility is tied
    to both income and number of dependents, there are cases of service
    members receiving food stamps in pay grades as senior as E-7. Service
    members who require food stamps to support their families have acquired
    more dependents than they can reasonably expect to be able to support.
    While the issue is an emotional one, we can surely reduce the very
    small percentage of service members receiving this assistance by
    helping them to understand that responsibility includes considering
    family income when marrying, starting a family, or increasing family
    size.
        Because each state has different requirements for food stamp
    eligibility, a family on food stamps in one state might not be eligible
    to receive them in another. For this reason, it is almost impossible to
    track the actual number of personnel on food stamps by name. However,
    studies done within the Department of Defense and surveys completed in
    the Navy over the past few years show the number of service members
    receiving food stamp assistance is approximately .5 percent. This
    translates to about 5,000 service members who may be on food stamps in
    the Navy.
        This is a societal problem, and as such, must be tackled on a
    societal basis. I do not feel it reasonable to raise over 400,000
    salaries above any possible food stamp eligibility. A possibility may
    be to appoint a study group to explore options to resolve this problem
    within the service or Department of Defense.
                             hunter/jaeger aviation
        Question. What is the Navy and the Marine Corps assessment of
    Hunter/Jaeger Aviation that was demonstrated at the recent exercises
    you jointly held?
        Answer. Hunter/Jaeger Aviation was tested during the Advanced
    Warfighting Experiment. While a full analysis has yet to be completed,
    preliminary results from Hunter Warrior indicate the concept of using
    air as a maneuver element worthy of further exploration. If certain
    technological questions can be resolved, initial results indicate that
    this concept may provide significant improvements to ground force
    combat effectiveness.
        Question. What activities do you plan to further test Navy and
    Marine Corps support for ground forces under this concept.
        Answer. The Hunter Warrior detachment after-action report is still
    in work. Preliminary discussions are currently ongoing regarding future
    activities.
        Question. What other technologies or concepts are you considering
    that would provide direct combat support for ground forces that would
    be at least as low in cost and that would provide sustained support as
    the Hunter/Jaeger concept?
        Answer. Jaeger Air was not completely evaluated during Hunter
    Warrior. Only the command and control function was exercised. The use
    of air as a maneuver element presents significant training and
    technology challenges: there is insufficient data to indicate that this
    approach is a low-cost option. The Automatic Targeting Hand-off System
    (ATHS) is scheduled to be incorporated in most Navy and Marine Corps F/
    A-18 and AV-8B aircraft to provide improved Close Air Support (CAS)
    capabilities. Improvements in air-to-ground sensor capabilities (FLIR,
    LANTIRN pods, etc.) and technologies to provide real-time information
    in the cockpit (RTIC) are ongoing.
        Question. Is Hunter/Jaeger Aviation a high or low priority in the
    Navy and Marine Corps budget and in your thinking for the future?
        Answer. Hunter/Jaeger Aviation is not funded in the Navy and Marine
    Corps budget. The concept of air as a maneuver element remains a
    priority for the Navy and Marine Corps throughout the Sea Dragon
    Advanced Warfighting Experiment. New command and control improvements
    through technology insertions or doctrinal modifications are a medium
    priority within the OPNAV Command, Control, Communications, Computers,
    Information, Surveillance, and Reconnaissance (C\4\ISR) road map.
        Question. Please list the costs you envision for Hunter/Jaeger
    Aviation for the next two years and compare those costs to other forms
    of direct support to ground forces from platforms at sea in the budget
    for the next two years.
        Answer. There is no formal Hunter/Jaeger Aviation program in the
    budget. An estimate to support a 12 aircraft squadron of $1.5 million
    in year one and $2.7 million in year two has been developed, but has
    not yet been validated. The concept of employing air as a maneuver
    element is being investigated within the Sea Dragon Advanced
    Warfighting Experiment series. Platforms in the budget which could, and
    do provide direct support to ground forces include numerous aircraft,
    weapons, and C\4\ISR. Detailed costs/funding lines for the next two
    years are contained in the President's Budget Submit.
                      ea-6b prowler replacement to ef-111
        Question. The Department of Defense has made a decision to replace
    the EF-111 with the EA-6B Prowler. This Committee has had significant
    reservations about the timing of this replacement, and also about the
    Navy's commitment to fully fund the necessary upgrades. It is well know
    that currently 20 EA-6B's are subject to embrittlement of the center
    sections of their wings (a molecular anomaly in aluminum stock when
    combined with use of that material in high stress environments such as
    flying, causes stress corrosion cracks). Replacement center sections in
    the wings of 20 aircraft manufactured prior to 1976 need to be
    installed. The Navy has no money in its fiscal year 1998 budget to
    address this embrittlement issue. The Navy is taking a risk to the
    operational readiness of the EA-6B.
        Why doesn't the Navy have the $100 million required to address the
    embrittlement of 20 EA-6B center wing sections in its fiscal year 1998
    budget?
        Answer. The Navy is fully committed to assuming the mission of the
    EF-111A with the EA-6B Prowler. To accomplish this tasking, the Navy
    increased PAA from 80 to 104 aircraft. The 24 aircraft required to
    support the PAA increase were in storage. Of these 24 aircraft, 20 are
    now undergoing concurrent SDLM, re-wing and Congressionally mandated
    Block 82 to Block 89 modifications.
        Through fiscal year 1997, a total of 32 re-wings have been funded:
    12 have already been installed and the remaining 20 re-wings, funded
    with fiscal year 1997 and prior year funds, begin delivery in fiscal
    year 1998. These 20 re-wings are for the 20 aircraft, which are
    undergoing modifications outlined above. Today there are 39 aircraft in
    service made with the older 7079 aluminum wing, which is subject to
    embrittlement. Of these aircraft, 8 have had their wings replaced and
    10 are in the process of getting their wings replaced while undergoing
    the concurrent SDLM, re-wing and Block 82 to Block 89 modifications.
    The remaining 21 aircraft with older wings are fully operational and
    inspected on a regular basis. Every aircraft removed from service
    before required impacts the Navy's ability to meet its operational
    commitments. As long as the 21 aircraft with the older wings are fully
    operational, it makes both fiscal and operational sense to keep them in
    the air. All aircraft currently grounded due to embrittlement will have
    their wings replaced with fiscal year 1997 and prior year funds.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                            recruiting and retention
        Question. Admiral Johnson, I understand you intend to recruit
    47,000 sailors in 1998. What is the goal for high school graduates and
    for CAT I-IIIA personnel?
        Answer. Based on a goal of 47,000 accessions and planned quality
    standards of 95 percent high school diploma graduates and 65 percent
    CAT I-IIIA, Navy will recruit 44,650 high school graduates and 30,550
    CAT I-IIIA Sailors in fiscal year 1998.
                             ship depot maintenance
        Question. Admiral Johnson, the Defense Department has identified
    readiness as its number one priority. With that goal, can you explain
    why ship depot maintenance is only funded at 88 percent of its
    requirements?
        Answer. The Navy's ship depot maintenance program is budgeted at a
    level that will support critical readiness requirements and will allow
    us to obtain maximum utility from our organic depot maintenance
    facilities. We have taken into account the resourcing of all of our
    readiness programs (material, training, personnel, etc.) and have
    stricken the best possible balance of resources to achieve maximum
    readiness at the minimum cost.
        Question. Admiral Johnson, how can you adequately maintain the
    fleet if you are only funding 88 percent of its needs?
        Answer. First, it should be recognized that we have budgeted $174.6
    million more for Active Forces ship depot maintenance in fiscal year
    1998 ($2,040.7 million) than the current estimate for fiscal year 1997
    ($1,866.1 million). In addition, our budget includes $1,707.8 million
    of funding in the Shipbuilding and Conversion, Navy account in fiscal
    year 1998 for the U.S.S. Nimitz (CVN-68) refueling complex overhaul.
    Second, the Navy relies on two critical maintenance policies to ensure
    the continued safe and efficient material condition of our ships:
    Reliability-Centered Maintenance (RCM) and Condition-Based Maintenance
    (CBM). We require that the maintenance plans for new acquisition ships,
    systems and equipment be based on RCM principles in order to achieve
    readiness objectives in the most cost-effective manner. In addition,
    the Navy requires that the maintenance plans for in-service platforms
    be reviewed and modified to incorporate RCM principles in areas where
    it can be determined that the expected results will be commensurate
    with associated costs. Finally, CBM diagnostics, inspections and tests
    are utilized to the maximum extent practicable to determine performance
    and material condition for aircraft, ships, systems and equipment.
       navy missile defense testing at the pacific missile range facility
        Question. Admiral Johnson, can you elaborate on the Navy's current
    plans for completing flight tests of the Navy Area Wide and Theater
    Wide missile defense systems at the Pacific Missile Range?
        Answer. Within the TBMD Area Program the Navy intends to conduct
    the following T&E events at PMRF:
      --User Operational Evaluation System--Second Quarter fiscal year
            2000; Three SM-2 Block IVA firings in three events.
      --Developmental Testing (DT)--First Quarter fiscal year 2001; Five
            SM-2 Block IVA and one Block III firing in seven events.
      --Developmental/Operational Testing (DT/OT)--First Quarter fiscal
            year 2001; Six SM-2 Block IVA and two Block III firings in four
            events.
      --Operational Evaluation (OPEVAL)--Second Quarter fiscal year 2001;
            Fourteen SM-2 Block IVA and three Block III firings in seven
            events.
        In addition, within the Aegis LEAP Interceptor flight demonstration
    program (Navy Theater Wide TBMD), the Navy will conduct the following
    T&E events at PMRF:
      --Control Test Vehicles--Fourth Quarter fiscal year 1997 to Fourth
            Quarter fiscal year 1999; Two modified SM-2 Block IV and two
            SM-3 missiles in four events.
      --Guidance Test Vehicles--Second Quarter fiscal year 2000 to First
            Quarter fiscal year 2001; Four SM-3 firings in four events.
                                 carrier basing
        Question. Admiral Johnson, I understand the Navy is examining
    locations for basing three Pacific Fleet aircraft carriers. Can you
    tell us whether you believe Pearl Harbor might be a good candidate and
    why?
        Answer. In accordance with the National Environmental Policy Act of
    1969, the Navy is currently working on an Environmental Impact
    Statement (EIS) to evaluate the environmental effects associated with
    homeporting three U.S. Pacific Fleet nuclear powered aircraft carriers.
        Several criteria must be considered when comparing potential home
    port locations for these carriers. Among the key criteria are the
    following: clear access to the sea, including channels and turning
    basins of adequate depth; pier and/or wharf space adjacent to the
    ship's berth for safe loading and handling of material, supplies, and
    equipment; access to shore services such as high-voltage electrical
    power, high-volume steam, water, and sewer; nearby shore space for
    maintenance facilities, warehousing, and parking; roadway capacity to
    accommodate daily commuters; quality of life for the crew and their
    families, including housing, schools, medical facilities, military
    grocery and retail shopping, and recreation; utilization of existing
    naval infrastructure; and cumulative environmental impacts associated
    with changes in personnel loadings, construction of any required
    facilities, dredging, etc.
        Since Pearl Harbor is one of our major fleet concentration areas
    and may have the potential to meet the key homeporting criteria, it is
    appropriate to consider it as a possible alternative in the preliminary
    analysis for the EIS.
        Question. Admiral Johnson, there are some who question whether it
    makes sense to base a carrier in Hawaii if the air wing was stationed
    on the mainland. Does this give you concern?
        Answer. The environmental and operational impact and efficiencies
    of the location of the air wing with regard to the carrier's homeport
    will be evaluated as part of the EIS. The aircraft and air wing
    personnel do not remain on a carrier while it is in home port. Since
    the air wing is typically based at multiple Naval Air Stations and
    flies out to meet the carrier at sea, Pearl Harbor should be evaluated
    as a possible alternative during the EIS process.
        Question. Admiral, I am told that EA-6B aircraft are all based on
    the West Coast. In order to deploy with an East Coast carrier, they
    have to fly across the United States and marry up with an air wing
    there. Is this accurate and does it present any serious problems for
    the Navy.
        Answer. Yes, all of the stateside Navy EA-6B active duty squadrons
    are located at a single site, NAS Whidbey Island, Washington. EA-6B
    exceptions are the single forward deployed squadron with the U.S.S.
    Independence in Japan; four Marine Corps squadrons at MCAS Cherry
    Point, North Carolina; and the single Navy reserve squadron at the
    Naval Air Facility, Andrews Air Force Base, Maryland.
        The EA-6B has supported both east and west coast carriers for 25
    years from a single site. There are some minor differences in deploying
    across the country to the East Coast as compared to deploying the
    length of the West Coast from Puget Sound to San Diego. For example,
    the time to truck squadron equipage to and from the carrier increases
    from 3 to 7 days. With the use of airlift for all personnel movements,
    the impact on the sailors is minimal because personnel movements are
    completed in one day. Once aircraft, personnel, and equipage are with
    the carrier, the Navy provides indigenous intercontinental
    transportation, that is, the squadron goes with the aircraft carrier.
        With the assumption of the radar support jamming mission for
    Department of Defense, the Navy has stood up four more EA-6B squadrons
    in the last two years, with a fifth coming in October 1997. These
    squadrons will deploy around the world in a land based expeditionary
    role to replace the retiring Air Force EF-111A, and are also based at
    NAS Whidbey Island. In contrast to squadrons deploying on aircraft
    carriers, expeditionary squadrons rely heavily on strategic lift and
    tanking to move personnel, equipment and aircraft from their home base
    to overseas deployment locations. However, regardless of the home base
    location in the United States, the same complications of using
    intercontinental strategic lift would occur.
        The Navy experience with a consolidated support structure for the
    EA-6B at a single base has been very positive for decades, and we see
    continuing advantages to a consolidated EA-6B force structure at NAS
    Whidbey Island.
        Question. How much more difficult would it be for aircraft to fly
    to Hawaii to marry up with their aircraft carrier?
        Answer. The obstacles presented by basing a carrier (CV/CVN) in
    Hawaii and its carrier air wing (CVW) in CONUS range from ``painful''
    to insurmountable. What follows is only a sampling of the logistics
    problems this situation presents.
        Each CVW consists of the following types and number of aircraft:

    F-14..............................................................    14
    F/A-18............................................................    36
    EA-6B.............................................................     4
    ES-3..............................................................     2
    S-3B..............................................................     8
    E-2...............................................................     4
    C-2...............................................................     2
    SH/HH-60..........................................................     6

        The C-2 is not air refuelable; however, with the installation of
    additional fuel bladders, these aircraft could fly from CONUS to
    Hawaii.
        The E-2 is not air refuelable and would require transport to
    Hawaii. Since the aircraft is too large to put in a C-17 or C-5, the
    Navy would have no choice but to surface-lift the CVW's four E-2's on a
    larger amphib (which ties up its flight deck) or some other suitable
    merchant. Sailing the carrier east from Hawaii to meet the E-2's is
    also not an option as the initial ``carrier qualifications'' of the
    pilot's each at sea period requires that an alternative landing option
    (divert field) exist.
        The SH-60/HH-60 helicopters would likewise require either an air or
    surface-lift.
        It is anticipated the delays encountered in scheduling the lifts
    and preparing the aircraft for transport would negate any time
    advantage homeporting a carrier in Hawaii might provide due to the
    homeport's location closer to the theater of interest.
        The other CVW aircraft could ``Transpac'' to Hawaii from CONUS;
    however, this is far from ``routine'' and creates additional risk.
    These types of flights are limited by the Navy to those required for
    operational necessity. Numerous aircraft emergencies that could occur
    on these extended landing alternative, could eventually result in the
    loss of an aircraft. Survival of the crews that are required to exit
    their aircraft due to these emergencies is also complicated by the lack
    of readily available rescue platforms.
        Homeporting a CV/CVN in Pearl Harbor would also increase the
    operational burden of the carriers that remain CONUS based. Currently,
    the CONUS-based CV/CVN's share the requirements for the initial
    ``carrier qualification'' of Student Naval Aviators and those
    undergoing training in the numerous Fleet Readiness Squadrons. One less
    carrier in CONUS increases the requirements on the other carriers.
        Likewise, isolating a carrier in Hawaii from all carrier based
    squadrons limits the exposure of the CV/CVN to flight operations;
    hence, the efficiency of all personnel associated with the flight deck
    and related equipment is reduced.
        Another consideration is the ``Ready Carrier'' requirement. CV's/
    CVN's and their CVW's that are not deployed, but are in either their
    final stages of pre-deployment work-ups or immediate post-deployment
    phase are designated the ``Ready Carrier,'' which means they are
    required to maintain a state of readiness that enables deployment
    within 96 hours. The logistics associated with getting the aircraft,
    crews/maintainers, and other equipment on the ship would eliminate a
    CV/CVN based in Hawaii without its CVW from participating in this
    rotation.
        Homeporting a CV/CVN in Hawaii with its CVW in CONUS creates other
    ``hurdles'' which would limit the responsiveness of the CVBG to
    whatever world crisis may be developing. A CVW consists of
    approximately 1,980 men and women. All of these people would now
    require transportation from their home bases in California, Washington,
    and Virginia (F-14 squadron) to Hawaii. This is much more cumbersome
    than the current situation--a large percentage of CVW personnel are
    located at or near San Diego where the CONUS-based carriers pull in for
    loading and unloading.
        The amount of equipment the CVW squadrons are required to transport
    for operations is also significant. In order to deploy a CVW,
    approximately 45 semi-trucks/flatbeds of equipment are loaded at the
    squadron's homebase and driven to the carrier for unloading. Obviously,
    all of this equipment would require airlift to Hawaii or back if that
    is where the CV/CVN is located.
       navy missile defense testing at the pacific missile range facility
        Question. Admiral Johnson, I was told by General Lyles that the
    Navy and BMDO are working together to identify the necessary upgrades
    for PMRF. Can you assure me that the appropriate officials will meet
    with PMRF representatives to make sure both sides exchange the
    information necessary to allow test planning and preparation to
    proceed?
        Answer. Yes. The Navy and BMDO recognize the importance of actively
    engaging the professionals at PMRF to plan for the test and evaluation
    of Theater Ballistic Missile Defense (TBMD) systems. We have included
    PMRF personnel in our upgrade initiatives for future TBMD system test
    and evaluation and expect to do so throughout the service life of these
    weapons systems.
                                     ______

                  Questions Submitted by Senator Byron Dorgan
                     use of 480-gallon external fuel tanks
        Question. These questions refer to the General Accounting Office's
    report on ``Navy Aviation: F/A-18E/F Will Provide Marginal Operational
    Improvement at High Cost.''
        The Department of Defense argues that the F/A-18C/D cannot carry
    480-gallon external fuel tanks on its inboard wing stations without
    extensive structural modifications to the plane's pylons and wings. DOD
    further states that the Canadian CF-18 has used the 480-gallon tanks
    for ferry purposes only, because the task restricts maneuver
    capability.
        GAO responded that Canadian officials argued that in combat the
    fuel in external tanks would be used first, emptying the tanks by the
    time the F/A-18 reaches its target. GAO states that Canada planned to
    use the 480-gallon tanks operationally in Europe. GAO also cites a 1991
    McDonnell Douglas report stating that the 480-gallon tank successfully
    passed all qualification tests, including a test to withstand
    acceleration loads due to catapult and arrestment. The report stated
    that the study demonstrated load carrying capability without damage and
    that the flying qualities with the 480-gallon tank are equivalent and
    comparable to 330-gallon tank loadings.
        How does the Navy respond to the GAO's account of Canada's plans
    for the CF-18? Is the Navy familiar with the cited testing record of
    the C/D carrying the 480-gallon tank? How does the Navy respond to the
    1991 McDonnell Douglas report?
        Answer. The significant flight restrictions imposed on the CF-18
    carrying 480-gallon external fuel tanks, specifically, the flight
    maneuver limitations cited in the flight clearance issued for this
    configuration in 1987, remain in place. As the Navy clearly stated in
    its response to the GAO, the Canadian Air Force required the tanks for
    ferry purposes only to meet NATO deployment commitments. The Canadian
    Air Force no longer uses the 480-gallon fuel tank, and is in the
    process of removing them from inventory at this time. The McDonnell
    Douglas ``report'' cited above is, in actuality, a brochure issued by
    the company's marketing/new business group, and the statements
    regarding the C/D's ability to carry the 480-gallon external fuel tank
    in a carrier environment are considered in error by the McDonnell
    Douglas engineering staff, who still contends they are not carrier
    suitable for use on the C/D.
                               combat performance
        Question. GAO's analysis concluded that, in a threatening
    situation, with fuel tanks jettisoned, the F/A-18E/F has 3-10 percent
    less thrust per pound of aircraft weight and 5-6 percent less specific
    excess power than the F/A-18C/D. How does the Navy respond to this
    analysis?
        Answer. There are many performance parameters to consider when
    determining an aircraft's effectiveness in executing a mission in a
    given scenario. Key Performance Parameters validated by the Joint
    Requirements Oversight Council on 7 March 1997 for the F/A-18E/F
    aircraft include required measures of specific excess power and
    acceleration, which the aircraft's measured performance continues to
    exceed. System engineering trades made during program development took
    advantage of the advent of launch and leave agile missiles and off bore
    sight cueing systems to keep costs in the affordability box. The
    upgrades made to the airframe and engine for the F/A-18E/F were
    balanced with systems improvements. An F/A-8C/D powered by an F404-GE-
    402 Enhanced Performance Engine has a slightly greater thrust to weight
    ratio than an F/A-18E/F, but this difference is lost in the
    overwhelming improvement that agile missiles and cueing enhancements
    bring to the F/A-18E/F Strike Fighter system solution. Given the F/A-
    18E/F's enhanced range, payload and survivability, it is significantly
    more capable than the F/A-18C/D in any of the applicable mission
    scenarios. It should also be noted that fuel tanks are generally not
    jettisoned as a standard response to anticipated engagements.
                                aerial refueling
        Question. GAO cited a 1993 Center for Naval Analysis report which
    concluded that the E/F ``would require in-flight refueling to reach a
    majority of targets in many of the likely wartime scenarios in which
    the E/F would be deployed.'' DOD did not respond to the GAO's comments
    on aerial refueling requirements. Does the Navy have a response on this
    point? Has anything happened since the 1993 report to raise doubts
    about its conclusion that the E/F would require aerial refueling for
    many wartime scenarios?
        Answer. The 1993 Center for Naval Analysis (CNA) report referred to
    above is not clearly cited. However, assuming this is the ``Comparison
    of the F/A-18C and F/A-18E'' completed by CNA in April 1993, this
    particular quote could not be located in the report. In fact, this
    study clearly states that, ``for targets at a given range, the E will
    have greater flexibility to select its flight profile or to complete
    the flight without refueling. To compensate for the F/A-18C's limited
    range, an all-C airwing would require additional tankers.''
        Unrefueled Interdiction Mission range (two tanks) is 468 nautical
    miles for the F/A-18E/F, and 304 nautical miles for the F/A-18C/D. This
    equates to a 54 percent increase in unrefueled range and a commensurate
    increase in target coverage, providing significantly more flexibility
    over any target range selected.
        While the S-3 is an adequate recovery tanker, it is not a mission
    tanker, which was the role previously filled by the A-6. With the
    retirement of the A-6 from service, tactical aircraft now have no
    organic mission tanking. The F/A-18E/F provides that organic tanking
    capability and provides the strike fighter community with efficient
    organic tanking which meets the altitude and speed requirement of the
    mission aircraft without additional fighter escort coverage.
                            carrier recovery period
        Question. Please provide me a copy of the decision to increase the
    F/A-18C/D's Carrier Landing Design Gross Weight to 34,000 pounds, with
    restrictions.
        Answer. A copy of the flight clearance issued to allow for F/A-18C/
    D restricted operations at a carrier landing design gross weight of
    34,000 pounds is provided. As demonstrated by the severe limitations
    imposed, this 1,000 pound increase in landing weight comes at an
    increased risk to flight safety and significant limitation in the
    Battle Group Commander's operational flexibility.

        PTTUZYUW RUEOMCA0279 0952005--UUCX--RUWFLBH.
        ZNR UUUCX ZUI RULSNAA1407 0950700
        P 042001Z APR 96 ZYB PSN 640266Q24
        FM COMNAVAIRSYSCOM WASHINGTON DC//4.3P//
        TO AIG ONE SIX FIVE
        AIG SIX NINE EIGHT SIX
        AIG ONE ONE ONE EIGHT THREE
        RULSABU/NAVSTKAIRTESTRON PATUXENT RIVER MD//55SA3AA/55SA10A//
        RUNDMCP/NAVWPNTESTRON CHINA LAKE CA//56F000D/56F00D//
        RUWFADI/NAVWPNTESTRON PT MUGU CA//56F000D/56CF00D//
        INFO RULSABU/NAVTESTWINGLANT PATUXENT RIVER MD//55TW3AA//
        RUWFADK/NAVTESTWINGPAC PT MUGU CA//560000E/56F000D//
        RULSNAA/COMNAVAIRSYSCOM WASHINGTON DC//5.0D//
        RULSADU/NAVAIRSYSCOM DET ACC PATUXENT RIVER MD//MO/AMO/CM-1//
        RUCTPOH/NAVAEROPMEDINST PENSACOLA FL//60//
        BT
        UNCLAS //N03711//
        MSGID/GENADMIN/COMNAVAIRSYSCOM//
        SUBJ/INTERIM CHANGES TO FA-18 AIRCRAFT NATOPS FLIGHT PUBLICATIONS//
        REF/A/DOC/NAVAIR/01AUG95//
        REF/B/DOC/NAVAIR/01AUG95//
        REF/C/DOC/NAVAIR/01AUG95//
        NARR/REF A IS NAVAIR A1-F18AC-NFM-000, (F/A-18A/B/C/D NATOPS FLIGHT
    MANUAL, DTD 15 JAN 94, CHG 3, DTD 01 AUG 95. REF B IS NAVAIR A1-F18AC-
    NFM-500, F/A-18A/B/C/D AIRCRAFT (EQUIPPED WITH F404-GE-400 ENGINES)
    NATOPS POCKET CHECKLIST, DTD 15 JAN 94, CHG 3, DTD 01 AUG 95. REF C IS
    NAVAIR A1-F18AC-NFM-510, F/A-18C/D AIRCRAFT (EQUIPPED WITH F404-GE-402
    ENGINES) NATOPS POCKET CHECKLIST, DTD 15 JAN 94, CHG
        01 AUG 95.//
        POC/R. PHELAN/CIV/AIR-4.3P/-/TEL:DSN6643400X8607
        /TEL:COMM7036043400X8607/TEL:FAX7036043539//
        RMKS/1. THIS IS INTERIM CHANGE NUMBER 66 TO REF A, INTERIM CHANGE
    NUMBER 43 TO REF B, AND INTERIM CHANGE NUMBER 11 TO REF C. THIS MSG
    MODIFIES THE MAXIMUM ALLOWABLE CARRIER LANDING WEIGHT INFORMATION IN
    REFS A THROUGH C.
        2. CHANGE REF A, CHAPTER 4, PAGE I-4-6, PARAGRAPH 4.1.7, WEIGHT
    LIMITATIONS:
            A. DELETE NOTE AND THE THREE LINES PRECEDING THE NOTE.
            B. ADD (REPLACE WITH) THE FOLLOWING TEXT:
                LANDING
                  UNRESTRICTED.......................................
      33,000.........................................................
                  RESTRICTED.........................................
      34.000.........................................................
              ARRESTMENTS ABOVE 33,000 POUNDS ARE SUBJECT TO THE FOL-
                LOWING RESTRICTIONS:
                  (1) ARRESTING GEAR--MK 7 MOD 3 ONLY
                  (2) GLIDE SLOPE--3.5 DEGREES MAXIMUM
                  (3) RECOVERY HEAD WIND (RHW)--
                      (A) 40 KTS MINIMUM--HALF FLAPS ALLOWED
                      (B) LESS THAN 40 KTS--FULL FLAPS ONLY
                  (4) LATERAL WEIGHT ASYMMETRY--14,500 FT-LB MAXIMUM
                    (EXTERNAL PYLON STORES, AIM-9 WING TIPS, AND WING
                    FUEL)
                                      note
                                      THE COMBINATIONS OF ARRESTING GEAR,
                                    GLIDE SLOPE, RHW, AND THE ASYMMETRY
                                    LIMITS LISTED ABOVE WILL ENSURE LANDING
                                    STRESSES REMAIN WITHIN TESTED LANDING
                                    GEAR STRENGTH SAFETY MARGINS.
        3. CHANGE REF B, PAGE 159, WEIGHT LIMITATIONS--
            A. DELETE LAST THREE LINES, AS FOLLOWS:
                LANDING
                  AIRCRAFT 161363 THRU 163778........................
      33,000.........................................................
                  AIRCRAFT 163985 AND UP.............................
      34,000.........................................................
            B. ADD (REPLACE WITH) THE FOLLOWING TEXT:
                LANDING
                  UNRESTRICTED.......................................
      33,000.........................................................
                  RESTRICTED.........................................
      34,000.........................................................
              ARRESTMENTS ABOVE 33,000 POUNDS ARE SUBJECT TO THE FOL-
                LOWING RESTRICTIONS:
                    (1) ARRESTING GEAR--MK 7 MOD 3 ONLY
                    (2) GLIDE SLOPE--3.5 DEGREES MAXIMUM
                    (3) RECOVERY HEAD WIND (RHW)--
                        (A) 40 KTS MINIMUM--HALF FLAPS ALLOWED
                        (B) LESS THAN 40 KTS--FULL FLAPS ONLY
                    (4) LATERAL WEIGHT ASYMMETRY--14,500 FT-LB MAXIMUM
                      (EXTERNAL PYLON STORES, AIM-9 WING TIPS, AND
                      WING FUEL)
        4. CHANGE REF C, PAGE 153, WEIGHT LIMITATIONS--
          A. DELETE LAST LINE, QUOTE CARRIER LANDING.................
      34,000 POUNDS UNQUOTE..........................................
            B. ADD (REPLACE WITH) TEXT AS IN PARAGRAPH 3.B, ABOVE.//
                             landing gear upgrades
        Question. DOD argues that upgrades to the F/A-18C/D's landing gear
    are not possible without ``stronger metals that are not developed or
    qualified.'' However, GAO contends that ``according to E/F program
    data, newer, stronger metals are now available, and will be used in the
    production of the landing gear for the heavier E/F.'' Will the E/F use
    these metals? Have they been developed? If yes, how long would it take
    to qualify them for the C/D? If no, when does the Navy believe they
    will become available? Is there any reason why these metals to be used
    for the E/F's landing gear could not be used to upgrade the C/D's
    landing gear?
        Answer. When addressing shortfalls in F/A-18C/D performance, one
    must take a total systems approach in arriving at a solution. The
    identified deficiencies in the F/A-18C/D are in the aircraft's ability
    to provide the necessary range, payload, and survivability to counter
    the projected threat into the twenty-first century, and cannot be
    solved by simply strengthening landing gear. To carry additional
    payload, the wing pylons and attachment points must be strengthened,
    which requires additional strength in the structure, which increases
    weight. This heavier aircraft requires more lift, which would generate
    the requirement for a larger wing and higher thrust engines. This is a
    simplified version of the logical thought and study process that led to
    the requirement for the F/A-18E/F.
        Aermet 100 metal used in the landing gear is now used in both
    military and commercial applications. It provides negligible
    improvements in static strength, but does provide improved metal
    fatigue characteristics when compared to the 300M material used in the
    F/A-18C/D landing gear. A material change from 300M to Aermet 100 for
    the F/A-18C/D landing gear would not be sufficient to overcome sink
    speed, wind over deck, and landing weight restrictions currently in
    place. Measurable improvements in this area would also require new,
    larger gear, which the current wheel well bay cannot accommodate.
                            room for avionics growth
        Question. Does the Navy consider .25 cubic feet of space and above
    as usable for avionics systems? Are the .9 cubic feet saved by the
    replacement of APG-65 radar by the APG-73, and the 1.2 cubic feet saved
    by the upgrade of the SMS weapons management system, space usable for
    avionics growth?
        Does the E/F program still derive avionics growth space from the
    gun bay, as the McDonnell Douglas F/A-18E/F Baseline Configuration
    Study suggested? Does the Navy plan to use gun bay space to house the
    F/A-18D's reconnaissance avionics package?
        Answer. .25 cubic feet is a negligible amount of space for avionics
    integration. Where the F/A-18C/D is concerned, there was .9 cubic feet
    of space saved in the replacement of the APG-65 and the APG-73, and 1.2
    cubic feet saved by the upgrade of the SMS weapons management system.
    However, these changes affect only a limited number of F/A-18C/D
    aircraft (257 for the radar upgrade and 184 for the SMS), and therefore
    cannot be considered a source for avionics growth for the F/A-18C/D
    overall. Additionally, the utility of the space in this limited number
    of aircraft would be bounded by the power and cooling available versus
    that required by proposed systems. Modifying to accommodate systems
    with greater power and cooling requirements require airframe
    modifications and redistribution of aircraft power and cooling within
    an already fixed power/cooling budget. As the radar upgrade and SMS are
    part of the baseline F/A-18E/F, there are not avionics volume savings
    associated with their incorporation for the F/A-18E/F.
        Although there is space available in the F/A-18E/F gun bay, the
    environment in this area is generally not appropriate for avionics
    equipment. As stated in the McDonnell Douglas F/A-18E/F Baseline
    Configuration Study, the F/A-18E/F aircraft nose barrel design is
    compatible with the reconnaissance pallet currently being produced for
    the F/A-18D aircraft. Alternative designs of the nose kit for the F/A-
    18E/F are being evaluated, and a trade-off study is being conducted to
    determine if the reconnaissance requirement could be adequately met
    using a podded design. The study is expected to be completed by the end
    of the fiscal year, at which time we will decide which configuration
    for the F/A-18E/F most adequately meets the needs of the Navy.
                                     ______

                    Questions Submitted to Gen. C.C. Krulak
                   Question Submitted by Senator Ted Stevens
                                      v-22
        Question. General Krulak, your statement says the MV-22 ``remains
    the Marine Corps' most critical acquisition priority.'' Given this
    priority, are you comfortable with the current procurement profile that
    will not meet Marine Corps requirements for 25 years?
        Answer. The 22 year procurement profile, as currently budgeted, is
    not a desirable procurement profile. However, topline constraints have
    resulted in this plan. As currently budgeted, the last MV-22 aircraft
    would be received in fiscal year 2020. Given the current MV-22
    procurement profile, our CH-46's will be approaching 50 years of age at
    retirement. I would much prefer a higher production ramp to 36 MV-22's
    per year, thereby allowing for replacement of our aging CH-46E fleet
    aircraft several years earlier, saving significant dollars and funding
    and important capability sooner.
                                     ______

                  Questions Submitted by Senator Arlen Specter
                                  acquisition
        Question. I am interested in the progress being made toward the
    development of a Tactical Hand Held Radio for the United States Marine
    Corps. I am aware of a new hand held radio called the Leprechaun that
    is compatible with the existing ground and airborne radio system and
    would provide U.S. Marine Corps infantry squads with reliable,
    lightweight equipment. To what extent do the Marines intend to evaluate
    and field test such radios?
        Answer. There is no funding in the fiscal year 1998 budget for the
    acquisition of Tactical Hand Held Radios (THHR), such as the
    Leprechaun. Accordingly, the evaluation and/or field testing of THHR's
    is currently not planned.
        There is an approved Mission Need Statement (MNS) for the THRR.
    THHR would satisfy a wide range of missions requiring short range
    communications in support of infantry team/squad/platoon level
    communications. Additional funding for RDT&E would be used to support a
    solicitation and request for competitive bid samples for testing to
    find the ``best value'' solution in fulfilling the need. Commercial
    off-the-shelf (COTS) radios would be thoroughly evaluated/tested with
    RDT&E funding.
        THHR has not been funded due to topline constraints. We will
    continue to review the requirement as we prepare future budget
    submissions.
        Question. Last year, accelerating the production rate for the V-22
    was one of the top underfunded modernization priorities of the Navy and
    Marine Corps. Congress responded by recommending funding for 12 V-22's
    this year. However, the Department of Defense includes funding for only
    5 V-22's in the fiscal year 1998 budget. Wouldn't there be cost savings
    associated with an accelerated rate of production, based in part on the
    limited life of current aircraft, that justify appropriating sufficient
    funds for a total of 12 V-22's?
        Answer. Accomplishing a near term procurement rate of 12 aircraft
    per year with a vamp up to 36 aircraft per year remains my highest
    aviation acquisition priority. In constructing the fiscal year 1998
    Budget, however, affordability constraints and competition with other
    Navy priorities precluded the Department from budgeting the
    approximately $700 million required to procure those additional
    aircraft in fiscal year 1998.
        Increased production of twelve aircraft per year provides for a
    shorter and more economic production schedule for the V-22 and builds
    to my priority of procuring 36 MV-22's per year. This rate of
    procurement is estimated to result in significant overall program cost
    savings of up to $6 billion while providing more rapid replacement of
    our aging medium-lift assault aircraft.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                 budget issues
        Question. Both the Navy and the Marine Corps have submitted add-on
    lists that total $3 billion. Do any of the items on these lists have a
    higher priority than any item contained in the President's original
    request for 1998?
        If, so please identify and explain.
        Answer. No, none of the items on our add-on list have a higher
    priority than the items contained in our President's Budget submission.
                               bosnia operations
        Question. What 1997 items have you identified, or would you
    identify, if Congress approves the President's request for broad
    authority to reprogram $2 billion for Bosnia operations? What programs
    have you identified, or would you identify, to permit the $2.8 billion
    rescission package the President has requested? What are the
    implications for the 1998 spending for these programs?
        Answer. Marine Corps sources for supporting supplemental
    reprogramming requirements is to take advantage of foreign currency
    (increasing value of the dollar) and inflation savings. There should be
    no effect on fiscal year 1998 as the President's Budget submission
    already reflects lower foreign currency and inflation rates.
                           quadrennial defense review
        Question. In an analysis for the Budget Committee, CBO and GAO
    identified up to $50 billion in ``underfunding'' in the next four to
    five years of the defense budget. What actions can you tell us about
    that the Quadrennial Defense Review is undertaking to address this
    problem?
        Answer. The Quadrennial Defense Review is being conducted under the
    purview of the Office of the Secretary of Defense (OSD). Although the
    Marine Corps is a participant in the process, this question can be more
    accurately addressed by OSD. The results of the QDR are due to Congress
    on 15 May and will include the Secretary of Defense's assessment of the
    needed funding level to support DOD. The QDR results will be the
    subject of further review by the National Defense Panel and the
    Secretary of Defense appointed Reform Group. These panels will also
    recommend appropriate funding levels, efficiencies and risks associated
    with supporting our National Military Strategy.
                             quality of life issues
        Question. The Navy and Marine Corps continues to operate in
    peacekeeping and other international operations at a historically high
    rate. What indicators do you use to register the stress that this high
    operating tempo puts service men and women under? What measures do you
    use to measure the stress for their families? What do these data show?
        What lessons have been learned from Operation Desert Storm and more
    recent peacekeeping activities to reduce this stress?
        Answer. The Marine Corps has implemented a consolidated deployment
    plan to manage DEPTEMPO within its operating forces. This plan enables
    Marine planners and commanders to monitor DEPTEMPO of subordinate
    units. Using this plan as a guideline, 34 percent of the operating
    force on average is forward deployed, with the remaining forces at home
    station. Historically, Marine Corps' DEPTEMPO has not changed
    significantly with the exception of Desert Shield/Storm. The Marine
    Corps is able to manage current DEPTEMPO at present rate provided it
    maintains its manning strength of 174,000.
        ``The Quality of Life in the U.S. Marine Corps'' study conducted by
    Elyse W. Kerce, Navy Personnel Research and Development Center, had
    tools to measure the quality of life for Marine families. There are no
    known tools used to measure stress for Marine Corps families; however
    The Kerce study did use a subjective measuring tool entitled ``The
    Marine Corps and Quality of Life: 1993 Member Questionnaire.'' The
    questionnaire was partitioned into sections corresponding to the
    domains of interest (e.g. residence domain, neighborhood domain,
    marriage and intimate relationships domain, health domain, friends and
    friendship domain, et al). The results were generally favorable toward
    the Marine Corps lifestyle. It also showed a positive correlation
    between married life and retention. Additionally, the Kerce study gave
    credence and direction for the Marine Corps to develop pro-active
    quality of life programs.
        The Marine Corps also conducted the ``Study of Impact of Operation
    Desert Shield/Storm on Marine Corps Families and Effectiveness of
    Family Support Programs in Ameliorating Impact.'' It found that family
    support programs do help service members and their families better cope
    with peacekeeping deployments. The general perception is that most
    services were available to families during Desert Shield/Storm;
    however, service providers relied on the families to contact them for
    assistance when needed. Nonetheless, many felt that the Marine Corps
    did more than they had in the past in supporting families. Commands now
    realize that family support programs do support the mission and are
    important to maintain.
    Lessons Learned:
        That receipt of a predeployment briefing or materials had a
    positive bearing on families' preparedness.
        That family readiness supports the unit mission and clarifies
    family expectations, both during peacetime and war.
        That strong ongoing support programs for families during peacetime
    help ensure that adequate preparations are in place when needed.
        That coordinating family support efforts at all levels of the base/
    unit structure are important to ensuring that the best support is
    available to service members and their families during predeployment,
    while deployed, and during post-deployment periods.
        That unit support for families while the unit is deployed
    positively affects families experiences with separation and the
    retention of service members.
                               bosnia operations
        Question. In past years there was an attempt to reprogram money out
    of programs to assist military families to pay for operations in
    Bosnia. Is there going to be any similar attempt to pay for 1997 Bosnia
    operations with funds intended to help alleviate family stress?
        Answer. No. Marine Corps sources to fund contingeny operations are
    related to foreign currency or inflation savings; there are no plans to
    reduce family programs.
                             quality of life issues
        Question. I am concerned that high operating tempos can put stress
    on military families and can result in higher rates of child and spouse
    abuse among military families. What trends do the most recent data show
    on this issue? How do these data compare to recent trends in civilian
    life?
        Answer. Caliber Associates just completed and forwarded to Congress
    within the last week, ``The study of spousal abuse in the Armed Forces:
    Analysis of spouse abuse incidence and recidivism rates and trends.''
    While this document does not include children, but only spouse abuse,
    it does examine the issues of the frequency of abuse, how widespread it
    is, the prevalence of reports, profiles of victims and offenders, and
    an overview of risk factors associated with abuse. Factors identified
    which are particularly relevant to the military are age, gender, length
    of marriage, education level, income, residential mobility, social
    isolation, behaviors and attitudes, and alcohol abuse/use. These
    factors are relevant to the military because:
      --A large portion of the military population is young;
      --Males are predominant in the military and are generally more
            aggressive than females;
      --Early marriages are at higher risk;
      --Lower levels of education are typically associated with higher
            risk;
      --Lower pay grades are typically associated with higher risk;
      --Frequent moves of military families increase risk;
      --Social isolation of not being near extended family and friends
            increase risk;
      --Alcohol use/abuse is a definite co-occurrence and therefore seen as
            a risk factor, but is not considered a causal factor.
        Additionally, the Marine Corps sees a tendency, but not an absolute
    trend supported by research, in the young male who believes he has the
    responsibility to control his family members being at higher risk for
    abusive behaviors. If he believes this prior to and during deployment,
    it may increase his risk for actual abuse upon returning home.
        Question. I recently wrote to Secretary Cohen supporting his
    comment that it is ``unacceptable'' for military families to be on Food
    Stamps. What is your view on this issue? How many Navy/Marine Corps
    families receive Food Stamps? What actions would you find acceptable
    and affordable to address this problem?
        Answer. Eligibility for food stamps should entail no negative
    stigma. Marines who qualify for food stamps are likely of a very junior
    enlisted grade, with several dependents, and with a spouse who does not
    work outside the home. Like any benefit, food stamps help ease the
    financial burden on these young families. Since promotions (and thus,
    pay raises) come fairly quickly at the lower ranks, Marines drawing
    food stamps likely do not do so for extended periods of time.
        The question concerning the number of Marines on food stamps has
    been asked several times in the past three years. While the guidance
    for the Food Stamp Program is provided by the federal government, each
    state interprets that guidance and carries out their program according
    to their interpretation. The Marine Corps has installations in nine
    different states and personnel in every remaining state. As a result of
    state interpretation differences, it is virtually impossible to arrive
    at an accurate figure for the number of Marines participating in the
    Food Stamp Program.
        States sometimes separate participants according to their status of
    employment (e.g., civilian or military), but most do not. In those
    cases where participants are categorized according to their status it
    is possible to determine the number of participants in that state.
    Other states include BAQ as part of a servicemember's income when he/
    she lives off an installation. It then becomes possible for a Marine to
    live on base and have no house payment (forfeit BAQ and VHA) and
    qualify for food stamps, while a Marine living off the installation
    collecting BAQ and VHA (with costs exceeding those allowances) may not
    qualify for the program. This is particularly true in Hawaii.
        There is no simple solution to the financial hardships experienced
    by young families. We have many different programs within our Family
    Service Centers that support young Marines and their families,
    including financial counseling. A partial solution is simply to ensure
    all Marines are aware of the different avenues of assistance available
    to them.
                             hunter/jaeger aviation
        Question. What is the Navy and the Marine Corps assessment of
    Hunter/Jaeger Aviation that was demonstrated at the recent exercises
    you jointly held?
        What activities do you plan to further test Navy and Marine Corps
    support for ground forces under this concept?
        Answer. The Hunter Warrior Advanced Warfighting Experiment was
    conducted under the cognizance of the Commandant's Warfighting
    Laboratory and the Commanding General of the Marine Corps Combat
    Development Command in March of 1997. Part of the Warfighting Lab's
    charter is to serve as a test bed for the development of enhanced
    operational concepts, tactics, techniques, procedures, and doctrine. A
    detachment of Navy T-34C's, sponsored by the Naval Strike and Air
    Warfare Center (NSAWC), participated in the Hunter Warrior experiment.
    The NSAWC detachment, sometimes referred to as Jaeger or Hunter
    aviation, evaluated the effectiveness of aerial platforms in the
    limited search and attack role as well as the ability to contribute to
    decisive results on a dispersed, non-contiguous battlefield as part of
    a limited deep operations maneuver group. The Marine Corps welcomes
    Navy efforts to experiment with evolving aviation concepts for
    supporting expeditionary forces in the littorals and the Jaeger concept
    is one of a number of ongoing initiatives in this regard. The Center
    for Naval Analyses is in the process of conducting an independent
    analysis of Hunter Warrior data for the Commandant's Warfighting
    Laboratory. The Hunter Warrior final analysis report is scheduled to be
    completed on 15 May 1997. Hunter Warrior represents only an initial
    step in developing an assessment of the Jaeger concept's potential.
    Further experimentation will have to be conducted in order to draw
    definitive conclusions about the utility of such a concept.
        We will continue to work closely with the Navy to further
    experiment with advanced warfighting concepts throughout the
    Warfighting Lab's five year experimentation plan.
        Question. What other technologies or concepts are you considering
    that would provide direct combat support for ground forces that would
    be at least as low in cost and that would provide as sustained support
    as the Hunter/Jaeger concept?
        Is Hunter/Jaeger Aviation a high or a low priority in the Navy and
    Marine Corps budget and in your thinking for the future?
        Answer. One of the key pillars of the Marine Air Ground Task Force
    (MAGTF) is Marine Aviation's direct support of the ground combat
    element and the MAGTF commander. Marine Aviation has always been an
    innovative organization--from close air support to our development of
    the MV-22 and STOVL technology--Marine aviators have remained on the
    cutting edge. We will continue to experiment with new and evolving
    concepts and technologies in support of our ground forces and the MAGTF
    commander. Those concepts and technologies that prove promising will be
    fully vetted through the Marine Corps combat development process.
        Jaeger aviation is primarily a Navy initiative and is not part of
    the Marine Corps budget.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                            recruiting and retention
        Question. General Krulak, what is the Marine policy regarding the
    recruitment of category IV personnel; is there a place in the Marines
    for those of the lower mental categories?
        Answer. Mental Group IV accessions are not routinely authorized.
    Exceptions to this policy are applicants who meet stringent waiver
    criteria set forth by the recruiting service.
        The Marine Corps, after years of detailed analysis that indicated
    applicants testing in the lower mental categories (CAT IV) have a
    significantly higher attrition rate than those testing in higher
    categories, has limited the number of CAT IV accessions to no more than
    1 percent of the total requirement. The applicant must also have
    participated in extracurricular activities, (youth, school, church
    groups, sports or have established a good employment record) and must
    be a high school graduate (Tier I). These restrictions are enforced to
    assure only the most fully qualified lower mental category applicants
    are accepted.
        The Marine Corps does have job specialties available for those who
    meet the screening and waiver requirements.
        Question. General Krulak, do you expect to meet your recruiting
    goals in 1997?
        Answer. Yes, we will meet the recruiting mission accessions and net
    new contracts to build the delayed entry pool for fiscal year 1998. We
    will meet the Marine Corps requirement for quality (95 percent Tier I
    and 63 percent mental group I-IIIA) for the active component.
                             modernization demands
        Question. Mr. Secretary, in your posture statement, you list
    acquisition reform, savings from base closings, and overhead savings as
    the primary ways you will get the money you need for your modernization
    programs. Do you think these will be sufficient, or will the Navy
    budget need to be increased to provide for the necessary modernization?
        General Krulak, what is the Marine Corps' position on this matter?
        Answer. While it is true that the Marine Corps is making every
    effort to bring about efficiencies and ``savings'' in the way it
    conducts business, it is important to note that the fiscal year 1998
    budget for Modernization accounts represents a 25 year low.
        Historically, a procurement funding level of approximately $1.2
    billion per year is needed to keep the Marine Corps at an acceptable
    warfighting capability. While the funding level in fiscal year 1999
    doubles from the funding level in fiscal year 1998, the Marine Corps
    does not attain its goal of $1 to $1.2 billion until fiscal year 2000.
    This funding level is carried through the out years. Employment of
    smart business practices, such as acquisition reform, modeling and
    simulation, employment of commercial off-the-shelf technologies or the
    use of performance based specifications, and/or multi-year procurement
    strategies will be key in our effort to overcome modernization
    deficiencies.
        However, it is important to note that present fiscal constraints
    have a direct impact on modernization for all the services.
    Furthermore, savings derived from recent efforts, such as acquisition
    reform, typically represent outyear cost avoidance and not near-term
    real growth to Marine Corps modernization TOA.
        In base closure, the Marine Corps has been part of a larger
    Department of the Navy effort.
        A realistic goal for modernization of the Marine Corps aviation
    force is approximately $3 to $3.5 billion annually. This amount would
    fund the Marine Corps' top aviation priorities--the V-22 and the AV-8B
    Remanufacture at the most economical rate. It would also fund the H-1
    Upgrade (4BN/4BW) program, KC-130J procurement to replace our aging
    fleet of KC-130F and R models, CH-53E's to complete standup of two
    reserve squadrons, additional F/A-18C/D's to sustain the F/A18 force
    structure until replacement by the Joint Strike Fighter, and continued
    investment in aircraft modifications to increase warfighting
    capabilities and maintain safety.
                                  v-22 osprey
        Question. General Krulak, last year, the Congress increased advance
    procurement funding for the V-22 program to accelerate production in
    1998 to 12 aircraft. I understand you now want to reprogram these funds
    because you don't plan to buy 12 V-22's in 1998. Can you explain the
    situation?
        Answer. I have requested authorization to reprogram the $68.4
    million in fiscal year 1997 MV-22 advance procurement funding provided
    by the Appropriations Conference Committee. The subject funding
    supported advance procurement for twelve MV-22 aircraft expected to be
    programmed in fiscal year 1998. While we appreciate the strong
    Congressional support in approving additional funding, which would have
    moved us toward achieving a more efficient production rate of 36,
    completion with other Department of the Navy priorities only allowed us
    to program five of the twelve aircraft in fiscal year 1998.
        Reprogramming of the fiscal year 1997 funding will allow the
    Department of the Navy to apply funding to critical MV-22 Engineering
    and Manufacturing Development (EMD) phase RDT&E short-falls.
    Application of this reprogrammed funding will ensure timely and
    successful completion of the MV-22 EMD.
        The MV-22 remains my number one acquisition priority and the Marine
    Corps will continue to seek funds for increased aircraft procurement
    and a more desirable rampup.
        Question. General Krulak, you have identified the V-22 as your
    highest priority. Can you identify funding from other programs to
    purchase more V-22's in the outyears?
        Answer. No, I cannot identify funds in other programs to purchase
    more V-22's. Yes, the V-22 is my highest acquisition priority, however,
    topline constraints precluded funding additional aircraft in this
    budget. The fiscal year 1998 budget represents our best attempt at
    achieving balance among many competing programs while funding near term
    readiness. As currently budgeted, the last MV-22 aircraft will be
    received in fiscal year 2020. Given this current 22 year procurement
    profile, our CH-46's will be approaching 50 years of age at retirement.
    I would much prefer a higher production ramp to 36 MV-22's per year,
    thereby allowing for replacement of our aging CH-46E fleet aircraft 5
    years earlier; however, as previously stated, present topline
    constraints precluded funding at this level.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                            initial issue equipment
        Question. General Krulak, sometimes I think we lose track here in
    Washington with all our focus on stealth airplanes, missile defenses,
    and airborne lasers, about the very modest needs of our tens of
    thousands of infantrymen. Can you tell me about the Marine Load System,
    and the new Body Armor? What will these programs do for our Marine
    infantrymen?
        Answer. The Marine Load System (MLS) consists of an integrated load
    bearing vest and modular pack system incorporating a drink-on-the-move
    hydration system. The modular pack will be designed to detach from the
    vest using a one or two point quick release system. The load bearing
    vest will consist of hardware to attach the modular ammunition pack
    designed for small arms that attaches separately, and a padded hip belt
    that will comfortably support the pack as well as the vest. The vest
    system will be adjustable to fit the 5th-95th percentile Marine. The
    modular pack will consist of a main pack, two attachable side
    sustainment pockets, a teardrop shaped patrol back and a detachable
    sleeping bag with compression straps and carrying handle. Both the vest
    and pack will be able to carry the two liter drink-on-the-move system
    with gas mask compatible drinking tubes. The system will be capable of
    tailored loads from 800 to 6,800 cubic inches. The system will use a
    350 to 1,000 denier nylon or ripstop nylon Cordura, polyethylene and
    aluminum hard components. The pack cloth will be woodland camouflage
    483. Padded foams will be dual density for optimum performance. The
    pack will be fully adjustable for comfort and fit and durability for
    120 continuous combat days.
        The family of body armor is a three piece system consisting of an
    inconspicuous soft armor vest, outer fragmentation vest, and two
    ballistic plate inserts that fit in the outer vest. The system will
    weigh no more than 30 pounds total. The inconspicuous soft armor will
    be worn under the battle dress utilities. It will offer protection from
    small caliber handguns or National Institute of Justice (NIJ) Standard
    IIA munitions. The outer vest will be equal in protection to the
    current Personal Armor System Ground Troops (PASGT) vest. It will offer
    better durability, removable armor inserts, and be woodland camouflage
    in color. It will be front opening and have modular components that
    protect the throat, neck, and groin areas. It will be able to
    incorporate both front and back ballistic plate inserts. The ballistic
    plates will weigh no more than five pounds each and offer NIJ level IV
    protection. The inconspicuous vest will not be worn with other
    components. The system should offer better casualty reduction than the
    PASGT and weigh 20 percent less.
                      commandant's warfighting laboratory
        Question. General, last year this subcommittee added funds for your
    Commandant's Warfighting Laboratory. Can you tell us a little bit about
    what the Marines have learned from these warfighting experiments?
        Answer. Preliminary results from the Hunter Warrior Advanced
    Warfighting Experiment (AWE) validated the hypothesis that a Marine
    Expeditionary Unit (MEU), through the employment of enhanced
    capabilities and technology, could expand its area of influence in an
    open littoral environment. Tactics, techniques and procedures such as
    enhanced training and streamlined command-and-control can enhance our
    warfighting capabilities.
        During the Hunter Warrior AWE, the Special Purpose Marine Air-
    Ground Task Force, Experimental (SPMAGTF(X)) used an Experimental
    Combat Operations Center (ECOC) concept that linked multi-service units
    and control systems. The ECOC also included capabilities such as a
    Commander's Three Dimensional (3D) Workbench that provided 3D map
    displays of units. Individual Marines employed palmtop computers to
    track all units and to place digital calls for fire.
        A new concept introduced a Cellular Command Element for the
    SPMAGTF(X) that completely replaced the Napoleonic staff organization.
    The Cellular Command Element innovations include groups for planning
    and shaping; engagement coordination; and the ``red cell'' concept. The
    ``red cell'' group provides an initial anticipated enemy response to
    unfolding friendly actions. These innovations were designed to improve
    decision making and leverage tempo. We also experimented with the
    employment of drones in support of forward units to enhance their
    target acquisition, identification and tracking capabilities.
        Hunter Warrior was primarily naval in nature, but a lesson learned
    for all future joint operations is the need for command, control and
    communications interoperability and the use of common computer
    operating environments.
        Data from Hunter Warrior is currently being analyzed. Additional
    lessons learned may emerge as results solidify.
                                    aviation
        Question. General Krulak, you have stated in the past that the
    oldest aircraft in your aviation inventory are the KC-130 tankers, and
    that they need to be replaced. I believe that last year Congress
    provided $210 million for four new KC-130's to begin that process.
        Can you please tell us the status of those funds and how that
    program is going? And would you also tell us your future plans for the
    KC-130J?
        Answer. Thanks to Congressional support last year, we will begin to
    replace our aging active force KC-130F's during 1999. These aircraft
    are approaching 40 years of age and are the oldest aircraft in the
    Marine Corps inventory. Events over the past year in Liberia, Central
    Africa, Albania, and most recently in Zaire, continue to demonstrate
    the important role this multi-mission aircraft continues to play in
    support of our forward deployed MAGTF's and in the joint arena.
        We anticipate receipt of the fiscal year 1997 funding provided by
    Congress within the next month. In order to create a balanced program,
    as agreed to by the principles, the plan is written for procurement of
    3 aircraft with spares and repair parts support vice 4 aircraft only.
    NAVAIR is working closely with the Air Force and industry and we expect
    to have the aircraft on contract by the end of June.
        The acquisition objective for the KC-130J is 51 aircraft to replace
    our aged active duty KC-130F and KC-130R aircraft.

                              subcommittee recess

        Senator Stevens. The next meeting will be at 10 a.m.
    Wednesday. Thank you very much.
        [Whereupon, at 12:19 p.m., Wednesday, April 9, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    April 16.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                           WEDNESDAY, APRIL 16, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:05 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Inouye, Bumpers, and
    Harkin.

                             DEPARTMENT OF DEFENSE

                             Department of the Army

    STATEMENTS OF:
            TOGO D. WEST, JR., SECRETARY OF THE ARMY
            DENNIS J. REIMER, GENERAL, CHIEF OF STAFF OF THE ARMY

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning.
        Our subcommittee today will hear from the Honorable Togo
    West, Secretary of the Army, and Gen. Dennis Reimer, Chief of
    Staff of the Army. We welcome you both, gentlemen. We look
    forward to discussing the issues facing the Army for the fiscal
    year 1998 budget.
        Senator Inouye and I recently took a delegation to Korea
    and to the Russian far east, and we were very impressed by the
    Army people we met, led by General Tilelli and General Franks.
    We witnessed a live-fire exercise that was formidable, and the
    candor and directness of the members of the Army that we met
    and their discussion on issues that concern them was very
    valuable to us. The Army could not have better ambassadors than
    the troops of the 2d Infantry Division that we met in Korea.
        Secretary West, General Reimer, we will put your statements
    in the record. Gentlemen, we hope that that is agreeable to
    you.
        I want to yield to Senator Inouye for any comments he might
    make.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. Thank you very much, Mr. Chairman.
        I join you in welcoming the Secretary and General Reimer.
    We face another very challenging year, as your requirement for
    new recruits continue to increase, as you are pressed for an
    increasing number of overseas deployments, your social problems
    capture the headlines, and funding pressures squeeze your
    modernization programs.
        Together with the chairman, I spent some time visiting
    soldiers of the 2d Infantry Division in Korea, and the 25th in
    Hawaii. I know from these experiences that you have a force
    unmatched in quality, and extremely high in spirit. Hopefully,
    you can share with us your thoughts on how we can sustain this
    during these extremely difficult times.
        I, for one, am concerned with those that recommend cutting
    our forces below the 495,000 end strength, and I am concerned
    that you plan to reduce your goal for high school graduates by
    5 percent. I worry that some may look to reduce benefits, such
    as health care and other quality-of-life programs to find
    necessary funding for your modernization programs.
        I know that these are your concerns and they are ours. And
    so, I will be listening to your thoughts as we proceed with the
    hearing.
        Thank you very much, Mr. Chairman.
        Senator Stevens. Yes, sir. I have a statement for the
    record from Senator Bond.
        [The statement follows:]

               Prepared Statement of Senator Christopher S. Bond

        Thank you Secretary West and General Reimer for speaking to
    the committee today. I want to echo the statements and concerns
    of the Chairman, Senator Stevens and the Ranking Member,
    Senator Inouye. I especially want to emphasize my concerns for
    the health and readiness of the Army.
        As we all know, this year has been a busy one for our armed
    forces and I see no sign that our commitments and
    responsibilities are going to slack off in the future. As the
    President has sent the military on increasingly frequent and
    tedious missions, many observers have expressed reservations
    about the readiness and maintenance of our military equipment.
        Additionally, I have serious concerns about the level of
    morale for troops who have increasingly become involved in
    operations other than combat and combat support. Specifically
    such duties as nation-building programs and foreign relief work
    are often onerous. Given certain circumstances, I understand
    and support the use of American troops for the initial
    introduction of programs, but I question the role of our Army
    in the long-term feeding, clothing, and nation-building
    programs for other countries that we have been involved in
    recently.

        Senator Stevens. Mr. Secretary.
        Mr. West. Mr. Chairman, Senator Inouye, it is a pleasure to
    appear before you once again to talk about the President's
    budget for the U.S. Army for fiscal year 1998 and also, the
    posture of your Army. Again, thank you for the support that
    this subcommittee has provided to the Army and its soldiers,
    civilians, and families over the past year. A number of
    examples come to mind: your support on the supplemental for our
    mission in Bosnia--an issue, of course, with which we seek your
    support again this year; the additional funding you provided
    for the Army's truck fleet--about $213 million; and your
    support of our Force XXI initiatives, which, as you know, are
    so critical to the Army for our success in the 21st century.
        Since the end of the cold war, Mr. Chairman and Senator
    Inouye, Army end strength has been reduced by some 36 percent
    and to 10 divisions in the active component, 8 divisions and 15
    enhanced brigades in the National Guard, and 10 Reserve
    regional support commands. Those figures--a loss overall of
    some 620,000 soldiers and civilian employees and the
    redeployment of some 250,000 soldiers, civilians, and family
    members from Europe--are the result.
        Since 1989, we have closed 89 installations in the United
    States and 664 overseas. This year, for the first year, we will
    begin to show a net savings of $200 million from that effort.
        Our traditional role, of course, continues to be to compel,
    to deter, to reassure, and to support. You know of the number
    of deployments we have had over the last year, including
    Southwest Asia, Operation Intrinsic Action, humanitarian
    efforts with the Kurds in Iraq, reinforcement of peace in the
    Sinai, and continuing peace building in Bosnia, while
    continuing to maintain a forward presence of over 100,000
    soldiers and 28,000 civilians in Europe and the Pacific rim.
        We serve at home. The Army has supported civil authorities
    in communities devastated by hurricanes and floods and by
    wildfires in the Pacific Northwest; provided medical counseling
    care to communities across the United States; supported the
    Summer Olympics in 1996; and, of course, is working to
    interdict the flow of illegal drugs across our borders.
        Our first priority, as has been your first priority for the
    Army over the years, is readiness. Those key elements to
    readiness are several of which you alluded to, Senator Inouye:
    recruiting quality people, training to tough standards,
    providing quality leadership, and sustaining the force. Yes; we
    are now having to replace 20 percent of the force each year, a
    one-for-one replacement. That means that in the last 2 years,
    the recruiting mission for your Army has gone up about 43
    percent, to almost 90,000 in the current fiscal year.
        The President's budget provides $219 million for
    recruiting, to include enlisted advertising and 5,200 on-
    production recruiters. We are targeting increases in
    educational and enlistment incentives. We are adjusting our
    requirement for high school diploma graduates so that, Mr.
    Chairman and Senator, the requirement will be 100 percent high
    school graduates. Of those, 90 percent will have high school
    diplomas, down from 95 percent, and the remaining 10 percent
    will have a GED or some other form of certification of
    completion of high school requirements, so that we maintain the
    quality of our recruiting and, thus, maintain the quality of
    our soldiers.
        Unit training continues to be one of our highest
    priorities, and it is funded at 100 percent of our requirement
    of $3 billion in this budget. Moreover, the President's budget
    continues to provide for our combat training centers: 12
    rotations at the National Training Center [NTC], 10 at the
    Joint Readiness Training Center [JRTC], 5 at the Combat
    Maneuver Training Center [CMTC], and, of course, 5 division and
    3 corps staff exercises at the Battle Command Training Program
    [BCTP].
        We will sustain this combat force with $637 million for
    depot maintenance, in addition to the $1.56 billion for
    logistic support programs that are in this budget. Those are
    important programs to us, Mr. Chairman and Senator Inouye,
    including second destination transportation, supply depot
    operations, conventional ammunition programs, continued
    improvement of infrastructure, such as railheads, access roads,
    and railroad cars, and our continuing commitment to the
    advances provided by total asset visibility and increased
    logistic efficiency.
        Modernization continues to be a challenge for your Army.
    This budget provides $11.2 billion for modernization, a
    combination of $6.7 billion for procurement and $4.5 billion
    for research, development, test and evaluation [RDT&E]. We
    continue our strategy of buying a limited number of new, high-
    payoff weapons, while extending the capacity and capability of
    existing weapons. We have in this budget continued support for
    production of our family of medium tactical vehicles, replacing
    our aging truck fleet with the state of the art. We also will
    get from this budget 1,500 new trucks and approximately 500 new
    high mobility multipurpose wheeled vehicles.
        We include $44 million in the budget to modify the Apache
    helicopters to the Longbow configuration, and we include $900
    million for new ammunition.
        We continue to have as our two priorities for new systems:
    the Comanche armed reconnaissance helicopter, which will give
    our commanders the ability to conduct all-weather
    reconnaissance operations day or night, and the Crusader field
    artillery system, which will fire faster, more accurately, and
    with a smaller crew than ever before.
        We have continued our efforts at acquisition reform and
    have seen almost $9 billion in cost reductions to date.
    Nonetheless, modernization, as you know, continues to be our
    most fragile area of funding and execution.
        In this budget, we continue to support quality of life for
    our soldiers. Just last month, we concluded another one of our
    worldwide conferences in which we brought family members here,
    to Washington, to talk about what matters to them. The pay
    raise included in the budget is to the fullest extent the law
    allows, and the $180 million for family initiatives includes
    child development service programs, which support almost 82,000
    children in 176 child development centers. That was one of the
    priorities identified during the meeting of family members last
    month.
        We hope to continue our efforts for quality housing for our
    soldiers--almost 2,480 new barrack spaces in the United States,
    1,500 in Korea, and another 350 more in Europe. We have
    included funding for new family housing and for whole-
    neighborhood projects as well.
        Mr. Chairman, I identify a number of other important
    matters in my written statement, which you have allowed me to
    submit for the record.
        I would like to close with a reference to all of our
    components--that is, to include the National Guard and Army
    Reserve. The overall strength and readiness of the Army Reserve
    and National Guard did improve last year, and the force support
    packages have reached historical levels of readiness. We
    continue our commitment within the Army to fully integrate the
    Guard and Reserve into the active component. The centerpiece of
    this effort, of course, is the ongoing Army National Guard
    division redesign initiative.
        I remind you that the Guard and Reserve, as you know, serve
    every day in support of our Army and in support of our national
    objectives. In the last 12 months, the Army Reserve has
    supported nearly 150 missions and deployments around the world
    and at home. In that same period, the National Guard supported
    nearly 1,000 missions and deployments around the world and at
    home. That happy partnership between the Guard, the Reserve,
    and the active Army continues, even as we go through the QDR
    process and our assessment of how we will be structured to meet
    the coming world security situation.

                               prepared statement

        Mr. Chairman, Senator Inouye, the fiscal year 1998 budget
    reflects fiscal realities of today, but also our Army's
    commitment to the Nation. Our soldiers, our civilians, and
    their families have been proud for nearly 222 years to lead our
    Nation and support it in its position as the dominant leader in
    the community of nations. Today's soldiers are trained,
    equipped, and fully prepared for the missions they are called
    to perform. We look to you and to all the Members of the Senate
    and the House for the wisdom, guidance, and support that this
    committee has historically provided to your Army, and we thank
    you for it.
        [The statement follows:]
                  Prepared Statement of Hon. Togo D. West, Jr.
        Mr. Chairman and members of the committee: I am pleased to appear
    before you today to report on the state of the Army and to talk about
    the Army's proposed budget for fiscal year 1998.
        President Clinton has submitted an Army budget for fiscal year 1998
    of $60.4 billion. This budget is the result of a very careful
    assessment of our needs and priorities and reflects today's fiscal
    realities. Most importantly, this budget funds the level of readiness
    necessary to support the National Security and National Military
    Strategies. Further, this budget balances the demands of recruiting
    high-quality soldiers, maintaining near-term readiness, preparing for
    long-term modernization needs, and taking care of soldiers and their
    families.
        The soldiers, civilians, and family members who comprise America's
    Army continue the legacy of superb service to our nation with an
    exceptional mix of professionalism, selflessness, and personal
    sacrifice. On any given day during the past year, the Army has had more
    than 100,000 soldiers and 28,000 civilians stationed around the world
    with more than 35,000 soldiers deployed from their home stations in
    over 70 countries. You, and the nation, can be proud of their
    achievements.
        The current world security environment is complex and uncertain, a
    mixture of new threats and old animosities in many regions across the
    globe. The end of the Cold War did not bring an end to international
    conflict. Many old threats to national security have been replaced by
    new dangers. This new environment makes the task of providing for
    America's national security different and, in some ways, more complex
    than it was during the Cold War period. Army capabilities are crucial
    to an increasing number of missions in this environment. The Army
    serves as the nation's contingency force, ready to deploy on short
    notice to anywhere in the world, and ready to conduct missions across
    the full spectrum of military operations--from humanitarian assistance,
    to peace operations, to fighting and winning major regional conflicts.
                               the changing army
        The Army has changed significantly to meet the challenges of the
    post-Cold War world. Executing missions now requires a strategically
    mobile Army that can be deployed rapidly wherever and whenever needed.
    In the last seven years, we have transformed the Army from a forward-
    deployed force to a capabilities-based force, based primarily in the
    United States. The Army has reduced and redistributed its forces,
    closed and realigned bases, improved integration of active and reserve
    components, and reorganized and redistributed its equipment pre-
    positioned overseas. The Army now has 10 divisions in the Active
    Component, 8 divisions and 15 enhanced brigades in the Army National
    Guard, and 10 Regional Support Commands in the Army Reserve.
        We will continue the integration of the active and reserve
    components, enabling the Total Force to perform an increased number of
    missions more efficiently and effectively. Each component of the Total
    Force--Active, Guard, Reserve, and civilian--provides essential
    capabilities that give the National Command Authority a range of
    options when dealing with contingencies.
        The world security environment will continue to be unpredictable,
    volatile, and dangerous; America's Army will remain ready to respond
    rapidly and decisively to any crisis around the world.
                        army missions: engaged worldwide
        As President Clinton has said, ``There are times when only America
    can make the difference between war and peace, between freedom and
    repression, between life and death.'' Just as our allies look to
    America for leadership, our nation will continue to call upon the Army.
        As the military's land component, the Army is a critical player
    with the joint team of the Navy, Air Force, and Marine Corps. The
    Army's role continues to be fourfold: to compel enemies, deter
    potential foes, reassure and lend stability, and, in times of
    emergency, lend support to our communities at home.
        In the last year, American soldiers responded to a threat in
    Southwest Asia as part of Operation Intrinsic Action; supported
    humanitarian efforts in the Kurdish region of Iraq as part of Operation
    Provide Comfort; reinforced peace in the Sinai Peninsula; deterred
    aggression in Korea; safeguarded the evacuation of American citizens
    from Liberia; demonstrated resolve in the former Yugoslav Republic of
    Macedonia; and continued to build peace in Bosnia-Herzegovina.
        The Army also serves at home. In the past year, Army soldiers and
    civilians have assisted communities devastated by hurricanes and
    floods; extinguished wildfires in the Pacific Northwest; provided
    medical care to under-served communities across the United States;
    supported the 1996 Summer Olympics; and worked to interdict the flow of
    illegal drugs across America's borders.
        In every instance, the Army has served the nation well.
         army priorities--readiness, modernization, and quality of life
        For the foreseeable future, America's interests will require the
    Army to remain engaged around the world. Our challenge in this
    environment is to balance readiness, quality of life, and
    modernization, while continuing to execute missions across the full
    spectrum of military operations.
                                   readiness
        Readiness continues to be our number one priority. High-quality
    people, both soldiers and civilians, are the defining characteristic of
    a ready force. The diverse and wide-ranging missions assigned to
    America's Army require highly capable and flexible soldiers and
    civilians. They must be capable of adapting to complex, dangerous, and
    ever-changing situations throughout the world, often while operating in
    small groups, remote locations, and ambiguous situations. Many factors
    contribute to readiness. Four key elements are recruiting quality
    people, training to tough standards, providing quality leadership, and
    sustaining the force.
    Recruiting
        Quality people are essential to the Army's success, and we continue
    to attract quality young people to our ranks. Today's recruits are the
    best educated and disciplined in the Army's history. However, success
    is becoming increasingly difficult in the recruiting business. The
    active Army recruiting mission continues to increase as the drawdown
    concludes, and we begin to replace losses one-for-one. The recruiting
    mission rose from 63,000 in 1995 to 73,000 in 1996 and to almost 90,000
    in 1997: a 43 percent increase over two years.
        We are committed to recruiting top-quality soldiers for our Army,
    but the challenge remains for us to maintain the quality force we now
    have as we replace almost 20 percent of that force each year. The
    fiscal year 1998 President's Budget provides $219.2 million for
    recruiting. It includes $73 million for enlisted advertising--$2.5
    million more than fiscal year 1997--and includes $146.1 million for
    5,200 on-production recruiters. These initiatives, coupled with $74.5
    million in educational and enlistment incentives, should enable us to
    meet our recruitment objectives.
        We are adjusting our requirement for high school diploma graduates
    to the Department of Defense goal of 90 percent of our active Army
    recruits, down from 95 percent. However, all Army recruits will possess
    either a high school diploma or equivalent certification. Further, we
    are maintaining our scoring requirements for the Armed Forces
    Qualification Test, requiring 67 percent of our active Army recruits to
    score in test categories I-IIIA and no more than two percent in test
    category IV.
    Training
        Our quality training is essential to maintaining a decisive
    battlefield edge. Training is primarily conducted at home stations.
    Unit training continues to be our highest priority and is funded at 100
    percent of our requirement of $3 billion.
        Unit training is reinforced in our world class combat training
    centers. These centers provide soldiers with the most realistic and
    demanding training short of combat by virtue of professional staffs,
    battlefield instrumentation, wargames, and feedback. An investment in
    simulators and simulations has enhanced unit capabilities, and
    information-age technology will be used in the Army's distance learning
    program to bring the classroom to the students.
        The Combat Training Center program is central to maintaining the
    Army's readiness. This program allows battalion and brigade-size units
    to train at the three combat training centers: the National Training
    Center (NTC) at Fort Irwin, California; the Joint Readiness Training
    Center (JRTC) at Fort Polk, Louisiana; and the Combat Maneuver Training
    Center (CMTC) in Hohenfels, Germany. The Battle Command Training
    Program (BCTP), a computer-driven tactical exercise that provides
    valuable training without the expenditure of fuel and ammunition,
    trains corps and division staffs at Fort Leavenworth, Kansas. The
    fiscal year 1998 President's Budget provides $371.4 million for combat
    training centers. This provides for 12 rotations at the NTC, 10
    rotations at the JRTC, and 5 rotations at the CMTC. Additionally, it
    funds five division and three corps staff exercises with the BCTP. Our
    soldiers also participate in numerous joint and combined training
    exercises to enhance their ability to operate as a member of a joint
    team with other services and coalition forces.
        Through an initiative called ``Future Army Schools--21st Century,''
    the Army is establishing a Total Army School System with fully
    accredited and integrated active Army, Army Reserve, and National Guard
    schools. Each component is working to reduce duplication, share
    information and resources, and make tough but necessary decisions on
    organizational changes. A component of the program, distance learning,
    will use information-age technology to bring the classroom to the
    students. Our fiscal year 1998 budget request for training
    modernization is $97.5 million.
        Besides preparing our individual soldiers for combat, our training
    system plays a key role in redesigning the Army's operational forces
    for the 21st Century. Through our battle labs program and warfighting
    experiments, we are testing and refining the components of success on
    the battlefield: doctrine, training, leader development, organization,
    materiel, and soldier system requirements. In consonance with the
    results of the Quadrennial Defense Review, the Army of the 21st Century
    will be designed and built based on what we learn through these battle
    labs and warfighting experiments.
    Leading
        A ready Army is not only well-trained but also well-led. Our
    professional development system for commissioned and noncommissioned
    officers combines formal civilian education, military schooling,
    professional experience in the field, and self-improvement initiatives.
    With the advent of emerging information technology and realistic
    simulations, the high-quality and diversity of our officer education
    system will get even better, and we can project that learning to
    soldiers around the world using interactive classrooms and
    teleconferencing.
        Our noncommissioned officer corps is the envy of armies around the
    world and serves as the model for many emerging democracies. It
    provides the foundation for our success in joint and combined training
    exercises, in our Partnership for Peace programs, in military-to-
    military contacts, and in operational deployments around the world. The
    fiscal year 1998 President's Budget provides $217.2 million for our
    leader development system--a system that will continue to produce
    professional military thinkers who will lead our Army to new
    achievements in both peacetime and war.
    Sustaining
        The Army distinguishes itself in its ability to sustain its forces
    deployed worldwide. Providing the fuel, ammunition, food supplies,
    repair parts, medical care, equipment, transportation, and other forms
    of support soldiers need is vital to the effectiveness, morale,
    welfare, and continued readiness of the Army. It requires an extremely
    complex, but highly efficient infrastructure to acquire, manage, store,
    move and distribute the required materiel and services the Army needs.
        The fiscal year 1998 President's Budget supports the sustainment
    effort by providing $637 million for the depot maintenance program in
    addition to $1.56 billion for logistics support programs, such as
    second destination transportation, supply depot operations, the
    Conventional Ammunition Program, and pre-positioned war reserves.
    Moreover, our efforts have improved infrastructure, such as railheads,
    access roads, railroad cars, containers, loading facilities, and
    communications. These initiatives, combined with our continuing efforts
    at total asset visibility and logistics efficiency, ensure the
    continued success of our sustainment effort.
                                 modernization
        Army modernization is focused on the highest priority units and
    leverages our current technological superiority to ensure that the
    force continues to achieve full spectrum dominance. The strategy
    emphasizes integrating new technology, especially technology that
    enhances information dominance, and upgrading existing systems in order
    to preserve America's scientific and technological edge.
        American soldiers are the best equipped in the world; but the
    challenge we face is maintaining that status while meeting the fiscal
    realities of the years ahead. The fiscal year 1998 President's Budget
    provides $11.2 billion for modernization, consisting of $6.7 billion in
    procurement and $4.5 billion for Research, Development, Test, and
    Evaluation. We are buying a limited number of new, high-payoff weapons
    while extending the capabilities of existing programs.
        This budget allows the Army to continue its upgrade of the Abrams
    tank and the Bradley fighting vehicle. These improvements enhance the
    mobility, survivability, and lethality of existing systems and are
    crucial to our ability to defeat all current and foreseeable ground
    combat threats. The upgrade will also enable these vehicles to interact
    on the 21st Century digital battlefield.
        The budget also supports continued production of our Family of
    Medium Tactical Vehicles, which will replace our aging truck fleet and
    provide state-of-the-art automotive technology for our soldiers. The
    budget provides $209 million for the purchase of over 1,500 new trucks
    and $31 million for the purchase of more than 500 High Mobility
    Multipurpose Wheeled Vehicles. The fiscal year 1998 budget also
    includes $44 million for modifying some basic Apache helicopters to the
    Apache Longbow configuration, complete with improved radar-guided,
    fire-and-forget Hellfire missiles.
        The modernization budget contains nearly $900 million to procure
    new ammunition. We will procure the Sense and Destroy Armor to enhance
    our ability to defeat armored vehicles. Additionally, we will continue
    the Brilliant Anti-Armor submunitions research and development effort
    and will procure additional tank ammunition.
        These modernization programs, considered together, will increase
    the Army's combat effectiveness and minimize the threat to our soldiers
    on the ground.
        We are also taking steps to ensure the timely development and
    transition of technology into weapons systems and system upgrades, and
    to apply alternate concepts in future warfighting capabilities. Perhaps
    the most important of these are the Comanche armed reconnaissance
    helicopter and the Crusader field artillery system. These two
    programs--budgeted for $282 million and $324 million, respectively--
    will give commanders the ability to conduct reconnaissance operations
    in all types of weather during both day and night, and the ability to
    fire artillery faster, more accurately, and with a smaller crew than
    ever before.
        In addition, acquisition reform is achieving significant savings
    that are being applied toward the development of the 21st Century
    force. Through streamlining and re-engineering acquisition programs,
    almost $9 billion in cost reductions to date have been identified in
    various programs and have leveraged our ability to maintain an
    effective modernization program in the face of declining budgets. That
    notwithstanding, modernization is still our most fragile area in terms
    of resources, and it requires our constant attention.
                                quality of life
        We must look after our soldiers and their families. An important
    part of readiness--of soldiers doing their jobs whether at their home
    station, at a training assignment here in the U.S. or deployed abroad--
    is the soldier's ability to go about his or her work with peace of
    mind: with the knowledge that society values that work; and that his or
    her family is being provided for. And so, quality of life will continue
    to be a priority to the Army leadership. We are committed to ensuring
    adequate pay, housing, health care and retirement benefits for our
    soldiers.
        As we all recognize, adequate compensation is a fundamental
    requirement for maintaining an all volunteer force. This year's budget
    requests a 2.8 percent pay raise for our military and civilian
    personnel.
        We have also requested $180 million for family support initiatives
    such as the Programs for School-Age Teens, Army Community Service
    programs, and Child Development Services (CDS) programs. Our CDS
    programs, for instance, give many working parents much needed support.
    During the past fiscal year, CDS served approximately 82,000 children
    in 176 Child Development Centers. The Family Child Care program
    provided for another 27,000 children and our Programs for School-Aged
    Children served over 28,000 children.
        Quality housing is another important element of the quality of life
    of our soldiers. The fiscal year 1998 President's Budget contains $338
    million for the Whole Barracks Renewal Program, which will improve the
    living conditions of single soldiers by constructing 2,482 new barracks
    spaces in the continental United States and nearly 2,000 more overseas.
    The fiscal year 1998 budget also provides $86.4 million for 583 new
    family housing units and $44.8 million for the renovation of six Whole
    Neighborhood projects containing 455 additional units.
        Through the Capital Venture Initiative, the Army is pursuing
    privatization initiatives to increase housing availability and to
    improve housing conditions. This initiative will convey current housing
    units to private entities which will, in turn, revitalize the housing
    for our Army families. The first of these initiatives is scheduled to
    begin at Fort Carson, Colorado, this summer.
                             military construction
        The Military Construction budget continues to focus on the quality
    of life initiatives mentioned above as well as facilities that upgrade
    the capabilities of Army installations as power projection platforms. A
    predominately U.S.-based Army requires modern rail systems, airfield
    and port operations, and installation storage facilities to ensure that
    forces can be deployed rapidly to anywhere in the world. The Army is,
    therefore, improving its deployment infrastructure and converting its
    installations into world-class power projection platforms.
        New facilities include strategic mobility infrastructure,
    computerized training simulators, modernized barracks and an overseas
    prepositioning site. The fiscal year 1998 budget requests a total of
    $687 million for military construction. This includes $23 million for
    an ordnance support area in Concord, California; $7.7 million for a
    strategic maintenance complex in Charleston, South Carolina, and $37
    million for a strategic prepositioning site in Southwest Asia.
                         base realignment and closures
        The Army is now in the final third of a 13-year implementation
    effort that spans four rounds of base closures and realignments. We are
    pleased to report that savings realized from base closures now exceed
    initial closure costs. We are proud of our success in reducing the cost
    of infrastructure and returning assets to the private sector. Reducing
    infrastructure creates savings which in turn increases investment in
    our forces and bases.
        We have nearly completed the first three of four base closure
    rounds in the United States. The Army has closed over 80 percent of the
    bases planned for closure in the United States (91 of 112). Over half
    (15 of 27) of the installation realignments are also complete. The
    remainder will be completed by 2001 in accordance with the law, but we
    are accelerating the process when possible in order to realize the
    savings and permit local communities to gain benefits from the BRAC
    process as soon as possible. The closure of a base is often very trying
    for communities, but it also offers new opportunities. The Army works
    closely with communities to ensure a successful transition. For
    example, Packard Bell now employs 5,000 people at the former Sacramento
    Army Depot; 2,000 more than the Army did.
                           national guard and reserve
        As the Army reserve components are integrated into the Total Army,
    to this point, I have discussed them in the context of the Total Force.
        I am pleased to report that the overall strength and readiness of
    the Army Reserve and National Guard improved last year. The Army
    Reserve and Army National Guard's Force Support Package, units that are
    among the highest priority units in the Army, have reached an historic
    level of readiness. Evidence of the impact and the importance of the
    reserve components to the National Security and National Military
    Strategies is demonstrated by the Army and the nation's reliance on the
    reserve components to support such operations as Uphold Democracy and
    Joint Endeavor. Additionally, the Army's reserve components have
    supported more then 400 missions and deployments around the world and
    at home in the last 12 months. The Army continues its commitment to the
    full integration of the Army National Guard and Army Reserve. The
    centerpiece of this integration effort is the ongoing Army National
    Guard Division Redesign initiative. The Army views a mission-ready and
    integrated Army National Guard and Reserve as essential to the Army's
    role in the National Military Strategy.
                                  efficiencies
        Through the encouragement of better business practices and
    innovation and empowerment of the work force, the Army is developing a
    culture that will ensure it remains efficient in a rapidly changing
    political, technical, and economic environment. Long-term readiness is
    linked to the ability to make maximum use of resources. The Army has
    major initiatives ongoing to divest itself of excess infrastructure and
    achieve efficiencies. The Army continues to pursue innovative ideas to
    increase efficiency.
                                   conclusion
        This budget reflects the Army's commitment to our nation. Our
    soldiers are proud to carry out that commitment, which began nearly 222
    years ago and has led our nation to a position as the dominant leader
    of the community of nations. As an Army, we look to you, this Congress,
    for continued wisdom, guidance, and support as we fulfill our
    commitment to the nation.

        Senator Stevens. Thank you very much.
        General Reimer.
        General Reimer. Mr. Chairman, Senator Inouye, thank you
    very much for the opportunity to appear before your
    subcommittee and to talk about our soldiers. On behalf of all
    of them, I thank you and the other members of the subcommittee
    for not only your great support during a period of uncertainty
    for the U.S. Army, but also for taking the time to go out and
    see our soldiers on the front lines. I certainly agree with
    your laudatory comments about them. But, more importantly, it
    sends a signal to all of them that you really care, and you
    care enough to go out and see them on the front lines. And, for
    that, thank you very much.
        As a postscript, I would simply add to your comments that,
    about 1 week ago today, I visited Hawaii, where I observed a
    capability exercise being conducted by the 25th Infantry
    Division at night. It was superb and done very professionally.
    Not only did I observe it, but the delegates from the armies of
    41 Pacific countries also observed it.
        I have to tell you and the other members of the committee
    that I think this does a lot to reassure our friends and deter
    potential enemies. When you have capabilities and soldiers that
    are well trained, they send a very powerful message. I could
    not be prouder of them, and that is why I refer to them as our
    credentials.
        I would like to spend just a couple of minutes to talk
    about where the Army has been, where we are right now, and
    where we plan to go. And, in so doing, tie my comments into the
    Army budget that we have submitted to Congress.
        First of all, let me talk about what we have done. I like
    to say that, for the Army, the 21st century began in 1989. That
    is when the Berlin Wall came down. What we have done since that
    time is to change the Army, physically and culturally. And, it
    has been no small accomplishment. The physical change is very
    easy to quantify. The Secretary already talked about it; we
    have taken 620,000 people out of the U.S. Army. That is active
    and Reserve component soldiers, and Department of the Army
    civilians--all dedicated people. I think we did it right. We
    put people first, as we always do. It was a tough thing to go
    through.
        The other changes that we have gone through are also easy
    to measure. For example, we have closed over 600 bases. Many of
    those are in Europe. You can quantify that by saying that all
    of the bases that we have closed over in Europe is equivalent
    to closing 12 major bases in the continental United States. So,
    we have had a tremendous amount of change physically.
        But, the change that is hard to quantify is the emotional
    change that you see out there in the Army. It is the
    uncertainty that exists in our soldiers. The budget that we
    have submitted to you this year calls for a stable active end
    strength of 495,000. I think that stability is very important.
    This is not a large army. It is only the eighth-largest army in
    the world. It is the smallest we have had in almost 60 years.
    So, it is a very important part of our submission to have the
    stability that we need.
        The second part of that change is a cultural change. We
    have moved the Army from a threat-based force to a
    capabilities-based force. I have spent 34 years in the Army,
    and 27 of those were in that threat-based force. It was a very
    easy time for us in terms of what we had to do. We built the
    Army against the threat. We trained against the threat. We
    wrote our doctrine against the threat. We did everything
    against the threat. Most of us spent a lot of time in Europe,
    walking, what we called, the general defense plan. We knew
    exactly how we were going to fight a battle if we had to fight
    a battle.
        What we have found, in the last 7 years, is that we have
    been involved in a lot of other exercises that we did not
    expect and that we did not plan for. Although the victory in
    the cold war has been won, peace is not at hand. The world is
    still complex. It is unpredictable. It is still very dangerous.
        I think the Army, as an institution, reacts well to change.
    We know how to administer change. We know that it is important
    to update your doctrine. We have updated our doctrine. It is
    important to change your leader training programs, and we are
    in the process of doing that. It does not occur overnight. You
    have to adjust your unit training programs, and we continue to
    do that.
        I want to assure the members of the committee that we will
    always train against the most difficult part of our mission,
    and that is high-intensity combat. Because, if we can do that,
    then we can do the other missions that we have been given.
        The modern equipment, which the committee has helped us in
    receiving, is very important to us. And, of course, most of
    all, our quality people continue to be our greatest strength.
        I do not care whether you see our soldiers in Korea, as you
    did, or in Hawaii, as I did, or in Bosnia. They are doing a
    great job, and I could not be prouder of them. I would tell you
    that the change which has occurred almost invisibly to the
    American people is a great accomplishment. We have done it
    well, but we have not done it perfectly. We did it quickly. We
    did it over a period of less than 7 years. We did it at a time
    when the pace had gone up about 300 percent. And there are
    challenges that we face. Basically, they are in the three R's.
        The first R is readiness. As you visit our units, you will
    see that we often have a shortage of people. Many of our units
    do not have the required number of people that they need. There
    is too much turbulence. We are moving them too fast. We
    understand that. We are undermanned, and we have some
    imbalance, in terms of our force structure and end strength,
    and we know how to deal with it.
        I would also tell you that if we were ever pushed to the
    limit where we were fully committed, we really would need to be
    able to access the Ready Reserve as quickly as possible. That
    is the only way we will be able to fill those units that we
    have in an undermanned status right now.
        I should also mention to you that the readiness for this
    year is very much dependent upon the supplemental for Bosnia.
    What we have done in the Army is to pay the bills by mortgaging
    the fourth quarter training funds. That is a tough way to do
    business, but it is the only way we know how to do business.
    And, consequently, we are very dependent on and ask for your
    support of the 1997 supplemental.
        The other issue, or the second R, is recruiting. As you
    mentioned, Senator Inouye, it is a terrifically enormous
    challenge that we face. The mission is up this year. What we
    have done is we have drawn down the Army. We suppressed the
    mission for the Recruiting Command. As we have arrived at our
    end state, their mission has gone up 20,000 recruits.
    Consequently, we are having to expend more effort in recruiting
    the high quality soldier that is so important to us.
        We will not compromise quality, but, it is a difficult
    challenge. Success is not preordained. I can tell you, having
    looked at it, I think we are going to make it, and we will
    continue to keep the quality people that we need.
        The third R has to do with human relations. We are dealing
    with some very tough issues. We have been very open. We have
    been very visible. And, we have been very straightforward in
    terms of our tackling these human relations issues. We have
    done that because the allegations that have been made are
    abhorrent to our sense of values and our sense of decency. They
    destroy the strength of the Army in terms of teamwork--being
    able to work together--and the discipline and respect for the
    chain of command, both up and down the chain.
        I would tell you that, when everything is said and done, I
    think the American people will realize we have done this
    properly, and we are going to be a better institution because
    of it.
        That is where we are today. But, we are not done changing.
    Change is hard, but you must change in order to be relevant.
    The Force XXI process that we are involved in really is
    evolving the Army from an industrial age organization to an
    information age organization. We have completed a very
    successful advanced warfighting experiment [AWE] at the
    National Training Center.
        What we did was to equip a brigade with the most modern
    equipment available in the information age. We asked them to
    look at three questions: where am I; where are my buddies; and
    where is the enemy? If we could answer those questions, we felt
    we could make a fundamental change to the way we do business.
        I will tell you, in all sincerity, that we answered those
    questions, and I am very, very pleased with the results of the
    AWE. I think we are onto something really big, and we are going
    to continue with Force XXI changes.
        That will lead us to an Army XXI, which is a product-
    improved organization over what we have right now. It takes the
    systems that we have now, with the exception of Crusader and
    Comanche, and gives us the information age Army that we need.
        At the same time, we are looking at the Army that we will
    need for 2020. That will be a vastly different Army. We have to
    start driving the research and development efforts right now,
    to make sure that the technologies are available for us when we
    need them in the Army after next. As we continue to mature
    through the Force XXI process, we will develop the other things
    that I have talked about that are the essence of the Army: the
    leadership training, the unit training, the doctrine, and those
    types of things. I think the Army after next and the Force XXI
    process offer a true revolution in military affairs.

                               prepared statement

        The budget that we submitted this year has the right
    balance between stability and change. Thank you for your
    attention, and I look forward to your questions.
        [The statement follows:]
                  Prepared Statement of Gen. Dennis J. Reimer
        Mr. Chairman and members of the Committee. Thank you for this
    opportunity to speak to you about America's Army, the world's best
    Army. I am pleased to report that the U.S. Army remains trained and
    ready today, and is proudly serving the nation around the world and at
    home. In the face of declining resources and increasing missions, the
    Army must continue to carefully balance readiness, modernization,
    endstrength and quality of life while executing missions across the
    full spectrum of military operations. The challenge has not been easy.
                           priorities and challenges
        I would like to address three key issues that are challenging the
    Army today--they are readiness, recruiting and retention, and human
    relations. These are critical areas where the Army needs continued
    support from this Committee and from the United States Congress. I will
    then talk about how today's Army has changed and will continue to
    change to meet the challenges of today, tomorrow and the 21st Century.
    Readiness
        First and foremost, thank you for your support in maintaining the
    current readiness of the force. Your support for operations and
    maintenance (O&M) funding has been crucial. Your actions have helped,
    and will continue to help, save soldiers' lives. Adequate O&M funding
    has permitted us to maintain forces that were able to answer the
    nation's call, to maintain peace, prevent wars and serve at home.
    Within our current funding levels, we have ensured that the ``first to
    fight'' units are resourced at levels that allow them to train, deploy,
    and operate in support of the CINC's. Later deploying units are
    resourced based on their deployment timelines. The soldiers in our Army
    appreciate your continued support in this important area.
        Today's Army is a successful force that has done the nation's
    bidding. We have great soldiers led by competent, well-trained leaders
    equipped with the most capable and best maintained equipment found
    anywhere in the world. There are some shortages of people and too much
    personnel turbulence in the field, but we are attuned to these issues
    and continue to work the force structure balance issues while
    simultaneously keeping the Army trained and ready.
        But, this is a busy force. Given the current geo-strategic
    environment and our National Military Strategy, an active force of
    495,000 soldiers is the minimum necessary to accomplish assigned tasks
    with acceptable risk while maintaining a personnel tempo that permits
    us to retain quality soldiers. Brave, selfless soldiers will accomplish
    all assigned tasks, but if they see the military profession as
    incompatible with a reasonably stable family life, then the future of
    the Army will be in serious jeopardy.
        I also ask your support for Army endstrength sufficient to meet the
    requirements of the National Security Strategy. Numbers do matter. As
    General Creighton Abrams was fond of saying, ``The Army is not made up
    of people, the Army is people.'' The most important and the
    ``smartest'' weapon in the Army's defense arsenal is the soldier,
    carrying out the will of the nation. For every unit deployed on an
    operational commitment, a second is preparing for deployment, and a
    third, having just redeployed from the mission, is at home station
    retraining and sharpening its skills. A properly sized force will be
    able to achieve the objectives directed by the National Command
    Authority without placing excessive strain on units, soldiers or their
    families.
    Recruiting
        The Army continues to enjoy success in attracting and retaining
    high-quality recruits, but enticing young people to serve, in the
    numbers that we need, is becoming increasingly difficult. Today's
    soldiers are the best educated and disciplined in U.S. history. In
    fiscal year 1996, the active Army met its recruiting goals for both
    quantity and quality. The active Army recruiting mission continues to
    increase as the drawdown concludes and we begin to replace losses on a
    one-for-one basis. The recruiting mission rose from 73,000 in fiscal
    year 1996 to a projected 89,700 in fiscal year 1997. In order to
    recruit the numbers we need, we will recruit 100 percent high school
    graduates, 67 percent Category I-IIIA and no more than 2 percent
    Category IV. We are adjusting the requirement for high school diploma
    graduates from 95 percent to 90 percent, the pre-drawdown prerequisite
    and Office, Secretary of Defense's (OSD's), goal. A high school diploma
    is an indicator of a soldiers ability to complete his initial service
    obligation, but it is not the sole measure of quality. Quality is
    measured by the scores on the Armed Services Vocational Aptitude
    Battery (ASVAB) and this adjustment will ensure we continue to have a
    quality force. Even with these changes the statistics are higher than
    for the force that fought Operation Desert Storm.
    Retention
        Good people will continue to answer the nation's call; however, we
    must have the tools and enablers to make the Army an attractive career.
    A key component in attracting and retaining the caliber of soldiers
    that we need is quality of life programs. The increased frequency of
    deployments, promotion slow-downs due to budgetary constraints, and a
    concern over health care and retirement benefits have the potential to
    increase uncertainty and adversely affect retention and recruiting.
    Consequently, the quality of life for both married and single soldiers
    is a top priority of the Army. Our soldiers sacrifice a great deal to
    serve their Country. It is our obligation to provide them and their
    families with fair and adequate pay, quality medical care, safe and
    affordable housing, and stable retirement benefits.
    Human Relations
        The most difficult issue we face today is dealing with the human
    dimension of change. There is a great deal of human emotion associated
    with all the changes the Army has gone through during the last several
    years. Sexual misconduct, sexual harassment, and extremism are totally
    counter to the values in our Army. They directly attack the dignity and
    mutual respect that give us the cohesion and espirit needed to win on
    the battlefield. We are addressing them in the context of respect for
    others--a core value of the U.S. Army.
        The operating tempo (OPTEMPO)--the operational pace of our units--
    and personnel tempo (PERSTEMPO)--a soldier's time away from home
    station--are both high. The changing demographics have added to this
    human dimension of change. Today, approximately 63 percent of the Army
    is married and more soldiers than ever reside off post. The percentage
    of women in the ranks has also increased over time and now approaches
    14 percent of the force.
        During the past several months, the most visible of these
    challenges--and the one that has most negatively impacted on the Army's
    reputation--is the issue of sexual misconduct/sexual harassment in the
    ranks. It is easy for people in and out of the Army to get caught up in
    the drama and hyperbole of current events, but such a reaction is not
    likely to result in any meaningful changes that will benefit the
    nation's Army. Real, sustainable progress in the fight against sexual
    harassment will not occur overnight. However, the leadership of the
    Army is strongly committed to doing what's right so all soldiers
    understand three things: the responsibilities they share, the systems
    that are in place to prevent and report sexual harassment, and the
    Army's policy of zero tolerance for sexual harassment.
        It is critical for the Army to successfully meet and overcome the
    challenge created by sexual harassment in the ranks. This is because
    sexual misconduct/sexual harassment undermines the three fundamental
    elements that serve as the very foundation stones of the Army. These
    are the values of the Army, military discipline, and teamwork. We have
    been successful for 221 years because of the strong bond of trust and
    confidence that is shared by our soldiers. This trust and confidence is
    based on our commitment to Army values, discipline, and teamwork.
                                drawdown update
        In fiscal year 1996, the active Army completed its drawdown to a
    base force of 495,000 soldiers. In real terms, the ranks have been
    reduced by 36 percent; and resources have been reduced by 39 percent.
    Since the drawdown began in fiscal year 1989, the total force has been
    reduced by 620,000 soldiers and civilian personnel. Today's Army is
    smaller than at any time since before World War II. In terms of size,
    our Army is the eighth largest in the world. However, I am proud to
    report that what our Army lacks in quantity it makes up by the quality
    we carefully preserved throughout the drawdown.
        It was important to take care of the people who served the country
    so well, and at the same time, to keep the remaining Army trained and
    ready during the inherent turmoil of the drawdown. In order to
    accomplish this, the accounts for modernization were reduced, and the
    most modern equipment distributed across the remaining force. The truly
    historic accomplishment is that the Army remained trained and ready
    throughout the drawdown. This unprecedented achievement was
    accomplished through the dedication and selfless service of great
    soldiers doing as much or more with less. The Army now needs to
    maintain adequate funding and stability in personnel endstrength.
        It is hard to predict when OPTEMPO and PERSTEMPO will affect
    retention of quality soldiers, but the time may be growing closer. We
    are asking a lot more of our soldiers these days, and they have
    responded magnificently. We must never forget that quality soldiers are
    our most precious resource, and we must give them the quality of life
    and stability that we have promised and they have earned by their
    selfless service.
                 the army--globally engaged and cost effective
        The Army's fundamental purpose is to fight and win the nation's
    wars. But the Army also is engaged around the world--protecting the
    national interests, supporting the national security strategy, and
    assisting the nation at home. The Army has more than 100,000 soldiers
    and 28,000 civilians stationed around the world, primarily in Europe
    and in the Pacific. On any given day in fiscal year 1996, on average,
    an additional 35,000 soldiers were deployed away from their home
    stations conducting operations and participating in exercises in over
    70 countries. Current missions include the Sinai, Macedonia, Kuwait,
    Haiti, Partnership for Peace exercises, Joint Task Forces for
    counterdrug operations, hurricane, and flood relief, and, of course,
    Operation Joint Guard in Bosnia. Concurrently, units are routinely
    deployed to our combat training centers, training to maintain readiness
    for possible regional conflicts.
        The Army's most visible ongoing deployment began in December 1995
    when NATO, with almost 20,000 American soldiers, deployed into war-torn
    Bosnia-Herzegovina as part of the Implementation Force (IFOR) to
    enforce the provisions of the Dayton Peace Accord and try to introduce
    stability into the region. It was a seemingly impossible mission to
    help bring peace to an area of the world hopelessly mired in ethnic
    hatred and civil war. American soldiers on the ground, well trained and
    with a clear mission, were able to separate the warring parties and
    have set the conditions for peace to take hold.
        Today, some fourteen months into this enormous peace enforcement
    effort, the Stabilization Force (SFOR) has assumed this important
    international effort. American soldiers, with NATO and coalition ground
    forces, continue to successfully enforce all of the military provisions
    in the Dayton Peace Accords. American soldiers routinely demonstrate
    their professionalism, technical skill, situational sensitivity, and
    determination to accomplish a difficult mission in an often dangerous
    and unforgiving environment. Our successes in helping to stabilize and
    rebuild Bosnia are clear proof that it takes soldiers on the ground--a
    visible force of well trained, professional soldiers--to show warring
    parties that America means business. Once again the United States Army
    has been at the forefront, clearly demonstrating to the world that we
    are a full spectrum force--a capabilities-based force--a force of
    decision.
        While the majority of soldiers deployed throughout the year were
    active duty personnel, the Army could not have accomplished these
    missions without the support of the Army National Guard and Army
    Reserve forces. The reserve components provide essential capabilities
    not found in the active force; they also play an increasingly important
    role in the National Security Strategy of Engagement and Enlargement,
    participating in peacekeeping, humanitarian and civil assistance
    operations, while at the same time responding to domestic emergencies.
    Reserve component support was essential during Operation Joint Endeavor
    in Bosnia, which mobilized almost 8,000 National Guard and Army Reserve
    soldiers. Over 3,000 soldiers augmented or backfilled units in Germany,
    and over 2,300 deployed to Bosnia and conducted public affairs, fire
    fighting, fire support, aviation, logistics, maintenance, civil affairs
    and psychological operations. Today's Army is a seamless blend of
    active component, reserve components and DA civilians working together
    to achieve America's goals.
        Requirements for U.S. soldiers on the ground continue to increase.
    Today's Army provides balanced capabilities, but it is stretched. The
    key to future peace is balanced capabilities sufficient to reassure
    allies, deter conflict and, if necessary, to compel adversaries who
    threaten U.S. interests. Balanced capabilities are necessary to pursue
    the Enlargement and Engagement strategy. For example, last year,
    American soldiers participated in 16 NATO ``Partner for Peace''
    exercises designed to expand and improve interoperability among NATO
    and other European nations. Operation Able Sentry, a peacekeeping
    operation, is a task force that observes and reports from the former
    Yugoslav Republic of Macedonia as part of the United Nations Preventive
    Deployment Force. Their presence, manning outposts between Macedonia
    and Serbia, is terribly important to protect the border and bring
    stability. Similarly, 61 soldiers stand watch on the border between
    Ecuador and Peru to assist in the peaceful settlement of the border
    dispute between those two important U.S. trading partners. American
    soldiers on the ground around the world serve not only as emissaries
    advancing the security interests of the United States, but promoting
    U.S. values.
                 changing to meet the challenges of the future
        The world recognizes that commitment of American soldiers on the
    ground is the most emphatic demonstration of resolve that the United
    States can make. The Army provides capable land forces to the Joint
    Force Commander to compel our enemies, deter potential adversaries,
    reassure friends and allies, and, in times of domestic emergencies, to
    support Americans at home. After the Cold War, we find the world less
    dangerous, but the challenges much more complex. Former Senator Sam
    Nunn articulated very well the environment facing us today when he
    said, ``It is a strange and ironic world. In a tragic sense, the world
    has been made safer for religious, ethnic, tribal, and class
    conflict.''
        While the obvious threats to our national security today may be
    less dangerous, they are much more diverse and complex. Ethnic conflict
    continues to spread and rogue states pose a serious danger to regional
    stability. The proliferation of weapons of mass destruction, the threat
    of terrorism, international crime, and drug trafficking pose a serious
    danger to the security of the United States and to global stability.
    During the Cold War, our nuclear deterrent led others to challenge us
    below the nuclear threshold. Similarly, we are challenged today by
    rogue actors on the world stage--national, subnational and some without
    borders. We are also challenged by proxy and by terrorists or others
    who seek to exploit perceived weaknesses. Those who seek to threaten
    U.S. interests will continue to do so in the manner that appears to
    offer the greatest advantage. In this uncertain environment, the Army
    must have balanced capabilities to deter or defeat a potential foe.
    Balanced forces provide the broadest range of options to policy makers
    and offer the most credible deterrent to the wide spectrum of potential
    threats. The Army has changed and is ready for today's unpredictable
    world, providing balanced capabilities that joint force commanders can
    tailor to meet multiple, varying requirements.
        The Army is a proud member of the best joint force in the world
    today. The United States has the best Navy and Marine Corps in the
    world. They are fully capable of defeating any maritime threat to U.S.
    access to the sea and providing power projection for its land forces.
    The United States is also fortunate to have the best Air Force in the
    world. The U.S. Air Force is fully capable of defeating any adversary
    to achieve air supremacy and global power projection. The U.S. Air
    Force's ability to gain and sustain air supremacy, destroy targets on
    the ground and project land forces around the world, is critical to
    successful operations in any environment.
        For its part, the U.S. Army must continue to provide land forces,
    trained to a razor's edge and firmly focused on our fundamental role--
    to fight and win the nation's wars. Since the fall of the Berlin Wall
    in 1989, the Army has changed dramatically from a threat based force,
    primarily focused on defeating the Soviet Empire on the plains of
    Europe, to a capabilities based force, relevant to the wide ranging
    needs of the nation. The Cold War Containment strategy was designed to
    prevent war, and it did that. Engagement and Enlargement is a strategy
    to ensure success--to help shape the environment--to contribute to
    global stability and prosperity in the 21st Century. Today, the U.S.
    Army is a full spectrum force serving around the world and at home,
    deterring potential adversaries, reassuring friends and allies, trained
    and ready to compel our nation's enemies, and in times of domestic
    crisis, to lend assistance to our communities.
        Today's Army is the premiere land combat force in the world. Our
    capability to wage and win high intensity warfare is a primary
    deterrent to those who would threaten the United States or our Allies.
    Deterrence is far cheaper than fighting a war. As President Clinton
    said during his State of the Union Address, ``We must be shapers of
    events, not observers. For if we do not act, the moment will pass and
    we will lose the best possibilities of our future.'' Consistent
    commitment to strong defense by the United States decreases our risk
    and assures the lowest defense spending over the long-term. Army forces
    achieve these and other policy goals. We must continue to maintain the
    appropriate mix of heavy, light, and special operations forces to
    ensure the continued capabilities of the Army--to help win the nation's
    wars.
        Today's National Security Strategy of Engagement and Enlargement
    has led to a dramatic increase in the use of the Army as an instrument
    of national policy. The Army's full spectrum capabilities are uniquely
    suited to reassure allies and deter potential adversaries, thus
    supporting the National Command Authority's efforts to enhance U.S. and
    global security. As the world's only super power, we must recognize
    that we are indispensable for peace in this tumultuous world. Every
    Allied officer and foreign military official I meet seeks closer ties
    and cooperation with the United States Army. We do this primarily
    through training exercises, student exchange programs and with our
    Military Attaches. This ``boots on the ground'' approach develops
    enduring friendships and understandings and increases the United
    States' influence worldwide.
        Our participation in operations to reassure warring parties and
    bring stability to an uncertain world is a singularly important aspect
    in creating global peace and prosperity. In my view, the key to
    providing the requisite capabilities to the nation is balanced, general
    purpose forces. If you ask the joint force commanders in the field
    today what capabilities add the most to their ability to execute the
    National Military Strategy, I think they will agree that U.S. success
    and influence in most situations ultimately depends on putting soldiers
    on the ground.
          the u.s. army--a full spectrum force for today and tomorrow
        The Army's current force structure is based on the decisions of the
    1993 Bottom-Up Review and the National Security Strategy. It has served
    us well in the uncertain post-Cold War period. The exact structure of
    our forces is a subject of continuous analysis and evaluation.
    Structural change, driven by strategy, requires integration of
    doctrine, training and technology. Wherever we are on the continuum of
    change, we must ensure we have the right soldiers with the right
    equipment and the right training to successfully accomplish the
    mission. That's why I welcome the top to bottom study of force
    structure within the framework of the Quadrennial Defense Review (QDR).
    I believe the QDR is off to a good start because it has focused on
    defining our strategy first. The size and composition of the nation's
    military forces must always begin by addressing the requirements that
    flow from our National Security Strategy. The reality of today is that
    land forces are highly suitable and versatile tools for implementing
    the National Military Strategy's strategic enablers--overseas presence
    and power projection. They provide the most flexible, visible,
    sustained presence overseas and this ultimate expression of America's
    power--soldiers on the ground.
        The United States Army provides capabilities across the full
    spectrum of military operations. It is a force that's capable of not
    only winning the nation's wars but also of preventing wars and shaping
    the international environment. Soldiers on the ground help provide
    regional stability. During the President's State of the Union Address,
    he emphasized the global economy and the world's interdependence and
    the importance of stability throughout the world. The United States
    Army is a primary contributor to that stability.
        While helping provide stability through overseas presence and power
    projection, the Army must be prepared for the most dangerous
    contingency, the requirement to deter an adversary or, if necessary,
    compel a major enemy in future decades. This requirement drives
    recapitalization of balanced ground forces with emphasis on
    modernization. The current force is designed based on acceptable risk--
    based on the current threat environment--but further forestalling of
    modernization will greatly increase risk. Risk may not be measured in a
    win-lose equation, but rather in casualties, resources and time to
    achieve victory.
        America's Army provides the nation with the capability for full
    spectrum operations. Soldiers on the ground are America's most visible
    sign of deterrence and reassurance. Securing peace and stability
    requires long-term commitment--a role the Army is uniquely structured
    to fulfill. Every day, the Army meets the demands for forward presence
    while remaining prepared to project power into any situation
    threatening the nation's interests. The capabilities to compel, deter,
    reassure, and support comprise the essence of today's Capabilities
    based Army--the nation's force of decision. The Army is working to
    ensure we will have balanced, capable land forces in the future. Army
    warfighting experiments address mechanized and light warfare as well as
    command and control and the needs of the individual soldier. Our Force
    XXI process is showing us better ways to structure our forces for the
    future.
        Additionally, the Force XXI experience demonstrates that enhanced
    situational understanding provided by new information and communication
    technologies is terribly important on the battlefield because it will
    give us an advantage that we have never had before. It allows our
    soldiers unprecedented ability to answer the battlefield's three key
    questions: ``where am I, where are my buddies, and where's the enemy?''
    We must continue to leverage the capabilities of the information age,
    and at the same time, we must be able to deal with industrial age
    armies. We must have a foot in both ages. It's a tough challenge, but
    we have to be able to handle it. These experiments will continue to
    guide us toward the most effective systems, organizations and training
    techniques. Our goal is to enhance warfighting capability by making
    faster and better decisions at each level of the chain of command and
    making soldiers more capable of accomplishing their missions at the
    lowest risk. While our increased ability to collect, analyze,
    disseminate, and act upon battlefield information is absolutely
    critical, soldiers on the ground, directly interfacing with people will
    always be the key to success.
        With the end of the Cold War, a prominent theory arose that there
    would no longer be a need for land forces, that power projection and
    national military strategy could primarily be carried out through
    precision strike using technologically advanced smart weapons. Reality
    proved that theory to be invalid. History has shown that we cannot
    counter the human dimension of warfare with purely technological
    solutions. We must achieve a balance between precision engagement and
    dominant maneuver. Those two capabilities must be synchronized and
    complimentary. Precision engagement is great, but there are counter-
    actions that can reduce its effectiveness. We must realize that, and we
    must keep precision engagement and dominant maneuver in balance.
        The United States Army has taken a very analytical approach in
    balancing the force. But, in the end, affordability will continue to be
    a major issue. Consequently, we are working hard to make the Army a
    more efficient organization. We have emphasized efficiencies during the
    last few years to get the most out of every dollar that we are given.
    But we also believe that the nation must take a hard look at the forces
    it is maintaining. We must ensure that we are funding the right
    forces--forces with the capabilities we need today and in the future,
    not those we needed in the past. I believe the QDR effort represents
    the opportunity to shift to a strategy-based resource distribution
    paradigm.
                  modernization--the key to our future success
        The Army faces tremendous modernization challenges as we look into
    and prepare for the 21st Century. American history has shown, time and
    time again, that we have asked soldiers to go into harm's way on short
    notice to defeat a determined and dangerous foe. When that happens, we
    must be satisfied that we have done our best to prepare them for the
    task at hand and ensure that they have the very best weapons and
    equipment the country can afford. We are providing adequately for the
    soldiers of 1997, but we have serious concerns about the equipment our
    soldiers will have as we cross the threshold into the 21st Century.
    Currently, the Army Research, Development and Acquisition (RDA) budget
    is only 15 percent of the Department of Defense RDA--in my view, this
    is the absolute rock-bottom minimum. We are aggressively seeking
    efficiencies within the Army to address this shortfall through
    acquisition reform and other measures to reduce operating costs.
    Balancing the readiness requirements of today's soldiers with the
    modernization demands of tomorrow's Army continues to challenge us all.
        The Army has reshaped the force while maintaining current
    readiness, in part, by deferring modernization and redistributing
    modernized equipment across the smaller force. Further deferral of
    modernization will incur significant risk to future readiness. With a
    smaller Army, every unit must be able to execute a full range of
    operations. Our heavy units are general purpose forces that not only
    can win our wars but can also accomplish other missions, as the 1st
    Armored Division demonstrated when it deployed to Bosnia as part of the
    IFOR to separate the warring parties and set the conditions for peace
    to take hold. We must modernize our equipment to deter, or if
    necessary, fight mid- and high-intensity conflict. Light forces also
    need the advantages available from information age technology to
    enhance their lethality and survivability for the challenges of this
    unstable world.
        Our modernization strategy emphasizes integrating new technology,
    especially technology that will allow the Army to establish information
    superiority, and upgrading existing systems in order to preserve
    America's scientific and technical edge. This strategy seeks to
    establish a mental agility--the ability to acquire and act on
    information faster than our adversaries--by integrating critical
    information management technologies across the force. At the same time,
    we will invest in key technologies and systems to ensure, that in the
    future, we have retained the physical agility--the ability to
    effectively mass and synchronize the effects of our advanced systems
    across the breadth and depth of any future battlefield. It is the
    combination of mental and physical agility that will ensure the Army
    maintains its capability to operate across the full spectrum of
    possible operations in the future.
        The Army's highest priority in the near-term is to increase our
    ability to establish information superiority--to collect, analyze,
    disseminate, and act upon battlefield information. This will increase
    the effectiveness of current systems and organizations, enable new
    organizational designs, and provide the operational environment for the
    introduction of new major weapon systems. This includes modernization
    of our logistics automation systems which will enhance our operational
    capabilities, allow us to realize efficiencies, and improve readiness.
    Our second priority is to maintain the combat over-match capability
    essential to successfully project a force against numerically superior
    adversaries. The third priority is to develop in the technology base
    the capability to transition to full spectrum dominance. We will
    continue to enhance the capability to project combat power, focusing on
    increasing the effectiveness of light forces and reducing heavy lift
    requirements, while recapitalizing and inserting technology to extend
    the life of existing systems. In the out years, the strategy will
    reorder priorities and focus on full spectrum dominance.
        Joint Vision 2010--an operationally based template for guiding the
    U.S. Armed Services' transition into the 21st Century--is our guidepost
    for the future. Joint Vision 2010 seeks to achieve full spectrum
    dominance through the application of four operational concepts:
    dominant maneuver, precision engagement, full dimensional protection
    and focused logistics.
        Joint Vision 2010 provides a coherent view of the future and the
    implications for joint operations expressed in terms of emerging
    operation concepts. Army Vision 2010 is the blueprint for the Army
    contributions to the operational concepts identified in Joint Vision
    2010. The document serves as the conceptual template for how America's
    Army will combine the vitality and innovation of its soldiers and
    civilians and leverage technological opportunities to achieve higher
    levels of effectiveness as the land component member of the joint
    warfighting team. Army Vision 2010 focuses on the implications that the
    operational concepts identified in Joint Vision 2010 will have on the
    fundamental competency of the Army--conducting prompt and sustained
    operations on land across the entire spectrum of military operations.
    Army Vision 2010 links Force XXI, the ongoing process to guide the
    Army's transformation, with the Army After Next, the Army's emerging
    long-term vision of a capabilities-based Army. Army Vision 2010
    provides the azimuth for making the vision a reality.
        Force XXI is the comprehensive process for modernizing and
    preparing for the challenges of the 21st Century. The initial product
    of the Force XXI process will be a versatile Army with the capabilities
    America will need in the first decade of the next century--Army XXI,
    which is forming right now at Fort Hood, Texas. Army XXI is a product-
    improved force. We are taking the equipment we have today and moving it
    into the information age. The Force XXI process seeks to exploit
    revolutionary changes in technology to mitigate the effects of
    reductions in military funding and endstrength and to provide a quantum
    leap in capabilities. Digitization, the application of information
    technologies to acquire, exchange and employ timely battlefield
    information, is critical to the Force XXI process. It will enhance
    situational awareness and provide the means for information dominance
    by enabling friendly forces to share a common picture of the
    battlefield while communicating and targeting in real or near-real
    time.
        At the same time we are fielding Army XXI, the intellectual energy
    of the Army is switching to the Army After Next. While Army XXI is a
    product-improved Army, the Army After Next is a totally different
    force. We know that it must be more strategically and tactically
    mobile, more versatile, more lethal and logistically unencumbered. The
    lessons learned in developing Army XXI combined with continuing
    technological leaps will provide us the tools to build the Army After
    Next, a force with the capabilities to conduct simultaneous,
    continuous, and seamless operations across the full spectrum of
    military operations.
        Some have called for personnel reductions to pay for modernization,
    but further personnel reductions will incur additional risk. Not only
    will the Army's capability to execute the National Military Strategy be
    impaired, the long-term viability of the force could be placed at risk.
    The Army must maintain sufficient endstrength and force structure to
    execute assigned missions in accordance with the National Military
    Strategy without placing excessive burdens on soldiers and families.
    Rather than cutting endstrength, the Army is reexamining and
    reengineering systems to save money and provide funds needed for
    modernization.
                             reengineering efforts
        Constrained resources require the Army to become more efficient as
    well as make tough decisions and trade-offs. Thus far, we have
    succeeded in maintaining near-term readiness, but we have sacrificed
    modernization, one of the keys to long-term readiness.
        The Army continues to pursue innovative ideas to increase
    efficiency and mitigate some of our funding shortfalls. We are
    streamlining operations, adopting suitable commercial practices, and
    reorganizing processes and programs to generate savings. These savings
    will help the Army maintain an endstrength commensurate with
    operational commitments, increase investment in essential modernization
    programs, and increase spending on vital quality of life programs. We
    are working to instill the concept of efficiency within the very fabric
    of the Army's enduring values. Long-term readiness is linked to our
    ability to make maximum use of resources.
        All major Army commands are working on reengineering and redesign
    initiatives that will result in more cost-effective and efficient
    organizations. Efforts to improve business practices include avoiding
    or reducing costs, streamlining and consolidating operations, and
    significantly increasing private sector participation in infrastructure
    improvements. Acquisition reform makes possible significant savings
    needed to develop a 21st Century force by ensuring that the latest
    technology, goods, and services are obtained on time and at the lowest
    cost. In logistics, the Army is evolving from a supply-based to a
    transportation-based system to reduce or eliminate the costly on-hand
    inventory of supplies, what we refer to as the ``iron mountain.'' We
    are committed to a comprehensive redesign and restructuring of all
    facets of the institution; however, I must tell you that legislated
    restrictions, such as those restricting the amount of depot maintenance
    that can be privatized, limit our potential in some of the most
    promising areas.
        The Army also is conducting a thorough review of development and
    acquisition programs. The Army will retire some older equipment without
    immediate replacement and accept the attendant risks. We are doing this
    to save the exorbitant maintenance costs of these older systems. Our
    intent is to apply these dollars to systems for Army XXI, the force of
    the first decade of the 21st Century. We are making tough choices in
    the allocation of limited resources. The Army cannot continue to invest
    both in legacy systems and in replacement systems. Rather than
    stretching out systems to uneconomic rates of production, we have cut
    whole programs. We are attempting to maintain economic production of
    the essential systems we need and can afford. The alternative, deeper
    cuts in force structure, will result in increased capability shortfalls
    in the force.
              the strategic imbalance--requirements and resources
        In this unstable and turbulent world, the Army will continually be
    called upon to meet the nation's needs. However, constrained budgets
    are threatening the Army's capability to meet future requirements
    across the full spectrum of operations and achieve swift victory with
    minimal casualties. Since 1989, the Army's buying power has declined 39
    percent in constant dollars. Our share of the Defense Department budget
    has decreased from nearly 27 percent in fiscal year 1989 to 24.6
    percent in fiscal year 1997 and will fall to 24.3 percent in fiscal
    year 2001.
        Current fiscal projections will place tremendous stress on the
    Army's ability to execute full spectrum operations in support of the
    National Military Strategy. Reduced infrastructure, other efficiencies,
    and OSD redistributions allowed for increased modernization investment.
    Still, with these initiatives, the Army's future buying power never
    returns to even the depressed level of today. The fiscal year 1998
    President's Budget for the Army totals $60.4 billion. After
    normalization for supplementals, transfers and inflation, the total
    obligation authority for fiscal year 1998 is $59.7 billion in fiscal
    year 1998 constant dollars. This figure represents a loss in buying
    power of $3.8 billion from fiscal year 1997 and of $5.9 billion from
    the fiscal year 1996 actuals.
        The most significant short-term risk is the impact of the
    unprogrammed costs of contingency operations. In fiscal year 1996,
    Congress reprogrammed $1.65 billion to support Operation Joint Endeavor
    and other contingencies, but the Army still absorbed approximately over
    $400 million in costs. Although the Army is now budgeting for ongoing
    operations, unprogrammed missions--whether in response to contingencies
    or natural disasters--continue to have an impact on the Army's ability
    to maintain readiness and quality of life programs.
        The greatest potential threat to Army readiness is the medium and
    long-term impact of an increased operational pace and insufficient
    modernization funding. The first risk is that by failing to modernize
    and update our equipment, we put tomorrow's soldiers at risk. In the
    event of conflict, a lack of modern equipment will cost the lives of
    brave soldiers. Speaking of our failure to modernize after World War
    II, General Creighton Abrams said, ``We paid dearly for unpreparedness
    during those early days in Korea with our most precious currency--the
    lives of our young men. The monuments we raise to their heroism and
    sacrifice are really surrogates for the monuments we owe ourselves for
    our blindness to reality, for our indifference to real threats to our
    security, and our determination to deal in intentions and perceptions,
    for our unsubstantiated wishful thinking about how war could not
    come.''
        The second risk is more difficult to assess or to quantify, the
    risk of loss of future leadership. In the Army today, there are
    hundreds of young officers and soldiers who will be the senior leaders
    in 2010. They will set the standards of readiness and training and will
    set the conditions for the success and survival of the Army in future
    combat. Those soldiers are out there today serving their country
    proudly. They are training hard and learning well. They may have
    deployed to Haiti or Guantanamo or both and may be in Bosnia today.
    Those soldiers are proud of their units' accomplishments and most want
    to continue in the Army. But those soldiers have personal goals as
    well; most notably the desire to have and raise families.
        Excessive time away from home is often cited by quality
    professionals as the main reason for their decision to leave the
    military. The Army has adapted personnel practices to assure that
    individual soldiers do not bear a disproportionate share of these
    requirements and has increased reliance on our Guard and Reserve forces
    for deployment missions. Still, it is common to find soldiers in
    today's Army that have been away from home, answering the nation's
    bidding for 140, 160 or 190 days this past year. These soldiers do not
    complain--they perform magnificently every day. It also is not uncommon
    to see spouses who, though proud and supportive of their soldier's past
    service, believe they have done their part. All of our research shows
    the views of the spouse to be the most important factor in a soldier's
    decision to stay in the Army. The Army's future depends on our ability
    to attract and retain the best soldiers to be tomorrow's leaders.
        The Army must have soldiers in sufficient numbers to meet our
    commitments without placing excessive burdens on individual service
    members. It is crucial that the Army maintain balanced capabilities.
    The country owes its soldiers a quality of life sufficient to raise
    their families successfully and with dignity. We can do no less.
                             the world's best army
        The quality of America's soldiers has been the key to our success
    in the past, and it will be the key to our success in the future.
    Inside the Army, we have sought to keep the right balance among
    readiness, endstrength, modernization, and quality of life. The Army
    has retained a trained and ready force through a major drawdown for the
    first time in history. America's Army is trained and ready today and is
    working hard to meet the inevitable challenges of tomorrow and the 21st
    Century.
        At the very heart of meeting the challenges in the Army's future is
    a continuing commitment to a full spectrum force of quality active and
    reserve soldiers and civilians. The global security environment, the
    complexity of emerging technologies, and the diverse missions being
    assigned to the Army will require men and women of intelligence and
    dedication who are able to adapt quickly to the missions at hand.
        Soldiers are our Credentials.

                              Bosnia supplemental

        Senator Stevens. Well, thank you very much, General.
        Mr. Secretary and General, as the General has just said,
    you have done it this past year the way we have always done it
    in terms of using moneys from other accounts for forces in the
    field, but we have never done it to the extent we have done it
    in the last 2 years. It is my judgment that there just has to
    be a better way, because the chances of our being able to fully
    repay these accounts in future years, as we hope to be able to
    do this year, are very slim.
        Now, we have before us $2.1 billion for the supplemental.
    We did give the Department moneys for contingencies for this
    fiscal year. But the actual expenditures have far exceeded even
    the estimates that we had of what the contingency would be.
        Now, this 1998 budget has a requirement of $1.009 billion
    for Bosnia. And we have to know how firm these really are. Are
    those all of the postdeployment costs--reconditioning of gear
    and equipment, return of personnel to their permanent duty
    stations--is that really all of Bosnia? Can we say that there
    is not going to be a 1998 supplemental before us 1 year from
    now for Bosnia expenses, Mr. Secretary?
        Mr. West. I would anticipate that it is the fiscal year
    1998 costs in that supplemental, Senator.
        Senator Stevens. That is for 1997. I am just saying we have
    got that before us right now for 1997. But we have also got the
    1998 request.
        Mr. West. Right.
        Senator Stevens. Now, is the 1998 request underfunded, like
    1997 was?
        Mr. West. The answer is that I do not know if there are
    further postdeployment costs that might occur that are not
    reflected there.
        General Reimer. The only thing I would say, Mr. Chairman,
    is that it is our best estimate of the cost, based upon the
    plan. If the plan changes, if something should happen to the
    June 1998 date, if it is accelerated or slipped, that could
    affect it. If the force levels that are necessary, based upon
    the situation on the ground, change, the cost might change. But
    based upon the plan--and it assumes a getting out date of June
    1998--it is our best estimate.
        Senator Stevens. Well, are we losing any possible financial
    control over these budgets? We do not face supplementals. We do
    not face reprogrammings under the old Food and Forage Act. The
    money is just spent from any account that is available for
    forces in the field. On our trips to Bosnia, Kuwait, Saudi
    Arabia, and Italy, we saw money being spent by CINC's without
    any predetermination by anyone on a departmental level of
    whether they were necessary.
        We saw A-10's lined up in Aviano, and there are no tanks in
    Bosnia. We saw excessive costs in Saudi Arabia and Kuwait, far
    beyond what were necessary to meet the current threat. And they
    all come out of other accounts. We are going to have to really
    dig into other accounts to repay those O&M accounts when we
    approve this supplemental.
        If we face that again next year, I have to tell you, there
    is not going to be that possibility next year. Next year, if we
    face a reprogramming, it is going to come out of--really, not a
    reprogramming, but a supplemental request to repay those
    accounts--it is going to come out of force structure. Now, that
    is a contingency I do not want to live to see, and I think that
    the committee agrees.
        I have to believe that one of the problems is that we are
    using civilian contractors--and I am not opposed to civilian
    contractors--we all believe that there is a need for them--but
    we are using them to pay costs that you cannot pay out of the
    budget. I do not think that the Food and Forage Act gives you
    the right to hire civilian contractors to do functions which
    would otherwise be paid through normal accounts and the use of
    normal military personnel.
        Now, are we looking at a contingency in terms of that type
    of operation for 1998, as you pull out of Bosnia?
        Mr. West. If you are talking about our contract, I think we
    are still planning to use it, yes, sir, Mr. Chairman.
        Senator Stevens. Have you programmed that? Is it in the
    budget?
        General Reimer. That is contained in the estimate that we
    have submitted.

                                   Recruiting

        Senator Stevens. I hope so, because we are losing sleep
    over it right now. Then we are going to have a big battle with
    the House, I am sure, over where there moneys are allocated
    that we have to reprogram for this 1997 supplemental.
        Now, what about recruiting goals? Where do we stand now in
    meeting recruiting goals? The Navy and the Air Force have
    chosen to reduce their end strength because they are not
    meeting their goals. Are you going to meet your goals?
        Mr. West. I think we will meet our manning goals, Mr.
    Chairman. As I said in my opening statement, we have a
    requirement to recruit about 90,000 this year, which is a 20-
    percent increase over 1996. That is because we are doing one-
    for-one replacement.
        Our retention is going to be higher than we anticipated, so
    the number that we will have to recruit is probably going to be
    less than the 90,000 figure. When we are done, we will have the
    numbers we need from a combination of retention improvements
    and our recruiting efforts.
        General Reimer. May I say something on recruiting goals and
    on the quality issue? I certainly agree with the Secretary. I
    think we are working both on retention and attrition. We are
    trying to increase retention and trying to reduce first-term
    attrition. That offsets, a little, the requirement for the
    Recruiting Command to come up with 90,000 recruits. We think we
    will meet our required end strength.
        I would like to point out that we have reduced the end
    strength of the active component by 36 percent. The problems we
    are experiencing in readiness in the field is because, for a 10
    division force, we are slightly overstructured and undermanned.
    We need to be at 495,000, so that we give field commanders the
    number of soldiers they need. That is why we have units like
    the brigade in Alaska and the division in Hawaii that do not
    have all the people that they need.
        We are committed to a 495,000 end strength. That is the
    number we need for a 10 division force, and we will continue to
    strive to meet that.
        As far as quality is concerned, I tried to compare the
    quality between our criteria right now--with 90 percent diploma
    graduates, 67 percent category I-IIIA, and less than 2 percent
    category IV--and what we had during Operation Desert Storm. If
    you look at the Operation Desert Storm force that we recruited
    in 1987 and 1988, what you found is that they were about 91.5
    percent diploma graduates. They were about 65 percent category
    I-IIIA and 5 percent category IV.
        The quality criteria we have established today is every bit
    as good as what we had for Operation Desert Storm, and that
    force fought well.

                               Brigade alignment

        Senator Stevens. Well, I will get back to some other
    questions, but now that you mention the brigade, let me just
    ask you a provincial question. We were in Hawaii, too. We were
    briefed by the CINCPAC and your Army of the Pacific. The
    brigade that is in Alaska, the 1st Brigade of the 6th Division,
    now I am told it is counted in terms of the manpower strength
    of the Pacific. I am told it is now aligned with the 3d Brigade
    of the 10th Mountain Division in New York.
        What has happened? That seems contrary to what we were
    briefed on in Hawaii. And there is a proposal to make that a
    separate, independent infantry brigade. What is the status of
    that brigade in my State?
        General Reimer. As you indicated, it is oriented and
    assigned to the Pacific. It represents the 3d Brigade of the
    10th Division, in terms of the number of brigades that we have.
    If we had to deploy with the 10th Division full-up somewhere,
    then that brigade would probably be assigned to the 10th
    Division.
        Senator Stevens. Well, is that not going to lead to a
    tugging and hauling in the event of a crisis that affects both
    the Pacific and the Atlantic? Who really controls that
    division?
        General Reimer. Who controls the division?
        Senator Stevens. Yes; the CINCPAC things they do pretty
    clearly. And I thought they did.
        General Reimer. They control the brigade, yes, sir. They
    do, and there has not been a problem from that standpoint.
        Senator Stevens. But if the 10th deploys, it goes with the
    10th.
        General Reimer. If we needed the 3d Brigade for the 10th
    Division, then, yes, it would go. That is the one it is aligned
    with. The issue on the separate infantry brigade is one that we
    will have to address in the quadrennial defense review [QDR].
    But, right now, we have not made that decision.
        Senator Stevens. Well, I do not want it to be an orphan
    brigade, but I also think we ought not to see the situation
    where they do not know where they really fit in. They are not
    part of--they are assigned to the Pacific, but they are part of
    the 10th.
        General Reimer. It may be confusing out there. If it is, I
    will sort it out. But, the brigade is oriented for the Pacific.
    They work for CINCPAC. They work for the U.S. Army Pacific
    Command.
        As far as if they had to deploy with a division, they could
    go with the 10th Division. They participate with them in BCTP
    and that type of training. But, their orientation is the
    Pacific.
        Senator Stevens. Senator Inouye.

                          policy on Sexual harassment

        Senator Inouye. Thank you, Mr. Chairman.
        There are 1,000 stories that can be told--positive
    stories--about our men and women, who are carrying out their
    peacekeeping mission in Bosnia and the African continent, in
    the Sinai, the humanitarian missions in Southeast Asia and,
    most importantly, standing in harm's way, literally, in Korea.
    And yet, we constantly are confronted with other headlines that
    anger us and embarrass us. I am speaking of sexual misconduct.
        You have taken steps, and I believe you have steps that you
    will take to bring about an implementation of your zero
    tolerance policy. Can you tell us what steps have been taken
    and what steps you propose to take?
        Mr. West. Well, first of all, Senator Inouye, the ongoing
    military justice proceedings are underway in various locations.
    They are proceeding without involvement by us. And, second, we
    asked the inspector general of the Department of the Army to
    look at all training bases across the Army to see what
    circumstances there are, whether we have common conditions that
    suggest to us further steps need to be taken to deal with the
    reality and the perception that all soldiers--our women
    soldiers as well--are to be treated fairly and are to be given
    the opportunity to perform at their best.
        That review by the inspector general is due to be completed
    this month. He is probably already in a position where he is
    ready to begin briefing the preliminary results. So, we will
    know more then.
        Third, there is a Secretary of the Army senior review panel
    on sexual harassment that I empaneled earlier this year,
    composed of a number of both military and civilians from within
    the Department, and several from outside the Department, who
    are looking across the entire Army, visiting a significant
    proportion of all of our installations in the Army--in the
    United States, the Pacific, and Europe--to look at the broader
    questions.
        There are things we need to know. Is there something we
    need to do more in our training--perhaps in our initial entry
    training--for all soldiers? Do we need to train our
    noncommissioned officers [NCO's] and officers better in this
    area? Do we understand the right way to apply law enforcement
    procedures to complaints that are based on alleged sexual
    crimes?
        So, a whole host of issues are being looked into. They will
    give the Chief of Staff and me their initial report in May,
    with their final report in June. Then, we will look to see what
    steps there are that can be taken.
        The Chief of Staff has already implemented a number of
    steps through his channels. I suppose I ought to let him talk
    about them instead of saying them for him.
        General Reimer. Senator Inouye, I appreciate the question.
    What we have tried to do is to work with the chain of command.
    The allegations that were most concerning to me were the ones
    that alleged abuse of authority by the chain of command. That
    is a sacred responsibility we give all commanders. When that
    trust is misplaced, it is wrong. It is wrong, whether it
    manifests itself in terms of sexual misconduct or prejudicial
    treatment.
        So, we went after the chain of command in terms of making
    sure they were sensitive to this issue. I have done a number of
    things besides talking to the division commanders and the
    people most closely involved, in terms of supervision of the
    chain of command. We developed a chain teaching packet that
    went to every soldier in the U.S. Army that talked about this
    issue. First, the message discusses what constitutes sexual
    harassment and sexual misconduct; second, that we have zero
    tolerance for these things; and third, how you report it and
    how you make it known to the chain of command and the proper
    authorities.
        We have looked at our drill sergeant program of instruction
    to make sure that, as we bring people into the drill sergeant
    program, they are given the proper instructions before they
    become drill sergeants.
        We have sent each division commander to the Defense Equal
    Opportunity Management Institute course in Florida to deal with
    equal opportunity. It is a week-long course that we send all of
    them to before they assume command.
        We will continue to followup on this issue. We are about to
    release something called character development XXI, which
    reemphasizes the importance the Army places in values--duty,
    honor, country, selfless service, and sacrifice.
        We will continue to put a full court press on the chain of
    command to make sure that we correct this problem. That, in my
    mind, is where it has to be resolved.

                                 Force mobility

        Senator Inouye. Thank you.
        On our recent trip to Korea, what we saw and heard
    reinforced our feeling that, as you put it, this is a dangerous
    place, and the millennium has not arrived. I know that as a
    result of the drawdown, General, your forces are pretty thin
    now. They are spread all over the globe. I believe your
    testimony says that, at all times, at least 35,000 Conus
    personnel are elsewhere.
        To what degree is mobility a priority in meeting such
    mission requirements at this moment?
        General Reimer. This is one of the things I mentioned,
    Senator Inouye, in terms of the change from a threat-based
    force to a capabilities-based force. What we have found is
    that, as we face this dangerous, uncertain, and unpredictable
    world, mobility is at a very high premium. We have found
    ourselves faced with challenges in this area at a number of
    places. We were able to send a brigade from Fort Hood, TX, to
    prepositioned equipment in Kuwait in less than 96 hours. That
    illustrates the mobility enhancements that have been made,
    because, during Operation Desert Shield, that took us about 28
    days.
        We also have had units flying from Europe to Africa--
    Liberia and Zaire. Army units flown in by the Air Force were
    the first ones there to stabilize the situation. Marines came
    in, and the complementary nature between the Army and the
    marines was demonstrated. The same thing was true in Somalia.
    The marines went in first, initially, because we had the time.
    Army forces came in for sustainment.
        I think as you look at all of the theaters, and
    particularly an area as big as the Pacific, the idea of being
    able to move forces in the 25th Division, Fort Lewis, or Alaska
    around the Pacific by Air Force assets continues to be one of
    our highest priorities.
        Mr. West. I think the C-17, which this subcommittee
    supported, has proven to be an extraordinary asset in that
    respect. The roll-on, roll-off ship continues to be important
    to us. We are still in the process, of course, of procuring
    those.
        Senator Inouye. Do we have enough?
        Mr. West. Enough?
        Senator Inouye. C-17's.
        Mr. West. Well, we have a start, I think.
        General Reimer. If we buy the 120, it will be very helpful.
    Whether that is enough or not, I think we need to continue to
    look at it. But the C-17, as the Secretary said, has been a
    lifesaver for us. The Army is wholeheartedly behind the C-17
    program.

                                   Force size

        Senator Inouye. I believe that most Americans, General,
    believe that the U.S. Army is the largest in the world. And if
    they were here, they would have been stunned to learn that we
    are No. 8. How does the quality of the U.S. Army compare to the
    other armies? And, can you tell us for the record who are Nos.
    1, 2, 3, 4, 5, 6, and 7? [Laughter.]
        General Reimer. Yes, sir, I can. That is an area that I
    spend a lot of time on. I think in terms of quality, the Army
    that we have today is clearly the world's best army. I think
    our soldiers demonstrate that every day. I mentioned the
    capability exercise that was conducted at Schofield Barracks. I
    think the delegates from the 41 nations were not only impressed
    with the capability to do that at night--we lent them each a
    night-vision device--but also with the high-quality soldiers
    that were their escorts.
        In terms of the size of armies, obviously, the largest army
    in the world is in the People's Republic of China. They are
    considerably larger than any other army. North Korea, the place
    that you visited, is No. 2. India has the third largest,
    followed by Russia, who still has a very large army. Then, the
    Republic of Korea has the next largest army, followed by
    Pakistan, Vietnam, and, finally, the United States, which comes
    in as the eighth largest.

                                Quality of life

        Senator Inouye. Quality of life has become a very important
    set of words in any discussion we have regarding our military.
    Are you satisfied with the quality of life that is available to
    the men and women of the Army, Mr. Secretary and General?
        Mr. West. We have challenges, Senator. We certainly put
    quality of life as one of our top three priorities. In fact, we
    have a tendency in the Army to order the priorities as:
    readiness, quality of life, and then, modernization. So, we
    devote a lot of attention to it. I referred to some of the
    efforts that we had funded. It is why we have family members at
    an annual conference, to talk to us about what they are
    experiencing.
        I think one of the most important things we can do for a
    soldier is to give him or her a quiet mind about how their
    family is being treated while they are out on the line, and
    also about how our country values their service.
        So, am I satisfied? No; I can think of a number of things
    in which we have to do more. But, I think we have done a good
    job of funding it in this budget, and we continue to treat it
    like the priority it is.
        We still are focused on health care, the barracks that I
    mentioned, and the child care centers. So, I am satisfied that
    we are giving quality of life the attention it should have,
    which is a lot of attention, indeed. But yes, we can do more.
        General Reimer. Senator Inouye, may I just say I will
    always fight for more quality of life for our soldiers, because
    I think they deserve it. And, the high-quality soldiers we have
    ask for very little. I think the areas that I am most concerned
    about are, one, adequate pay. We deeply appreciate the support
    of the Congress in terms of pay raises. But, our soldiers need
    more. We still have too many soldiers who are eligible for food
    stamps.
        Also, the living conditions for both single soldiers and
    married soldiers need to be improved. We have a program in the
    budget that tries to achieve that balance. We are not moving as
    quickly as we would like. But, we are moving toward improved
    living conditions for our single and married soldiers.
        We find that 63 percent of the Army is married. So, we have
    to take care of our families. The Army family team-building
    program was a great success in Europe. It helped the soldiers
    that went into Bosnia do a better job. They were able to
    soldier and do the things we asked them to do, because they
    knew their families were being taken care of.
        We are programming resources to meet about 65 percent of
    the child care needs that we have to take care of in the child
    development programs.
        The other thing I think is very important in terms of
    quality of life is to make sure our soldiers are never put in
    harm's way without being adequately trained. That is an
    important consideration also. The budget that you see attempts
    to achieve the balance that I think is so important. But, they
    are all related to quality of life.
        Mr. West. In your discussion earlier with the Chief of
    Staff about the fact that we are not the largest army and what
    it is that makes us the best, this is part of that point. We
    are an army unlike any other in the world, not just in terms of
    training, which is vitally important, but in terms of an NCO
    corps that has virtually unprecedented authority to do their
    jobs and responsibilities, and performs in a clearly
    unprecedented way in terms of other services.
        By the same token, we probably pay more attention to
    quality of life than just about anybody else, because we care
    about our soldiers and their families.

                            Modernization priorities

        Senator Inouye. Mr. Secretary, we are No. 8 in size. So,
    obviously, we have got to make up the difference with
    modernization. What are your modernization priorities?
        Mr. West. Well, certainly, a priority is the technology
    that was demonstrated recently in the warfighter exercise to
    which General Reimer referred, that is, the use of information
    age technology to equip our forces to answer the three
    questions he raised: where am I; where are my buddies; and
    where is the enemy? Also, the technology helps us deny that
    information to the enemy. So, that technology improves our
    ability to provide battlefield awareness for our forces and to
    deny that awareness to other forces.
        I think it is critically important and probably one of our
    highest, if not our highest, modernization priorities.
    Certainly, another priority is the continuing effort to bring
    on board the new programs that I described: Crusader and
    Comanche.
        Senator Inouye. Add the Javelin, too.
        Mr. West. I will be happy to add Javelin, and also our
    continuing efforts to modernize our logistics effort. Those are
    certainly among our highest priorities. I would invite General
    Reimer to add to that.
        General Reimer. I would agree. Certainly, the Javelin was a
    clear winner during the advanced warfighting experiment, and in
    the capabilities exercises that we demonstrated. The other area
    that I would mention as a priority is logistics automation and
    anything that helps us become more efficient. We have to become
    more efficient. We have to improve the way we do logistics.
        I have often said that there will not be a revolution in
    military affairs unless we have a revolution in logistics
    affairs. So, that is why the Secretary talked about total asset
    visibility and velocity management; those are terribly
    important programs, in addition to the programs that he already
    mentioned.
        Night vision devices are also another important item,
    because that gives us the edge over any other army right now.
        Senator Inouye. Mr. Chairman, finally, I would like to say
    that I was most reassured and impressed with your recruiting
    goals of not more than 2 percent category IV's. I think we
    should always remind ourselves that in the seventies, we were
    recruiting more than 25 percent category IV's. So the worst can
    happen if we do not watch ourselves. I hope we can keep up with
    your goal of no more than 2 percent.
        General Reimer. That is the highest recruiting priority:
    having high-quality people. You are absolutely right. During
    the hollow army in 1979, we were 46 percent category IV's.
        Senator Stevens. Senator Harkin, you are recognized for 10
    minutes.

                                Quality of life

        Senator Harkin. Thank you, Mr. Chairman.
        Mr. Secretary and General Reimer, I want to pick up on what
    Senator Inouye was talking about in terms of the quality-of-
    life issues in the Army. The Army this year faces not only our
    deliberations here, but also the quadrennial defense review.
    And I expect that to spark a pretty lively debate about our
    priorities.
        But I want to focus on just a few things. I want to focus
    on the quality of life for Army personnel. Again, I still
    believe you can talk all you want to about readiness, you have
    got to have training and all of that, but if you do not have a
    good quality of life for our troops, then they are not well
    motivated. I do not care what kind of gold-plated weapon
    systems you have got, it still takes that human being to
    operate the equipment.
        I think there are substantial shortfalls in our troops'
    quality of life--housing, the medical system, and thousands of
    troops forced to turn to food stamps and other Federal
    assistance due to inadequate pay. Your statement, Mr.
    Secretary, mentioned some initiatives to correct some of these
    shortfalls, but I cannot tell if these initiatives are new or
    are just keeping the status quo? Will these initiatives start
    to close the quality of life gap--food stamps, housing, pay?
    Will your initiatives start to close this gap, or are we just
    sort of maintaining things?
        Mr. West. Well, our purpose is to close the gap, Senator. I
    think the Chief will want to say something about that. Let me
    say that in housing, certainly, we should proceed apace, and we
    do have initiatives. We are looking at different ways of
    providing housing and different ways of financing it. That is
    something, I think, of special significance to this committee,
    in terms of an effort to privatize housing. We have that going
    forward. We have a pilot program at Fort Carson.
        So, yes, we are looking at initiatives to make changes and
    improvements.
        With respect to food stamps, frankly, my view is the way
    you solve that is to increase pay.

                                  Pay increase

        Senator Harkin. Well, what did you request for a pay
    increase?
        Mr. West. We requested the maximum permissible by law.
        Senator Harkin. That is 2.8 percent across the board?
        Mr. West. Let me just say, Senator, that in so doing, what
    we have done is something that has never been done or attempted
    in another administration, which is to commit to that kind of
    effort across several years, so that our soldiers do not
    misunderstand the intent, the desire, and the purpose.
        Senator Harkin. Let me ask you, does the law allow--and
    this is where I do not know the answer to this question before
    I ask it--does the law allow you at all to structure your pay
    increases so that those at the bottom ranks, the E-1's, E-4's,
    E-5's, would get a higher percentage than those at the top?
        Mr. West. You have that authority; we do not.
        Senator Harkin. Pardon?
        Mr. West. You have that authority; we do not.
        Senator Harkin. I do not understand what you mean, we have
    that authority.
        Mr. West. It would take a statutory change.
        Senator Harkin. So you do not have that authority. In other
    words, you cannot increase an E-4's pay, for example, at a
    higher percentage than someone else's; is that true?
        Mr. West. On that, I would need to check.
        Senator Harkin. Well, that is the question.
        Mr. West. I think that is true.
        Senator Harkin. Well, that is the question I am asking, and
    I do not know the answer.
        Mr. West. I think what we have done is we have increased
    every level's pay to the extent we can by law.
        Senator Harkin. Well, again, we get back to this whole
    thing. A 2.8-percent increase, obviously, for a general is a
    heck of a lot more than it is for an E-3, an E-4, and an E-5.
        Mr. West. Yes; I think the role we could have in it is that
    we could submit a proposal to you that says, here is a way to
    do it. But, I think it would take a statutory change.
        Senator Harkin. Well, I would like to see that. Those in
    the lower ranks are just not getting enough. A 2.8-percent pay
    increase is not enough for someone with a family that is
    existing on food stamps. It simply is not enough.
        General Reimer. Senator, may I also just say something on
    that?
        Senator Harkin. Yes.
        General Reimer. I think it is a very critical issue. You
    are right. The 2.8 percent comes on top of a 3-percent pay
    raise in 1997. So, we are moving in the direction the Secretary
    talked about.
        The second thing is that the pay business is fairly
    complicated. When you start to say, ``OK, I am going to
    increase pay at a certain rank,'' it has to be worked in terms
    of incentives for reenlistment and retention. I think it is
    complicated. I am not prepared to go into the details of it
    right now, except to say that we have had many people look at
    this issue, to see how we can do better in this area. It is
    very complicated, in terms of being fair to all concerned.
        I would also say that there are senior NCO's that are not
    receiving as much pay as they should. So, this whole thing has
    to be looked at as a total package.
        As far as the 2.8-percent increase being greater for a
    general than it is for a private, you are right. But they will
    not increase a general's pay anymore. We are capped out right
    now.

                            insufficient Allowances

        Senator Stevens. Would the Senator yield?
        Is not one of the problems, General, that we have
    increasing size in some of the families of the very younger
    people that are coming in, and their allowances are not
    sufficient and because of the size of the family, there is no
    housing on base--they are living off base--and their rental
    allowance is what is forcing them into the food stamp
    situation, not their pay scale?
        General Reimer. You are right, Mr. Chairman. The size of
    families are increasing. I talked to a trainee that was coming
    in, he was an E-1 or E-2. His pay is somewhere around $800 a
    month. He had two children. So, given his family's size and the
    low pay, they automatically qualify for food stamps. Whether
    they get them or not, we have no way of knowing the exact
    number. We can only identify the number that are qualified for
    food stamps.
        Senator Stevens. I think the Armed Services Committee ought
    to look into that problem about the allowances for the children
    and its allowance for the family. And when you get past two
    children up my way, you can hardly find housing on base. And
    when they move off base, their rental allowance does not
    increase because of the number of children. It is just the
    rental allowance for the family.
        So I think that the problem that is forcing the food stamps
    situation is related to other allowances, not pay, Senator.
        Senator Harkin. Well, I guess when I say pay, I include
    whatever the soldier gets, be it allowances or whatever it
    might be. To me, it is whatever keeps body and soul together.
    The figures are startling when you look at it. And I do not
    have the Army figures, I just have DOD--12,000 military
    families, 1 out of every 100, on food stamps.
        Senator Stevens. Senator, I think you can find some of our
    staff on food stamps. But it is because of different
    circumstances within their family that enables them to be
    eligible for food stamps, not the salary levels.
        Senator Harkin. With all respect to you, I think you ought
    to check in your staff pay. None of my staff would be on food
    stamps. [Laughter.]
        Senator Stevens. I meant Senate staff.
        Senator Harkin. Amazing.
        Senator Bumpers. Well, Ted, you act as if there was some
    kind of a quirk that would cause this. What was that?
        Senator Harkin. Family size.
        Senator Stevens. Family size.
        Senator Harkin. The number of military families receiving
    WIC, 11,000. Shortage of child care in the Army--I do have this
    figure--a 37-percent shortage of child care just in the Army
    itself.
        General Reimer. The 1998 budget will program for 65 percent
    of the requirement, which is the Department of Defense goal
    right now.
        Senator Harkin. It is to make 65 percent for child care?
        General Reimer. Sixty-five percent of our children who need
    care will be able to take advantage of child care.

                           number of General officers

        Senator Harkin. Let me ask you one other question. I read
    in the paper the other day that there was a plan for more
    generals. Under the tentative plan, the Army was going to get
    19 new generals; the Navy is going to get 20 more admirals; the
    Air Force 15 more generals; and the marines are going to get 12
    new general slots. Does the Army need 19 new generals, Mr.
    Secretary?
        Mr. West. Well, first of all, Senator, that plan has not
    made its way out of the Department of Defense yet. We do not
    know how that is going to look until those deliberations are
    finished. I think they are being delayed, pending the QDR. We
    will have a better answer for you on that once we have gotten
    through the analysis.
        Senator Harkin. The quadrennial defense review?
        Mr. West. Yes, sir.
        Senator Harkin. What do you think, do we need 19 more
    generals?
        General Reimer. The analysis that went into that showed
    that the 19 generals were necessary. This is a reflection of
    the coalition business, the NATO business, the joint
    requirements, and Goldwater-Nichols. To meet the requirements
    that we have, the analysis would support that recommendation.
    But, again, as the Secretary said, it is still being worked
    inside the Department of Defense. Whether it will come to
    Congress or not, I do not know.

                               excess Inventories

        Senator Harkin. Well, I think we are probably going to have
    to take a very close look at that one.
        The one last thing that I wanted to ask is on the issue of
    pay and benefits for the Army. This is something that gnaws at
    a lot of us. And you can explain it in the way of families and
    housing and stuff, but it all has to do with how they are
    living and how they are keeping body and soul together. And,
    quite frankly, it is simply not adequate. And that has to do
    with priorities. It has to do with priorities and where you put
    your money.
        Last, let me just ask you a question about inventory
    practices. I saw a recent GAO report which noted that the Army
    has more than $4 billion in unneeded supplies, including more
    than $200 million in items for which it has more than a 50-year
    supply. Again, why is it that the Army continues to buy items
    for which it has more than a 50-year supply? Is there any
    reason for that?
        Mr. West. Well, I am not sure we do. What we are doing,
    Senator----
        Senator Harkin. Are you familiar, Mr. Secretary, with the
    GAO report?
        Mr. West. I think we all are. It has certainly received a
    fair amount of publication.
        What we are dealing with right now is the question of what
    inventory we need and how we get over, what I call, the iron
    mountain mentality, which is that, when the time comes, our--
    whoever--sergeants or commanders do not want to be caught short
    on the things they need. That is why our logistics efficiencies
    improvements are important, such as total asset visibility that
    allows us to determine what we need and how we can get it
    quickly.
        So, we are aware of the challenge. Actually, I think our
    Army Materiel Command [AMC] and others are making fairly good
    strides in dealing with that situation. It is helpful to have
    the GAO report. But, you should not take away the understanding
    that we are somehow accumulating masses of things we do not
    need. On the contrary, we are busily getting rid of the things
    we do not need, controlling the decisions on what we do buy,
    and, more importantly, trying to link the place where they will
    be needed with a source much more quickly, so that we do not
    have to maintain large inventories, even for the very important
    assets.
        Senator Harkin. I guess my question is, if you have more
    than a 50-year supply of some item, why continue to buy it?
        Mr. West. I do not have an answer to that question, sir.
        Senator Harkin. Well, that must be happening.
        Mr. West. I am not sure that it is happening.
        Senator Harkin. You do not think it is happening?
        Mr. West. I would encourage you not to assume it.
        Senator Harkin. We have a Government Accounting Office, we
    have to rely upon them to do their accounting. If they are
    wrong, please tell us that they are wrong.
        Mr. West. We will.

                              Inventory management

        General Reimer. We will come back with details on that. I
    am not sure that we would sign up to everything that was in
    that report. We would have to come back to tell you what we do
    not sign up to.
        Let me also say that I do not think we are nearly as
    efficient as we should be inside the Department of Defense. I
    have said this very openly inside and outside the Pentagon. We
    turn over our inventory in the U.S. Army about once every 4 or
    5 years. Civilian industry will turn it over four or five times
    a year. So, obviously, inventory management is something that
    we are looking at, in how we can do it better.
        I would tell you there is a limit to how far we can go. The
    limit is the Federal acquisition regulation and the time lines
    associated with it. AMC, if it gets as efficient as it can
    possibly be, will have to order parts about 200 days in advance
    before it needs it, based upon the rules in the Federal
    acquisition regulation.
        Now, I do not know if that is the exact number or not, but
    it is in the ballpark. We are looking at inventory management,
    because there are big savings associated with it. But, somebody
    has to help us to become more efficient, in terms of
    regulations, too.
        Senator Harkin. So the GAO report, you are preparing a
    response to that?
        Mr. West. We will see. I have to assume that the inventory
    you are talking about is some form of ammunition. I do not know
    of what items you are talking about that we have a 50-year
    supply.
        Senator Harkin. We had all kinds. The GAO came up with all
    kinds of different parts for tanks and gun mounts and aircraft.
    It was not just the Army specifically, it was DOD-wide. It was
    not just focused just on the Army, it was focused on
    everything.
        General Reimer. I believe this is also a part of changing
    from the cold war Army to the post-cold war Army. I do not
    think you will find that we are buying additional parts for
    those items that we have a 50-year supply of, if that exists. I
    would be very surprised if that was the case.
        Senator Harkin. Well, I just draw your attention to the GAO
    report. One of the things they said is there are certain items
    for which if it is lower than a certain amount of money that
    just automatically, the computer just keeps ordering it every
    year. And here is just one.
        As of March 1996, the Army had--this is just an item out of
    the GAO report--had 424 spacer sleeves on hand. I do not even
    know what the heck that is. But according to the item manager
    at the Aviation and Troop Command, the sleeves--only three of
    them were needed to satisfy war reserve, and they received 424
    of them. Three were needed to satisfy war reserve and current
    operating requirements, yet we had 424.
        Mr. West. We will find the answer to it, Senator.
        Senator Harkin. I mean that is just one example. I have got
    a lot more--here is camouflage screening systems--the Army had
    6,599 on hand and only 712 inventory records were needed. Well,
    anyway, you get the picture.
        I mean something has to be done. I hope you do take a look
    at this report.
        Mr. West. We will, indeed.
        Senator Harkin. Thank you, Mr. Secretary.
        Mr. West. Inventory control is one of our highest
    priorities. Those make great horror stories, Senator, but we
    will look into them to see how much fact there is.
        Senator Harkin. I appreciate that very much.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Cochran.

                          funding for Missile defense

        Senator Cochran. Mr. Chairman, thank you.
        It was my pleasure to accompany Chairman Stevens and
    Senator Inouye on the trip to South and North Korea recently.
    One of the things that was very clear to me was that we see a
    threat posed against our own troops who were deployed there by
    missile capability on the North Korean side of that peninsula.
        My question is, under the new arrangement, where you are
    required to ask for procurement funds for missile defenses
    rather than depending upon the Ballistic Missile Defense
    Organization to do it for you, are there sufficient funds being
    requested in this budget for next year to provide protection
    for our troops who are deployed in Korea against missile
    attack?
        General Reimer. Senator, as you know, we have a Patriot
    battalion stationed there. We have beefed up the Patriot
    battalion in the last 2\1/2\ years. The theater high altitude
    area defense [THAAD] battalion, which is still in the
    development process, is slated to go there, in what we call, a
    user/operator initial capability. They will go to Korea, I
    think, in 1999, assuming that THAAD passes its testing.
        The answer to your question is, I think we are moving that
    as fast as we possibly can, in terms of THAAD, which will
    provide the upper tier protection that we really need.
        The Patriot battalion stationed there will protect our most
    critical assets, but the upper tier is the one we need. We are
    moving THAAD as quickly as we possibly can, given its
    operational record in terms of testing.
        Senator Cochran. Have the new procurement rules affected
    you in your ability to, at the same time you are requesting
    ballistic missile defense funds, having to choose between tanks
    and ballistic missiles or other modernization, has this
    presented a problem of any consequence to the Army?
        General Reimer. Senator, I am not familiar with the new
    procurement rules. There is always a tradeoff in terms of
    having limited funds. The Army gets about 15 percent of the DOD
    funds for modernization. We are always fighting those battles
    as to what goes to whom. But, I am not aware of a new
    procurement rule that has impacted upon us. I will check that
    out.
        Senator Cochran. Well, it is my understanding that Dr.
    Hamre at the Department of Defense has come out with a decision
    that will require each service to put in its budget request
    specific requests for missile defense procurement dollars. And
    so, up until now, my understanding is that the Ballistic
    Missile Defense Organization had actually requested those
    funds. So is that being handled or managed in a way that is
    going to cause us to have a downturn in procurement requests
    for ballistic missile defense and jeopardize troops in the
    field? That is the point of my question.
        Mr. West. I would expect not. Your point is a good one,
    Senator, which is that they now will compete with other Army
    priorities in the Army budget.
        Senator Cochran. Yes, right.
        Mr. West. The happy--or maybe not happy--part about that is
    it is a high Army priority.

                                   Landmines

        Senator Cochran. One other thing we learned on that trip
    was that mines have been laid out there which provide defense
    for not only our own troops, but the civilian population of
    South Korea. Under some decisions made by Congress, use of
    mines will be limited in the future. Have you looked at this?
    And is the administration prepared to ask for an extension or a
    reauthorization of the use of mines where it is clearly in our
    national interest to use them?
        General Reimer. Senator, this has been looked at
    extensively by the Joint Chiefs, and General Tilelli has
    briefed, as did General Luck before him, the defense of Korea.
    My understanding is that it is exempt from the antipersonnel
    landmine regulations that you mentioned. I think it is very
    critical to the defense of Korea that the exemption continue.

                                     Bosnia

        Senator Cochran. When we were in the Bosnia area--we went
    on a trip earlier in the year--looking at the specific requests
    for peacekeeping funds and what we were spending in that area
    and whether or not it seemed to be justified and the like. We
    did not get into Bosnia because of the weather conditions. We
    were in Sarajevo, though, and we were able to get reports from
    our commanders about the situation in Bosnia.
        Are you a part of a process to decide how many troops we
    should send to that area and whether or not the numbers of
    troops that we have in that region now are justified on the
    basis of military necessity or NATO politics or the like? And
    what is the outlook in terms of Army troops being required to
    remain in Bosnia for any length of time beyond what we have
    already heard that the administration has agreed to do?
        General Reimer. Any time there is a military mission such
    as that, the CINC that is responsible for that area, in this
    case, General Joulwan, and the land component commander, in
    this case, General Crouch, brief the Joint Chiefs in terms of
    the requirements. So, yes, we do get involved in the military
    necessity for those forces.
        Any change to those force levels, again, are worked through
    the Joint Staff, and the Joint Chiefs have an opportunity to
    provide input. We are very much involved.
        I certainly agree with the Secretary of Defense and
    everybody else who has said that June 1998 is the end date. I
    cannot comment on NATO's views, because I am not current on
    their views. But, certainly, our planning only includes through
    June 1998. It includes a stepdown in forces as we go toward the
    June 1998 date. As I mentioned to the chairman earlier, if that
    holds, then we think our estimate for the 1998 funding is about
    right.
        Senator Cochran. We know that in the supplemental request,
    we are asked to reprogram--in effect, take money away from
    accounts that have already been funded for this fiscal year--to
    help make up the costs that the expense of peacekeeping and
    other operations have required. Is this going to cause any
    particular problems to specific procurement programs,
    modernization programs, that are already funded? These are
    decisions that we are making, but we are making them in
    consultation with the services, to try to find out where the
    least painful cuts can be made. Have you submitted your
    suggestions to the committee for rescissions?
        Mr. West. We have done a very careful scrub, Senator. Those
    items are never offered as potential billpayers until we have
    actually gone through the pain ourselves in the Army--the Chief
    and I, with the Army staff. We have scrubbed them. Those are
    not cuts we would want to take, otherwise, we would not have
    asked for the money in the first place. When you look at our
    priorities and constraints, the items selected are the ones
    that are least harmful to us as we try to do everything we have
    to do.
        General Reimer. The only other thing I would say on that,
    Senator, is, yes, we are working very closely with the Office
    of the Secretary of Defense staff in identifying those places
    where it would hurt the least. If we are unable to find the
    billpayers, it will hurt a great deal, because it will come out
    from the training funds for the fourth quarter. That will have
    a significant impact on us in terms of readiness, not only for
    1997, but it will carry over into 1998.

                           Reserve component funding

        Senator Cochran. One part of the ``Quadrennial Defense
    Review,'' I know, is to try to decide on an appropriate balance
    between Army and Reserve and National Guard forces for the
    future. We have had the enhanced readiness brigades identified
    as one way to integrate the Guard and Reserve activities--
    particularly the National Guard--into the Army's defense plans.
    We are pleased that, in Mississippi, we have the 155th Enhanced
    Readiness Brigade, formerly Armored Brigade, which was a round-
    out brigade of the 1st Cavalry.
        Are you asking for enough money in this budget to sustain
    the operation of that brigade and others like it?
        General Reimer. From my standpoint, Senator, the enhanced
    brigades are funded at an appropriate level, based upon the
    first-to-fight philosophy that we have. We do not fund based
    upon component, but we look at war plans and fund accordingly.
        The enhanced brigades are funded at the operational tempo
    [OPTEMPO] necessary for them to maintain their readiness
    posture, as well as to send the proper people to school. The
    funding concerns you see in the National Guard occurs within
    the National Guard divisions, which are considerably
    underfunded in terms of resources. But, again, it is based upon
    a first-to-fight philosophy. They are not on the war plans and,
    as such, they end up at the bottom in terms of funding
    priorities.
        But, the 155th, I think, is funded at the right level.
        Senator Cochran. Thank you, Mr. Chairman.
        Senator Stevens. Thank you, sir.

                                  M-1 upgrades

        Senator Bumpers. Thank you, Mr. Chairman.
        Just quickly, Mr. Secretary, we are apparently getting
    ready to upgrade about 1,060 M-1A1 tanks at a cost of $7.3
    billion. That means the cost to upgrade a $3 million tank will
    be almost $7 million--$6.9 million. Does that sound rather
    exorbitant to you?
        Mr. West. I would have to look at the figures more closely,
    Senator. The upgrade is a very important one for us. It is
    going to substantially enhance the capability of that weapon
    system. I think we are doing the upgrade to avoid buying a new
    model tank. If we are going to continue to have the capability
    out there, we need to do the upgrades.
        Your question is as to whether this upgrade is more
    expensive than it is worth. I would have to see. I would think
    that there is justification for it, if those figures are right.
        Senator Bumpers. General Reimer, I know you are just
    busting to comment on that.
        General Reimer. I am not familiar with the exact figures
    you use. I will get familiar with it, Senator.
        I would simply say that comparing the M-1A2 and the M-1A1,
    the M-1A2 capability is much greater, because you get the
    commander's independent thermal viewer so you can pick up more
    targets at the same time. It, obviously, is an enhancement. As
    the Secretary said, we chose that as a product improvement
    program as opposed to fielding a new tank.
        Senator Bumpers. General, I am not quarreling with the idea
    of upgrading the M-1's, but to pay almost 2\1/2\ times as much
    as the tank cost when it was new seems pretty heavy to me.
        General Reimer. That is a figure I am not familiar with,
    and I will get familiar with it.
        Senator Bumpers. Would you, and report it?
        General Reimer. I sure will.
        Senator Bumpers. I do not know that the rest of the
    committee cares, but I would like to get an analysis on that.
        [The information follows:]

                       Cost Effectiveness of M-1 Upgrades

        The original M-1 tanks were developed in the 1976-1979 time
    frame and were produced between 1980 and 1985. We paid an
    average of $3 million each for the 3,268 M-1 tanks when they
    were bought; however, in today's dollars [considering inflation
    rates through fiscal year 1998], that equates to approximately
    $4.1 million per tank. These tanks were produced at an average
    production rate of 50 tanks per month or 600 per year.
        The configuration reflected in the December 1996 Selected
    Acquisition Report is an M-1A2 tank using reclaimed or
    overhauled parts from an older M-1 tank, rather than building
    an entirely new tank. The average M-1A2 cost is $6.86 million
    per tank over the program at an average rate of 83 upgrades per
    year; however, this includes a dip in the production rate from
    120 to 30 vehicles per year from fiscal year 2002-2005
    (substantially increasing the average unit cost). In addition,
    starting in fiscal year 1999, the M-1A2 includes a major
    electronics and sight upgrade called the System Enhancement
    Program. The core electronics and Second Generation Forward
    Looking Infrared sight upgrade will enhance the M-1A2 digital
    capabilities; increase the tank's range, accuracy, and
    lethality while reducing the potential for fratricide; and
    maintain our information dominance and battlefield overmatch
    position.
        Comparing our current program of technologically advanced
    M-1A2's to the M-1 tanks we procured through 1985 is not the
    most germane comparison. When the Army approved the M-1 to M-
    1A2 upgrade, we compared the cost of acquiring tanks via an
    upgrade to the cost of buying new tanks. At equivalent
    production rates, we conservatively estimate the upgrade
    program saves at least $800,000 per tank by reclaiming the M-1
    tank hull structure, overhauling the engine and transmission,
    and overhauling various fire control components vice buying
    new. The end product is an equivalent to a brand new (i.e. zero
    mileage) tank. The M-1A2 has a new production turret, all new
    data bussed electronics, a predominately new fire control
    system with updated software, new track and suspension, as well
    as a new 120 millimeter cannon. While it is not a fair
    comparison due to the differences in technology, if we could
    afford to produce our current program at the fiscal year 1980-
    85 production rate, we would be close to, if not under, the
    inflation adjusted M-1 tank unit cost. General Dynamics Land
    Systems and the many other government hardware and support
    contractors have done a credible job of constraining cost
    growth in the face of rate decreases of more than 80 percent.

                            training at Fort Chafee

        Senator Bumpers. On a parochial issue at Fort Chafee, when
    the BRAC Commission closed Chafee, the Army promised that they
    would provide $6.8 million a year to the Guard to operate it
    for a training facility. And now, what has happened is the Army
    put the $6.9 million in the budget, but the 1998 Army budget
    also cuts the National Guard's base support program to $69
    million. And there is a requirement that that be spread evenly,
    as I understand it, among all Army Guard training sites. That
    would leave Chafee with $4.6 million to operate that base.
        Now, we are looking--perhaps I can persuade the chairman
    and the ranking member to put a little more money back into
    that Guard base support. But there is no point in putting $4.6
    million in if that is $2 million short of what it takes. Do you
    agree?
        General Reimer. Well, first of all, I have received your
    letter.
        Senator Bumpers. I have not heard from you. That is the
    reason I am asking.
        General Reimer. We are in the process of responding to it.
    It is a complicated issue, involving all three components. We
    have had a couple of meetings in March, and the final response
    is being drafted.
        I am not familiar with the requirement to fund all National
    Guard training sites at the same, equal level. That is
    something that the National Guard Bureau has probably put out.
    I do not question it; I just am not familiar with it.
        Senator Bumpers. I do not think that is a legal
    requirement. That is something the Guard Bureau did.
        General Reimer. Right. We have said, in the case of Fort
    Chafee, that it is a great training area. I have trained there
    a number of times myself. I am very familiar with Fort Chafee.
    It was, obviously, one of the areas that we looked at very
    carefully, in terms of a JRTC decision.
        On the other hand, we have tried very hard in this budget
    to keep the right balance between the things we have talked
    about--quality of life, training and readiness of our force,
    and modernization--and we still have to keep that balance.
        In the case of Fort Chafee, it is like a pay-as-you-go type
    of operation. So, if they want to train there, it costs them to
    train. That is true of almost any of our training centers.
        Senator Bumpers. This is a comment to both you General
    Reimer and Secretary West. There is about $17 or $19 billion, I
    believe, in this budget for the four Reserve and Guard
    components. And we have 900,000 Guard and reservists. We have
    1.4 million active. So the Guard and Reserves represents about
    40 percent of our force, or close to it, and we are giving them
    7 percent of the total budget.
        Now, I know--and this is true of Senator Inouye and Senator
    Stevens--we are all big proponents of the Guard. And I know
    this sounds like a Johnny-one-note, but every time I go to
    Israel, they teach me more about how you can really have an
    effective fighting force with reserve units. And you know
    Israel depends almost totally on their reserve forces. And we
    depend on them a lot, but not as much as we could, simply
    because we shortchange them all the time.
        We have got 3,000 armories in this country--3,100--and
    1,400 of them are inadequate. I have been trying to get two in
    Arkansas replaced since, as we lawyers say, the memory of man
    runneth not. And the roofs leak. And it does damage to the
    equipment--40 years old--and two of the best units we have in
    the entire State. And this is the third straight year that the
    budget does virtually nothing for the National Guard armory
    upgrading or rebuilding or replacing of armories.
        I am not going to belabor that any further. You know these
    things as well as I do. But I just think that is a misspent
    priority, a misplaced priority, that we do not put more money--
    7 percent of the total budget to supply 40 percent of the
    people we depend on in case of war. And I have always thought
    that if you give the Guard or the Reserves 2 to 3 months of
    good training, like we did in Desert Storm, and they performed
    very well.
        Well, now on to THAAD. As I understand it, so far we have
    had four tests and no hits. And I am not overly concerned about
    that. I am sure that this requires time for it to be effective.
    But what I am concerned about is that, under the present plan,
    we are proposing, after the first hit--after the first hit--to
    give Lockheed-Martin an order for 40 missiles. Now, I think
    General Lyles even has said that the test program is not nearly
    as robust as it ought to be. And if I were in his position, I
    would be very reluctant to have the Nation depending on me and
    these missiles to defend the theater of operations when we have
    only had one hit.
        Would you care to comment on that, General?

                       Theater high altitude area defense

        General Reimer. Senator, I would say that--and this relates
    to my response to Senator Cochran--you have a requirement in
    Korea for upper tier protection. THAAD is the best system that
    we have available right now. I certainly agree with you, we
    would very much like to see a hit. We are trying to field an
    initial capability as quickly as we can to provide the soldiers
    in Korea the protection they need. I do not think that will be
    fielded, obviously, unless we are convinced that it can do the
    job.
        The whole program is very important to our soldiers. We are
    trying to move it along as quickly as we possibly can. But, it
    goes to the requirement that Senator Cochran talked about; we
    have soldiers in Korea that need THAAD. I do not think we will
    field it unless we are convinced that it will do the job.
        Senator Bumpers. This goes to the heart of my concern about
    the ballistic missile defense program, of deploying it whether
    you have proved the technology or not. I mean a lot of my
    colleagues apparently believe we should. I think the proposal
    to get the technology right before we start deploying it is 10
    times more important. Who cares how many missiles you got out
    there if you do not know whether they are going to hit anything
    or not.
        So I am just saying--I am not a scientist, so I do not
    know. Maybe one hit is enough. I do not think it is. And
    General Lyles, who is supposed to be the guru on this, does not
    think it is either apparently.
        Mr. West. That program is being carefully managed, Senator.
    We are not likely to buy a system that is not going to do the
    job. That is why the tests are important. I think we have got
    four more scheduled. We are going to get it right.
        Senator Bumpers. I think General Lyles has testified that
    when we score our first hit, we are going to buy 40 missiles. I
    am not saying that that is categorically wrong, but I am
    saying, commonsense dictates to me that it is wrong.
        Mr. West. My recollection is that we have got four more
    tests to do. We will need the results from those.
        Senator Bumpers. Mr. Secretary, would you drop me a note on
    whether or not we are required to buy 40 or it is just the
    present program to buy 40?
        Mr. West. Sure, I would be glad to.

                         Multiple launch rocket system

        Senator Bumpers. Finally, Mr. Chairman, last year we
    appropriated $41 million for MLRS rockets. Every bit of that,
    incidentally, is for the ER, the extended-range MLRS rocket.
    And they are in production right now. Bear in mind, that is $41
    million this year, 1997, and the budget request for 1998 is
    $2.9 million. Now, we are told by the contractor that they hope
    to sell enough in foreign sales to keep the line hot until
    1999, when we really start producing these things in some
    quantity. But they also say the foreign sales are not coming
    through.
        Now, it would be the height of folly, in my opinion--and I
    am saying this as much for the benefit of Senator Stevens and
    Senator Inouye as I am for yours or anybody else's--it would be
    the height of folly to depend on foreign sales to keep that
    line hot until 1999 based on foreign sales which may or may not
    materialize and so far have not materialized. It would be the
    height of folly for us not to up that $2.9 million figure.
    Because, I can tell you, the line is going to have to shut down
    if that is all there is. And I think that would be very
    foolish, considering the fact that we are going to have to
    crank it up full time in 1999.
        Do you agree with that, General?
        General Reimer. I definitely agree with that. I think that
    is something we would have to work. Hopefully, there will be
    more foreign military sales. Our 1998 figure represents the
    best we can do, given the balance that we had to achieve in all
    the other things. That is why we cannot solve all the problems
    for everything that has been mentioned here. So, we have tried
    to balance it and keep the force together.
        Mr. West. In fact, I was going to make the same comment,
    which is that probably you and I can sit down together, go
    through the budget, and find programs in which we are making
    uneconomical buys in uneconomical quantities at odd intervals.
    We do it because we are trying to make the best of a very
    difficult budgetary situation. We are constrained. I told you
    that our modernization budget is combined in this budget at
    $11.2 billion. That will not allow us to make smart buys in
    every program that we would like to.
        Senator Bumpers. Well, Mr. Secretary, if I could talk you
    and the Congress into making me king, I promise you I can find
    all the money in the world, without hurting our defense posture
    one iota, and still deal with the things that I think are
    important.
        Senator Stevens. What is the height of folly anyway?
    [Laughter.]
        I mean how do you measure that vis-a-vis your becoming
    king?
        Senator Bumpers. Well, short guys like you do not
    understand. [Laughter.]
        We are going to find, I think, a couple of billion dollars
    for you--of course, this is total defense--not retrofitting
    those Trident missiles with D-5 missiles. We can save $2
    billion that way, and absolutely hurt nobody.
        And if the chairman would turn this committee over to me
    for just a short while--[laughter.]

                          Reserve component resourcing

        Senator Stevens. That is why I asked you, what is the
    height of folly? [Laughter.]
        How high do you have to get to make a mistake like that?
    [Laughter.]
        I do think we are going to have to look at that D-5
    situation, but I am not sure where the money is going to be
    placed.
        Senator Bumpers. Think what you could do with that F-22,
    which is going to make the B-2 look good.
        Senator Stevens. Well, the B-2 looks pretty good to me
    right now. So, that is not so bad.
        Senator Bumpers. I do not know. I cannot find one with a
    search warrant. [Laughter.]
        Where do you hide those things? I mean these are not Air
    Force people, so they are not the right people to ask.
        Senator Stevens. That is stealth. You are talking about
    stealth now, that is true.
        Let me add just a couple of questions. We do have some
    problems about the Guard budget. The others have mentioned it a
    little bit here. But is not there pretty significant risk in
    the underfunding of the Guard as far as your current policy of
    rounding out the regular divisions with Guard and Reserve? I
    mean it looks like we have stumbled a little bit, if we are
    going to not fund the Guard and Reserve, when they are really
    the fillers for the divisions that we say we have got. What is
    the risk of not funding the Guard, in effect?
        General Reimer. Mr. Chairman, may I comment on that. You
    are absolutely right, we would like to have more money for the
    Reserve component. However, what we have done in this budget is
    to fund the first to fight. I think you will find the enhanced
    brigades, in terms of the OPTEMPO money, are funded at the
    proper level. You will find it for schooling; they are funded
    at the proper level, because it is based on prioritization.
        You will also find that, as a percentage of total
    obligation authority, the amount of money we are spending on
    the Guard and the Reserve is greater this year than it has ever
    been. If you compare it to the mid-1980's, it is about 17
    percent versus 12 percent. So, we have tried to do the best we
    can to balance it. I think where you will find the concern is
    in, as I mentioned, the National Guard divisions, which are not
    on a CINC's war plan. Consequently, as we use the first-to-
    fight philosophy, they are the ones that end up being the
    billpayer.
        Senator Stevens. Well, we ought to discuss that sometime
    with you. Because as we have watched--or at least as I have
    watched it--it seems to me that the first to fight or who were
    ready in the Haitian circumstance were the people from that
    part of the country. The first to go if there is a buildup out
    in Korea are people from the Western part of the country. So
    the first-to-fight concept, if you get to that point, you are
    going to end up by taking them from west to east, east to west,
    if there is a crisis.
        I do not know whether we can rely on a basis of the risk of
    the level we are undertaking, because this is becoming chronic.
    If we rely on the Guard and Reserve to be there when they are
    really needed, I mean in a real emergency, and they are the
    ones that are constantly chronically underfunded, they are not
    going to be there.
        I think we have got to think that one through. I do not
    know what the answer is.
        You mentioned the use of the new systems as far as the
    recent brigade-level exercise at NTC. We are quite interested
    in that. What does that exercise really mean with regard to the
    systems you are pursuing? I think you mentioned that Longbow
    and Javelin were upgraded. What does it do to the Comanche as
    far as future planning is concerned?

                        Advanced warfighting experiment

        General Reimer. Let me comment on that, and the Secretary
    certainly can join in if he wishes.
        I think there are a number of emerging insights. First of
    all, we have not been able to completely crunch all the data.
    It is ongoing, and we are doing the analysis now. We will have
    a meeting at the end of this month with the Army's uniformed
    leadership to discuss the military aspects of what we saw at
    the advanced warfighting experiment.
        There are a couple of things that are worthy of note. First
    of all, the way we fielded the equipment--the teamwork
    associated with the soldiers, the testers, and the civilian
    contractors working at Fort Hood, TX--is absolutely a great way
    to go. It saved us years in terms of cycle time, which results
    in savings in terms of dollars.
        Basically, the contractor would give us a piece of
    equipment, the soldier would take it out, work on it for a
    week, come back in and say, ``I do not like this part of it.''
    The contractor, over the weekend, would redo it and give it
    back to the soldier. They would continue to refine it in that
    manner. That is the way they fielded it. That, in my mind, is a
    very significant lesson learned from the advanced warfighting
    experiment.
        In terms of the specific systems that worked very well,
    obviously, anything that had to do with situational awareness
    was very important. It was important to know where you were on
    the battlefield and to know where your buddy was on the
    battlefield. That enabled us to mitigate the risk associated
    with the uncertainty on the battlefield. So, the applique,
    which is a system we put on most of the weapons to tell people
    where they were and to give them a common picture of the
    battlefield, was terribly important.
        Javelin, as was already mentioned, was extremely important.
    The commander of the operational force, the opposing force,
    said that the Javelin denied terrain to him that had never been
    denied before. In other words, it was such a good killing
    system on the battlefield that he had to avoid the Javelin.
        The UAV, the unmanned aerial vehicle, absolutely was a
    winner. Everybody wanted the UAV. They wanted more of them. It
    really gives you a clear picture on the battlefield. It
    provides the battalion and brigade commander, for the first
    time, the ability to see farther than the line of sight.
        The other thing, as was already mentioned, was the Apache
    Longbow. We had two systems there, because that is all we have.
    With their standoff capability, they were able to add a new
    dimension to the battlefield. When you work them in conjunction
    with the regular A models of the Apache and with the UAV, we
    begin to have a capability that we have never had before.
        Those are the major technology things that were important.
        The other thing I learned is that our young soldiers can
    handle this technology. It is not an issue for young soldiers.
    They come in, and they know how to use the technology. The
    challenge that we have is for some of us older fellows, in
    terms of being able to handle this new technology. But, the
    young ones identify with it, and they make it do things that
    are just unbelievable to me.
        Senator Stevens. That reminds me of the time I was down in
    Huntsville, and I asked this young soldier how he could do that
    so quickly, he says, Senator, it is easier than Nintendo.
    [Laughter.]
        General Reimer. That is exactly right. It is a Pac-Man
    generation.

                       Medium extended air defense system

        Senator Stevens. What about MEADS? It is up to $57.4
    million. You appealed to us to protect the program last year.
    Is that still your position now? And is your position fully
    funded in this budget?
        General Reimer. Mr. Chairman, we continue to support the
    medium extended air defense system or MEADS, as a mobile
    protective force for the troops in the field. It is the only
    system that is mobile enough to do that. As you know, a
    decision is due in December 1998. It is a tri-nation program.
    We continue to support it, not only verbally, but with the
    resources through December 1998, the decision point.

                                    Comanche

        Senator Stevens. And you are still in agreement with our
    concept in the conference last year, where we put up an
    additional $50 million to try and accelerate Comanche?
        General Reimer. You also mentioned Comanche, and thank you.
    I meant to comment on that. Although we did not have Comanche
    at NTC, we could see the advantages it would have provided if
    we did have Comanche there. It really is, as we have talked
    about, the quarterback for that digitized force. It gives you
    the aerial reconnaissance capability and the ability to provide
    targets very quickly. In conjunction with the UAV and other
    systems out there, it gives you a synergy that is tremendous.
        I also had the opportunity last month to visit the Comanche
    test. I had an opportunity to observe it in one of its test
    flights. Talking to the test pilot, he felt the helicopter was
    in better shape at this stage of its development than any other
    bird that he had been flying under development, and he was a
    very seasoned test pilot.
        I was tremendously impressed, not only with the
    capabilities, but with the maintenance concept. So, yes, I
    fully support Comanche.
        Senator Stevens. We were very impressed with that.
        Mr. West. It carries much of the technology that was
    validated at the warfighter exercise, Mr. Chairman. In fact, it
    was an important part of the package that we did not have
    there.

                           Force structure reduction

        Senator Stevens. Well, gentlemen, I remember so well
    Secretary Perry's comment that if he got to the point where he
    had to choose between modernization and research and
    development on the one hand and force structure on the other,
    he would opt to reduce force structure. It looks like we are
    coming very close to that in the budget negotiations we are
    going through right now. I have not talked to Secretary Cohen
    about it, but it looks to me like the pressure will be on the
    Department to make some hard choices in this next Congress in
    the next budget cycle.
        Can you tell me now, and if you cannot give it to us as
    sort of a paper and explain it, what are the potential savings
    per 10,000-slot reduction in the Army?
        General Reimer. One-half of a million dollars, Mr.
    Chairman.
        Senator Stevens. One-half of a million dollars?
        General Reimer. One-half of a million dollars. I am sorry,
    $500 million, or one-half of a billion dollars, is correct.
        Senator Stevens. One-half of a billion dollars. You are
    sounding like Everett Dirksen now. [Laughter.]
        General Reimer. A Freudian slip on my part.
        You get about 1 billion dollars' worth of saving for
    20,000. So, if you took 40,000 out of the force structure of
    the Army, it would be less than 1 percent of the Department of
    Defense budget.
        I think those people are what give you the opportunity to
    help shape the world for the 21st century. As I attended the
    Pacific Army management seminar conference, where 41 nations
    from the Pacific were represented, I was reminded that in all
    of those nations, the army is the dominant force. When we talk
    about military relations bringing stability to that region, we
    are talking about army-to-army contact. That is why I think
    people are very important.
        I do not differ with Secretary Perry on many things, but,
    in this case, I have a little different view on it.

                                Deployment tempo

        Senator Stevens. Well, I am constrained to say I think that
    some of the deployments we have seen recently, General, there
    has been such an overwhelming deployment as opposed to the size
    of the threat, that we probably spent more money than we should
    have spent in some of these recent deployments. I would hope
    that we would find some way to moderate the response to
    overseas crises, and to have a lesser deployment and subsequent
    lower cost in these peacekeeping operations. It is the
    peacekeeping operations that will force this choice that the
    Secretary is going to have to make.
        Senator, do you have any other questions?
        Senator Inouye. No; if I may, I would like to submit a
    whole set of questions.
        Senator Stevens. Certainly.
        We have time if you would like to ask questions. Do you
    have any further questions?
        Senator Cochran. No further questions, Mr. Chairman.
        Senator Stevens. Senator Domenici has also been tied up in
    the Budget Committee. He asked to submit questions. We would
    appreciate it if you would respond to them.
        We do appreciate what you are doing. And as they say in our
    travels around the world, you have every reason to be proud for
    your watch. These people are very well trained and they are
    absolutely in just great shape. And the morale could not have
    been better where we have traveled.
        I could ask you some questions about some of the problems
    we saw in the Russian far east. For instance, how many people
    do you think you would keep if your pay was behind for 90 days?
    They still have full strength. There is a message there for us
    which is hard to understand. But, in any event, the comparison
    with what we saw worldwide is just enormous. The Army is ready
    wherever it is right now, and we congratulate you.
        Mr. West. Mr. Chairman.
        Senator Stevens. Yes, sir.
        Mr. West. Can I make one observation in closing. It is not
    clear that Dr. Perry, in the comment that you referred to,
    necessarily had Army force structure in mind. [Laughter.]
        Indeed, the testimony of his stewardship is, right until
    the end, that he supported both our force structure and our end
    strength at its current levels, even in the face of----
        Senator Stevens. Well, we intend to ask the same question
    of everyone, Mr. Secretary: What is the savings from reduction
    of a wing? What is the savings from reduction of one ship of
    the line? And a 10,000-member unit is just a raw figure.
        Mr. West. I have other components in mind.

                         Additional committee questions

        Senator Stevens. I do not know what it is, and I think we
    ought to sort of understand that.
        Thank you very much.
        Mr. West. Thank you.
        General Reimer. Thank you, Mr. Chairman.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
               Questions Submitted to Secretary Togo D. West, Jr.
                   Questions Submitted by Senator Ted Stevens
                            bosnia contingency costs
        Question. What impact is the Army experiencing as a result of
    continuing operations in Bosnia, particularly in personnel rotations
    and unit OPTEMPO?
        Answer. The impact of contingency operations, such as Bosnia, is
    that they require unique packages of force mix from both active and
    reserve components. Cross leveling of personnel and equipment between
    deploying and non-deploying units is required to meet deployment
    standards. This, in turn, can leave some non-deploying units with
    personnel and equipment shortages and degraded readiness. These are
    temporary, and marginal, degradations in non-deploying unit readiness.
        In the case of personnel deployment tempo, contingency operations
    exact the most stress on low density support units like Military Police
    and Engineers. We are closely monitoring personnel tempo to ensure we
    balance both training and operational deployments to sustain an
    adequate quality of life for our soldiers and families.
                            national missile defense
        Question. Secretary West: Do you have concerns about the current
    National Missile Defense (NMD) acquisition strategy?
        Answer. No. While the Ballistic Missile Defense Organization (BMDO)
    is responsible for development of the overall NMD system, the
    individual elements that comprise the system have been and will
    continue to be developed by the Services to which they are currently
    assigned. We will continue to work with the Office of the Secretary of
    Defense and BMDO to ensure the Service roles in managing NMD system
    development are clearly defined.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                army western regional civilian personnel center
        Question. The Army plans to establish ten geographically based
    regional civilian personnel centers. The Western Region covers my state
    of New Mexico. The Assistant Secretary of the Army for Manpower and
    Reserve Affairs decided to locate the Western Regional Civilian
    Personnel Center at Fort Huachuca in April of last year. In March of
    1996, she rescinded that decision when she became aware that the
    initial selection had not considered potential environmental impacts as
    required by NEPA. After several other delays, the Assistant Secretary
    informed me in a letter dated May 9, 1996, that this process would be
    completed by October of 1996. It is now January of 1997 and this
    process has still not been completed. I am concerned that all of the
    delays may prejudice the impartiality of the decision making process.
        Can you please give the committee a final date on which this
    process will be completed, and will you commit to sticking to it?
        Answer. As required by the National Environmental Policy Act, 42
    U.S.C. 4321-4370d and Army Regulation 200-2, Environmental Effects of
    Army Actions, the Environmental Assessment (EA) and Findings of No
    Significant Impact (FNSI) will be completed on April 24, 1997, for the
    U.S. Army Garrison, Fort Huachuca, Arizona. The EA and FNSI are
    available for public review and comment for the period of May 7, 1997,
    through June 6, 1997. The U.S. Army Forces Command (FORSCOM) and Fort
    Huachuca will review these comments and determine any significant
    impact to the published EA and FNSI. The complexity of the public
    comments will influence when FORSCOM will be able to recommend to the
    Assistant Secretary of the Army for Manpower and Reserve Affairs a
    Civilian Personnel Operations Center location. We anticipate this
    process may be completed during July 1997.
        Question. Can you assure the Committee that the numerous delays
    that have occurred will not prejudice any of the competitors bidding
    for the location of the Western Regional Civilian Personnel Center?
        Answer. The National Environmental Policy Act (NEPA), 42 U.S.C.
    4321-4370d, requires that Federal agencies consider the environmental
    impacts of proposed actions prior to making a final decision, and the
    Army's implementation regulation, Army Regulation (AR) 200-2,
    Environmental Effects of Army Actions, specifies the nature and scope
    of required environmental analysis and supporting documentation for all
    Army actions. The environmental analyses completed over the past year
    bring the Army into compliance with both the NEPA and AR 200-2. The
    site selection criteria have not changed. The following attributes
    remain the optimum criteria to meet the operational, functional, and
    aesthetic needs of the mission: availability; costs; operational
    considerations; automated data processing infrastructure; and facility
    infrastructure. The recommendation and final decision will be
    consistent with the law and the site selection criteria established for
    determining the location of the Civilian Personnel Operations Center.
                                     ______

               Question Submitted by Senator Christopher S. Bond
                                  troop morale
        Question. Secretary West, could you please address this issue of
    troop morale and the role of the United States Army in non-combat and
    non-combat support missions?
        Answer. Experience from recent peacekeeping operations tells us
    that while these operations are inherently stressful for soldiers,
    morale remains remarkably high considering the normal difficulties
    associated with any deployment. Soldiers are certainly under a lot of
    stress in these operations, but surveys and interviews suggest that our
    soldiers are highly resilient. Data collected from recent peacekeeping
    operations provide no reason to believe that the Army's involvement in
    non-combat missions has had a negative impact on troop morale. Data
    collected from over 3,000 soldiers in Haiti revealed that psychological
    distress levels (a component of morale) did not differ from garrison
    norms. In Bosnia, distress levels collected from approximately 3,500
    soldiers were slightly elevated compared to garrison norms but were not
    so high as to raise serious concerns about health, well-being, and
    morale. However, despite the admirable way in which soldiers have coped
    with the stresses of deployment, their comments on surveys and
    interviews tell us that we cannot guarantee that their morale will
    remain high with the current operational tempo.
        While the overall data indicate no significant problems in troop
    morale, finer grained analyses also show that within any deployment
    there is considerable variability in morale among units. Interviews and
    quantitative data analysis suggest that some types of units, such as
    Engineer, Military Police, and Military Intelligence, have adapted well
    to their role in non-combat support missions and that their morale has
    tended to be good. Other types of units, such as Aviation and Medical,
    have found the transition to a non-combat role difficult and have
    suffered in terms of morale. The ability to successfully adapt to non-
    combat support roles is related, in part, to the type of work soldiers
    perform while deployed. Soldiers who feel that they are making a
    positive contribution to the success of non-combat missions and who
    have a high belief in the mission generally have high morale. In Haiti,
    for example, Military Police and Engineer units had day-to-day
    involvement with the Haitians which helped them feel as though they
    were making a positive contribution to accomplishing the mission. As a
    consequence, MP and Engineer soldiers tended to report relatively high
    belief in the value of the mission, and their morale tended to be high.
                                     ______

                Question Submitted by Senator Ernest F. Hollings
                      guaranteed active duty commissioning
        Question. There has been a long-standing policy permitting our
    Senior Military Colleges (The Citadel, VMI, Texas A&M, Virginia Tech,
    Norwich, and North Georgia) some flexibility in bringing on active duty
    a small number of qualified officer candidates, in addition to their
    annual quota. This policy, called the Guaranteed Active Duty
    Commissioning Option, has permitted each of the Professors of Military
    Science at these schools to commission a half dozen or so extra
    candidates each year. Several months ago, your Assistant Secretary for
    Manpower and Reserve Affairs, Sara Lister, apparently set about to
    remove this special status for the Colleges, with little or no input
    from the affected schools. On March 13, we asked Secretary Lister to
    come over and explain her intentions, and elicited from her an
    agreement to go back and reconsider her intentions. Further, she agreed
    to seek input from the affected schools. The Citadel tells me they have
    heard nothing further in the ensuing month since that meeting. This
    program only adds a total of a couple of dozen candidates each year.
    Why do you feel it necessary to rescind this special status for these
    outstanding military colleges in a time when we need to be reinforcing
    them, not tearing them down?
        Answer. As requested by Congress, the Assistant Secretary of the
    Army (Manpower and Reserve Affairs), the Deputy Chief of Staff for
    Personnel, and the Commander, U.S. Army Cadet Command, will meet with
    representatives of the Senior Military Colleges on May 28, 1997.
        The Army's Competitive Category requirement for second lieutenants
    has been reduced from a high of about 5,400 in 1989 to a projected
    3,800 in 1998. As a result, the Army can place on active duty only the
    highest quality cadets. In the past, cadets from senior military
    colleges have displaced those from other Reserve Officers Training
    Corps programs who were of higher quality as determined by Grade Point
    Average, Advance Camp Score, and Professor of Military Science
    Evaluation. For the Army to maintain the highest quality officer corps,
    it must select for active duty only those cadets who strictly meet
    these competitive measures.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
                              supplemental funding
        Question. Mr. Secretary: It is my understanding that the Army has
    made a forecasting error in its needs for the Hydra-70 rocket, which is
    used on all combat helicopters. Is it true that the Army has a fiscal
    year 1998 shortfall of 60,000 training rockets?
        Answer. We are currently projecting a shortage of 36,000 rockets.
        Question. What will be the effects of this shortage on the
    following: Combat training for pilots at Fort Rucker, Alabama.
        Answer. None. The program for combat pilots at Fort Rucker requires
    familiarization using smoke signature training rockets. We have a
    sufficient number of these rockets available to sustain fiscal year
    1998 and outyear training.
        Question. What will be the effects of this shortage on the
    following: Effects of a production break on cost of future Hydra 70
    buys?
        Answer. Because the Hydra 70 is procured by all three Services, we
    do not anticipate a production break in fiscal year 1998. Starting in
    fiscal year 1999, our Hydra 70 buys will be at their normal level, and
    barring any unforeseen events, we do not anticipate any future
    production breaks either.
        Question. What will be the effects of this shortage on the
    following: Effects, if any, on the price of tank ammunition?
        Answer. None. We are currently purchasing our tank ammunition at a
    fixed price through fiscal year 1998.
                          objective crew served weapon
        Question. Can you tell me about the Army's plan for developing and
    fielding the Objective Crew Served Weapon? How many of these weapons
    will the Army require?
        Answer. The Objective Crew Served Weapon (OCSW) represents a
    radical approach to small arms technology by incorporating air bursting
    munitions and advanced fire control systems. We recently finished a
    number of studies that were focused on filling technology data gaps
    associated with the concept of air-bursting munitions. This information
    was provided to industry who are developing and demonstrating prototype
    systems. We have planned funding for the Engineering and Manufacturing
    Development phase (EMD) for the OCSW from fiscal year 2001-2006.
    Production of the OCSW is currently scheduled to begin in fiscal year
    2006 or 2007, depending on the outcome of the EMD phase, with the first
    unit being equipped in the fiscal year 2007 time frame. We will not
    determine the actual OCSW quantity required until just prior to the EMD
    phase in fiscal year 1999.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                             anti-satellite weapons
        Question. Does the Army consider the Army's budget for the kinetic
    energy anti-satellite (KE ASAT) weapons program a priority? If not,
    what are the higher priority programs that could use this funding?
        Answer. The KE ASAT technology initiative is not in the Army budget
    or the Future Years Defense Plan. This program was directed and funded
    by Congress to develop KE ASAT technology. As a result, the Army cannot
    use the KE ASAT technology initiative funding for other non-ASAT Army
    programs.
        Question. Are there other means to counter reconnaissance
    satellites besides ASAT's? Has the Army, Department of Defense (DOD) or
    the Administration determined the relative cost and effectiveness of
    these alternatives compared to ASAT's?
        Answer. The DOD Space Architect recently conducted a detailed study
    to develop alternative options for an integrated space control
    architecture. It addressed DOD's requirements and potential
    technologies and techniques to negate an adversary's space control. The
    results of the space control Architecture Development Team indicate
    that pursuing KE ASAT technology activities is a viable option. There
    are other potential solutions that would also deny an adversary's
    freedom of action in space. The Architect will continue to scrub
    requirements and the Deputy Under Secretary of Defense (Space) will
    conduct an acquisition review that will help determine what specific
    acquisition activities may be pursued in this area.
        Question. Has the Army, DOD or the Administration determined that
    our testing and deploying of an ASAT weapon will spur other nations to
    deploy their own ASAT? Will this increase the threat from ASAT's that
    our nation's satellites face?
        Answer. The President's new National Space Policy reaffirmed that
    ``consistent with treaty obligations, the United States will develop,
    operate, and maintain space control capabilities to ensure freedom of
    action in space and, if directed, deny such freedom of action to
    adversaries.'' We are not aware of any historical evidence indicating
    that U.S. development of ASAT technology spurred other nations to
    deploy an ASAT or that U.S. restraint halted any other nation's
    development activities.
                                     ______

                  Questions Submitted to Gen. Dennis J. Reimer
                   Questions Submitted by Senator Ted Stevens
                     high energy laser system test facility
        Question. Last year, the Congress provided $50 million for the
    continued testing and development of the Tactical High Energy Laser
    (THEL). This program, which is operated jointly between officials of
    the U.S. Army and the Israel Ministry of Defense, has become an
    important asset to civilian and military personnel who face constant
    threats from terrorist-launched ground rockets. Israel also contributed
    $20 million for this effort.
        How has this program progressed and can you comment about any
    present and future requirements that need to be addressed by the
    Congress to ensure this program is continued to its successful
    completion?
        Answer. Congress provided $5 million in fiscal year 1996 and $45
    million in fiscal year 1997 for the Tactical High Energy Laser (THEL)
    program. It was established as an Advanced Concept Technology
    Demonstration (ACTD) by Secretary of Defense William Perry in May 1996
    and has progressed very rapidly. In July 1996, a Memorandum of
    Agreement (MOA) between the U.S. and the State of Israel was signed
    initiating the cooperative THEL ACTD to evaluate the effectiveness of a
    THEL to negate the threat posed by Katyusha and other short-range
    artillery rockets. The initial phase of the program includes the effort
    necessary to design and fabricate the THEL demonstrator, and to
    integrate it with an Israeli acquisition and tracking radar. The U.S.
    commitment at the time of the signing of the MOA was only to support
    the project to completion of this initial phase, and the President's
    budget for fiscal year 1998 includes the final funding increment ($16.5
    million) necessary to complete this initial phase of the program.
    Israel provided $29.5 million to support this phase of the program.
        On July 23, 1996, a contract was awarded by the U.S. Army Space and
    Strategic Defense Command to TRW to design, build, integrate, and
    functionally test the THEL ACTD demonstrator over an 18-month period,
    later extended to 21 months, in accordance with the initial phase of
    the MOA. A separate contractual effort will be required to pursue the
    MOA options described below, dependent upon availability of outyear
    funding. The system design has been completed. Hardware fabrication has
    begun and is scheduled for completion by November 1997. Integration and
    functional testing are scheduled for completion at the TRW Capistrano
    Test Site (CTS) in California by March 1998. Currently, the TRW
    contract does not include THEL engagements of rockets in flight at CTS
    due to environmental restrictions at that location.
        The MOA contains several unpriced options that go beyond this
    initial phase and allow either country to exercise them unilaterally or
    as a joint effort, with cost share subject to negotiation. The United
    States and Israel have recently agreed that it is appropriate to
    exercise an option to conduct technical testing of the THEL System at
    White Sands Missile Range (WSMR) in New Mexico. The developmental
    testing at WSMR will be the first opportunity to actually shoot down
    rockets in flight with the demonstrator to validate this capability
    prior to shipment to Israel. The estimated cost of this effort is $47.5
    million and the Secretary of Defense has proposed that the United
    States provide two-thirds of the funds ($31.7 million), and Israel one-
    third ($15.8 million); all in fiscal year 1998. This option has not yet
    been negotiated and is not part of the President's budget for fiscal
    year 1998 and would, therefore, require a Congressional increase to the
    President's budget. The other options in the MOA in the fiscal year
    1999-2000 time frame and their associated rough order of magnitude cost
    estimates include: operational testing in Israel ($50 million);
    operational upgrades to the THEL demonstrator design required by the
    Israeli Air Force and hardware modifications to correct deficiencies
    identified during testing ($40 million); residual operational
    capability evaluation in Israel ($10 million); and procurement of a
    second THEL system ($75 million). Of these options, the operational
    upgrades to the THEL demonstrator design and hardware modifications
    will contribute most to delivery of an operational system to Israel in
    fiscal year 1999. The majority of this option could be conducted
    concurrently with the Research, Development, Test and Evaluation
    testing at High Energy Laser Test Facility for an additional $20
    million (U.S. share). The extent of U.S. cost sharing, if any, in these
    additional options is yet to be determined. Israel has a strong desire
    to continue the program to its successful completion, but to date no
    commitments have been made by the United States to exercise, or
    participate in, any of these remaining options.
                                family violence
        Question. According to data I have received from Department of
    Defense's Office of Family Planning, in 1995 there were 19
    ``substantiated'' reports of military spouse abuse per 1,000 and 6.3
    cases (per 1,000) of child abuse. There are two problems with these
    data:
        First, there is no data more recent than 1995, so it is not
    possible to tell how the Bosnia deployment might have affected the
    families of troops deployed there.
        Second, there is no comparable study of family violence in civilian
    families to help us determine how military families compare.
        Despite the reductions in this year's budget for the Army Research
    Institute (ARI), don't you agree that this problem is important enough
    to collect some reliable and recent data?
        Answer. The U.S. Army Community and Family Support Center (CFSC),
    not ARI, is responsible for the analysis of family violence data and
    has records for fiscal year 1996. The fiscal year 1996 Army rate for
    child abuse is 6.80/1,000 and spouse abuse is 9.86/1,000.
        There is comparable data between the military and the civilian
    community on child abuse and neglect. The National Committee for the
    Prevention of Child Abuse reports that the civilian rate is 47/1,000;
    however, there is no central civilian database which collects and
    analyzes spouse abuse. Civilian definitions of spouse abuse and data
    collection vary from state to state.
        Question. In whatever manner you deem appropriate, will you require
    the required study to be performed?
        Answer. CFSC will continue to collect and analyze reliable data on
    family violence. CFSC first incorporated an item on family violence in
    its 1995 Survey of Army Families III, and will continue to do so. Based
    on our experience of Desert Storm, we expect that, like divorce,
    incidents of spouse abuse will increase greatly at the time of reunion
    and then level off at a lower level.
                            stress from deployments
        Question. The Army continues to operate in peacekeeping and other
    international operations at a historically high rate. What indicators
    do you use to register the stress that this high operating tempo puts
    service men and women under? What do these data show?
        Answer. Soldiers' psychological and physical well-being are
    assessed using self-administered standardized surveys. Both the
    psychological health and physical health status scales are
    scientifically valid and reliable, and have been used during the
    Persian Gulf War, and in Somalia, Haiti, Kuwait, and Bosnia. Garrison
    norms have also been established for these scales and are used in the
    interpretation of the deployment data.
        The data indicate that high operating tempo lowers soldier
    retention intentions. In Haiti, for example, 10th Mountain soldiers who
    had been previously deployed to Hurricane Andrew or Somalia indicated
    that they were more likely to leave the Army than did their peers who
    had not previously deployed. Interview and survey data from soldiers in
    high operating tempo environments reveal that one of the main effects
    of the high operating tempo is an increase in work-family conflict. A
    recent study showed that this increase in work-family conflict is more
    pronounced for married officers than for married non-commissioned
    officers or married junior enlisted personnel. Indications are that
    work-family conflict is the primary reason why high operating tempo
    adversely affects soldiers' retention intentions.
        The impact of the high operating tempo on soldier well-being and
    mental health needs further research. Existing data demonstrate that
    overly demanding work hours are related to poor psychological well-
    being. In addition, data collected in Bosnia show that psychological
    well-being decreases as deployment length increases. Both long work
    hours and lengthy deployments are characteristic of high operating
    tempo environments. However, we have been unable to detect reliable
    relationships between the frequency of training exercises in garrison
    and psychological well-being, or between the number of times soldiers
    deploy and their psychological well-being. Thus, while high operating
    tempo is clearly stressful for soldiers, we do not have data
    demonstrating the mental health consequences of frequent deployments or
    numerous field training exercises. Additional work of a prospective and
    longitudinal nature is required to better understand the relationship
    between high operating tempo and soldier well-being, morale, job
    satisfaction, and commitment to the Army.
        Question. What measures do you use to measure the stress for their
    families? What do these data show?
        Answer. The Army measures family stress and coping by using surveys
    of spouses and field interviews with spouses, soldiers, unit/
    installation leaders and support providers. Survey scales consist of
    reliable measures of family stress, and well-being.
        Since Operation Desert Storm (ODS), demographic data has shown a
    rise in active duty Army marriage rates and in the number of soldiers
    with dependent children. During recent deployments, three-fifths of the
    deployed soldiers were married. Half of these deployed soldiers had
    children at home. Data show that there are few single parents, but dual
    career Army couples have increased since ODS. More research is needed
    to assess the impact of high operating tempo on dual career and single
    parent households.
        A spouse survey administered during the Bosnia mission indicated
    that family distress levels rose as separation time lengthened. This
    finding was similar to that found during the Persian Gulf deployment
    and the Somalia deployment. Across these deployments, cumulative stress
    from ``back-to-back'' missions has been associated with more family
    financial problems and greater child-rearing stressors.
        Data indicate that high operating tempo adversely affects a family
    member's well-being. Depression rates are higher among spouses of
    soldiers who deploy. In addition, these spouses' commitment to the
    mission and to the Army way of life is lower. Lower commitment to the
    Army reduces these spouses' desire for soldier retention and an Army
    career. However, most Army spouses coped well during recent deployments
    despite high stress levels. Their marital satisfaction remained high,
    and Army divorce rates stayed low. Additional research data are needed
    to show possible effects of high operating tempo on Army families'
    long-term stability.
        Question. What lessons have been learned from Operation Desert
    Storm and more recent peacekeeping activities to reduce the stress?
        Answer. In combat situations like Somalia and Operation Desert
    Storm (ODS), casualty risks from lethal weapons are significant sources
    of stress. However, the types of factors that lead to stress during
    peacekeeping missions are similar to the types of factors that lead to
    stress in garrison training. In both peacekeeping and garrison
    settings, the primary sources of stress for soldiers are (a) conflicts
    among unit members and (b) family or personal problems. During
    deployments, close living conditions and constant exposure to unit
    members exaggerate unit level conflicts, and lengthy separation from
    family and friends heightens family and personal problems. Both of
    these factors amplify stress levels of deployed soldiers.
        One lesson that has been learned is that leadership of both
    officers and non-commissioned officers is one of the primary tools the
    Army has to reduce stress in peacekeeping and combat operations. Data
    show that effective unit leadership buffers (i.e. protects) soldiers
    from other stresses associated with deployments. Continuing command
    efforts to ensure that the Army trains and retains quality leaders is
    one of the crucial tools for reducing deployment stress.
        ODS and follow-on research has shown that deployed soldiers highly
    value personal time and personal space while deployed. Consequently,
    ready access to Army Morale, Welfare and Recreation (MWR) equipment and
    activities has been shown to be important in reducing stress among
    deployed soldiers. As a result of lessons learned since ODS, MWR has
    been made a requirement in operation plans, and has been improved in
    recent peacekeeping deployments. In Bosnia, for example, volunteer
    civilian MWR specialists were sent to enhance delivery of MWR
    activities and recreation using a newly tailored Force Provider
    package.
        Another lesson learned is that deployment stress is reduced when
    soldiers feel confident that their families are coping well with the
    separation and that their families are cared for by the Army.
    Establishing effective Family Support Groups (FSG's), providing pre-
    deployment command briefings, and staffing effective Rear Detachment
    Commands (RDC) have all been shown to help spouses cope with deployment
    separation. Since ODS, expanded regulations have been implemented to
    enhance FSG's, pre-deployment briefings, and the effectiveness of
    RDC's. As a result of family problems that emerged in ODS, the Army
    Preparation for Overseas Movement (POM) process has been expanded to
    include family members. Soldiers with sole custody of dependent
    children or disabled family members must prepare approved family care
    plans in order to be deployable. This initiative is designed to prevent
    stress in deployed soldiers from severe family problems. Another recent
    initiative developed to help families cope during deployments is the
    Army Family Team Building Program (AFTB). The AFTB is designed to help
    families gain awareness of support resources and learn coping skills.
    The goal is to make families more self-reliant during deployments and
    in managing their day-to-day lives. At the installation level, Family
    Assistance Centers (FAC) have been improved. The FAC's are ``one-stop''
    information points to learn about deployment information and Army
    programs to assist waiting families. In recent deployments, the FAC has
    been able to reach more family members. An ODS lesson learned by the
    Army Chaplaincy was the need to strengthen its presence within each
    Battalion via the Unit Ministry Team (UMT). The UMT is a spiritual
    resource to help soldiers and spouses cope with deployment stressors.
    Other MWR, health, and housing programs at installations also have been
    improved as a result of lessons learned since ODS.
        These family-oriented actions have improved soldiers' confidence
    that their families are coping well and that their families are cared
    for by the Army. Continued research is under way to find ways to reduce
    soldier stress and enhance soldier and family quality of life across
    the range of missions on which soldiers are deployed.
                                  food stamps
        Question. I am very disappointed in a recent exchange of
    correspondence I had with Secretary Cohen after he stated that it was
    ``unacceptable'' for military families to be on Food Stamps. It seems
    that everyone knows this is a serious problem but no one seems willing
    to take any actions to solve it. How many Army families receive Food
    Stamps?
        Answer. We do not know the actual number of soldiers receiving Food
    Stamps. Rather, we use survey data to estimate the number of soldiers
    on Food Stamps. A 1995 Department of Defense survey estimated eight
    tenths of a percent of service members received Food Stamps. The Army
    was estimated to have about 6,500 soldiers that received Food Stamps as
    of September 1996.
        Question. Does the Army believe that this is a serious problem?
    What do you propose to do to solve it in the Army?
        Answer. The number of soldiers participating in the Food Stamp
    Program is of concern to the Army. However, a recent Department of
    Defense study points to participation in the Food Stamp program as
    primarily the result of the Department of Agriculture calculation of
    gross income rather than the adequacy of military compensation. The
    receipt of in-kind services (i.e. on post housing) is not included in
    the calculation of gross income. We believe 59 percent of the Food
    Stamp participants are eligible because of this methodology.
    Additionally, the personal decisions of soldiers regarding family size
    affect eligibility. Adjusting the military pay system to account for
    these participants would be complex, expensive, and unwarranted.
    Changing the compensation package to eliminate Food Stamp eligibility
    would change the reason for pay increases from responsibility and
    performance to family size. It is unfortunate that soldiers run into
    difficult times and may need help in feeding their families with the
    Food Stamp program. However, let me assure you that the Army is
    committed to its soldiers and is taking care of them through an active
    quality of life program.
                                 budget issues
        Question. The Army has submitted an add-on list that totals $3
    billion. Do any of the items on these lists have a higher priority than
    any item contained in the President's original request for 1998?
        Answer. No, none of the items on the list have a higher priority
    than any item contained in the President's original request for fiscal
    year 1998. The Army submitted an fiscal year 1998 budget that made the
    best use of available resources. At the time of submission, all known
    requirements were covered at a level that resulted in acceptable risk.
    The $3 billion add-on list includes programs immediately below the
    authorized level of funding that the Army would have funded in fiscal
    year 1998 had resources been available. If the entire list were funded,
    the risk to readiness would be lessened, various modernization programs
    would be strengthened and/or accelerated, and improvements to our
    infrastructure would be made.
                underfunding and the quadrennial defense review
        Question. In an analysis for the Budget Committee, CBO and GAO
    identified up to $50 billion in ``underfunding'' in the next four to
    five years of the defense budget. What actions can you tell us about
    that the Quadrennial Defense Review (QDR) is undertaking to address
    this problem.
        Answer. The QDR started with a thorough analysis of our defense
    strategy and the force structure and level of modernization required to
    successfully implement that strategy. Some personnel reductions are
    likely as a result of the QDR, as are the reduction, elimination, or
    realignment of various modernization programs to better match available
    resources with validated military requirements. The QDR is also looking
    closely at infrastructure requirements.
                        inventory practices of the army
        Question. Why does the Army continue to buy items for which it has
    more than a 20-year supply, as documented in a recent General
    Accounting Office (GAO) Report (GAO/NSIAD/97-71)? Has the Army
    considered changing its purchasing practices and adopting so called
    ``best practice'' standards, such as those employed by the private
    sector? If so, what are the next steps planned by the Army for
    implementing such practices?
        Answer. The Army does not purposefully procure items for which
    there is a 20-year supply. Our determination process for requirements
    is similar to ``best practices'' in industry. We project requirements
    based on customer demand, repair, and return patterns, as well as a
    series of mathematical models and costing factors. In contrast to
    commercial organizations, the Army must react to national priorities,
    which are reflected in changes in force structure, deployment to
    support both military and humanitarian objectives, and force
    modernization. This changing scenario causes fluctuation in demand
    which is reflected in our requirements. The fluctuation in demand can
    create a potential for having items due-in that exceed our
    requirements. Our streamlined acquisition techniques and reduced lead-
    times will shorten the time it takes to react to changing requirements,
    though it may take some time before we can see the results of these new
    initiatives.
        The Army also holds some items which are not demanded during
    peacetime but are required immediately to support Military Operations
    Other Than War and humanitarian efforts. These items do not have
    commercial equivalents, so the only way to support these emergency
    situations is to hold assets in our inventory.
        Once inventory is on hand, we constantly review that inventory to
    ensure that it is working for us and that we are not holding it for its
    own sake. The Army has been extremely successful in reducing its on-
    hand inventory over the past 6 years. From 1991-1996, we reduced our
    inventory 36.1 percent. Our on-hand inventory at the end of fiscal year
    1996 was $10.77 billion, less than 16 percent of the total Department
    of Defense (DOD) secondary item inventory. We are still not satisfied
    with our progress. We have undertaken a new program to reduce
    contingency retention stocks, one of the approved DOD-holding levels.
    Specific guidelines are provided for retention and disposal of those
    assets. Inventory managers are currently justifying all contingency
    retention stocks from a zero base. The results will be applied to our
    requirements determination and budget stratification processes.
        The Army continues to improve its business processes. For instance,
    we have reduced the time to award a contract from 439 days in 1992 to
    151 days in 1997 and are working with our suppliers to reduce
    production time.
        Although the General Accounting Office (GAO) has authored several
    reports on adopting ``best practices'' in the procurement of military
    equipment, there were no recommendations in the current report. The
    only ``best practice'' that has been recommended by the GAO is direct
    vendor delivery (DVD). The Army has adopted DVD where it makes sense,
    most notably with tires. Successful DVD requires commercial-type items
    (most of which we have transferred to the Defense Logistics Agency) and
    a fairly substantial recurring demand. It is harder to apply DVD
    techniques to complex, high technology weapon system parts that are
    unique to DOD and for which there is no robust market in the private
    sector. In addition, while DVD is a great idea for the right items in a
    continental United States-based operation, it does not do well in the
    desert of Southwest Asia or the mountains of Rwanda. The Army has
    initiated other techniques to streamline our acquisition process, such
    as flexible long-term contracting and indefinite delivery, indefinite
    quantity methods. These two methods, along with DVD, have reduced the
    procurement cycle to one month for items procured via these
    methodologies.
        We have made significant strides in the last several years in
    reducing inventory and are on target to make the DOD Strategic
    Logistics Plan goal set for the Army. We will continue to right-size
    our inventory to meet our Title 10 responsibilities while practicing
    good stewardship of scarce resources by continually refining our
    requirement and surgically trimming our on-hand inventory.
        Question. The General Accounting Office (GAO) noted that the Army
    Material Command (AMC) has a policy of not placing orders of less then
    $2,350 (ibid, pg 15). Has AMC considered changes to its purchasing
    practices such as modifying the rules governing minimum purchase
    levels?
        Answer. AMC policy does not preclude orders of less than $2,350
    from being placed. However, it has a policy that ensures they do not
    spend more to process a contract than they do to purchase the items
    under the contract, and the $2,350 figure quoted by GAO does not apply
    to all items. This ``minimum buy'' policy varies by item or group of
    items, by location, and by type of procurement method. It is reviewed
    annually and is one of the elements being reviewed in an ongoing study
    to determine the optimum inventory levels for the Army. While AMC has
    no plans to rescind or modify its policy at this time, they will
    consider the result of the current inventory study.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                                comanche program
        Question. How much additional funding would need to be added to the
    Army's fiscal years 1998-2002 spending plan to support acceleration of
    the Comanche helicopter Initial Operational Capability from fiscal year
    2006 to fiscal year 2004?
        Answer. A two year acceleration of Comanche fielding (from December
    2006 to December 2004) will require an additional $1.4 billion from
    fiscal year 1998 to fiscal year 2002. That funding increase would
    result in a reduction of funding requirements greater than $2.1 billion
    in the period of fiscal year 2004 and beyond. Future Years Defense
    Program funding requirements for the current and accelerated programs
    are shown below:

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                   Fiscal year--
                                                              ------------------------------------------------------
                                                                  1998       1999       2000       2001       2002
    ----------------------------------------------------------------------------------------------------------------
    Baseline Program.........................................        282        372        441        587        738
    Accelerated Program......................................        532        672        791        937        924
                                                              ------------------------------------------------------
          Difference.........................................        250        300        350        350        186
    ----------------------------------------------------------------------------------------------------------------

                              comanche helicopter
        Question. Do the threats the Army is likely to face in the next 10
    years justify accelerating the Comanche Initial Operational Capability
    (IOC)?
        Answer. A significant battlefield deficiency facing the Army is
    armed aerial reconnaissance. This deficiency will continue until
    Comanche is fielded. The sooner we field Comanche, the sooner we fix
    the battlefield deficiency. However, the threat does not justify the
    cost that would be required in the outyears to bring the program
    forward, given that the Army has other requirements with higher
    priority.
        Question. Why is accelerating the Comanche IOC such a low priority.
        Answer. The Comanche program is fully funded and on schedule.
    Acceleration of the Comanche program would require us to take resources
    away from other programs that are vitally important to us in the near
    term.
                                comanche program
        Question. Are there any significant technical risks associated with
    accelerating the Comanche Initial Operational Capability (IOC) to
    fiscal year 2004.
        Answer. There is no significant technology risk in accelerating the
    Comanche development schedule. The technologies necessary to support
    Comanche are available or maturing at a rate that supports
    acceleration. Early, up-front funding is most critical in accelerating
    the schedule. If the necessary funds are available in fiscal year 1998
    and fiscal year 1999 to support parallel development of all the
    subsystems, the acceleration can be achieved without additional risk.
                       huey helicopter reengining program
        Question. The Army recently signed a Memorandum of Agreement with
    the Army National Guard to place T801 engines in Guard Huey
    helicopters. Would you please tell the Committee the rational behind
    this initiative and how much will this program cost?
        Answer. There will be a production gap of more than three years
    between the date the Federal Aviation Agency certifies the T801 engine
    for use in the Comanche and the date we will begin producing the
    airframe. We intend to place the T801 in three battalions of Army
    National Guard (ARNG) UH-1H helicopters currently being used as the
    interim aircraft to perform the Light Utility Helicopter (LUH) mission.
    This initiative offers us the opportunity to avoid a production gap
    and, at the same time, reduce program risk, because we will prove the
    engine's effectiveness. This, in turn, will allow us to reduce
    Operational and Sustainment costs for these aircraft. We expect to
    spend $10 million in fiscal year 1996 National Guard and Reserve
    Equipment Account money to reengine two UH-1H aircraft this year. If we
    find that the T801 engine is successful, we intend to reengine all
    three ARNG LUH battalions. We project that it will cost us around $108
    million to buy the remaining 129 engines to complete this initiative.
    An important feature here is that as these engines reach 6,000 hours in
    use, or as the airframes are retired, the engines will be returned to
    the depot for use as spares for the Comanche program.
        Question. Has the Army or the National Guard included funds in this
    year's budget to begin this program?
        Answer. As mentioned earlier, this year we intend to execute $10
    million to certify the T801 engine in the UH-1H airframe. If the
    certification is successful, the intention is to fund the remainder.
        Question. Is a reengined Huey as capable as a Blackhawk.
        Answer. No, it is not intended to be as capable as the Blackhawk.
    The reengined UH-1H will have no additional capabilities.
        Question. Has the Army done, or does it intend to do, an
    Operational Requirements Document validating the need for this program?
        Answer. The Army does not intend to prepare an Operational
    Requirements Document. This is not a new program, it is simply a
    reengining initiative.
                          army war fighting experiment
        Question. Does the success of Apache Longbow and Javelin argue that
    the Army must be cautious of pursuing digitization at the expense of
    weapons technology and firepower?
        Answer. Army modernization efforts have demonstrated that
    digitization (information technologies) integrated into a weapon
    system/capability leads to increased force effectiveness. As shown
    during the recent Army Warfighting Experiment, the Apache Longbow is a
    good example of how integrating digital technology can increase
    firepower effectiveness over existing systems.
        Digitization enables enhanced battlefield situational awareness,
    thus allowing commanders to maximize employment and effectiveness of
    weapons systems for decisive results. Pursuing digitization linked with
    essential weapons technology is key for the Army to fulfill its role in
    achieving the ``Joint Vision 2010'' goal of full-spectrum dominance.
        Question. Did the Army NTC opposing force use jamming or
    information warfare techniques against the blue force?
        Answer. No. The purpose of the Advanced Warfighting Experiment was
    to determine if we could apply digital technologies to the fighting
    force. With active jamming or information warfare, we would not have
    been able to get an accurate assessment of the technical, system, and
    operational architectures. Part of the assessment process was a passive
    evaluation of potential vulnerabilities of the digital systems.
    Information warfare experimentation will be conducted during the
    Division Advanced Warfighting Experiment.
                         national missile defense issue
        Question. Do you have concerns about the current National Missile
    Defense (NMD) acquisition strategy?
        Answer. No. Recently, the Secretary of Defense made a decision
    that, while the Ballistic Missile Defense Organization (BMDO) is
    responsible for development of the overall NMD system, the individual
    elements that comprise the system have been and will continue to be
    developed by the Services to which they are currently assigned. He
    further stated that this means that the Army will continue to oversee
    the development of the Ground Based Interceptor, Ground Based Radar,
    and part of the Battle Management, Command, Control, and Communication
    elements. The Army supports the Secretary of Defense in his decision on
    NMD development. We will continue to work with the Office of the
    Secretary of Defense (OSD) and BMDO to ensure the Service roles in
    managing NMD system development are clearly defined.
        Question. Do you believe there is agreement within DOD on who will
    man and operate the National Missile Defense?
        Answer. Yes. Based upon the Army's historic mission of providing
    ground-based active defense of the United States against ballistic
    missiles, there is agreement between the Army and the Air Force that
    the Army will man and operate the ground-based elements of NMD. There
    is also agreement that the Air Force will exercise Component Command
    responsibilities for space-based elements. The JROC, however, has not
    yet formally designated a lead Service for the NMD program. We will
    work with the Joint Requirements Oversight Council to formalize
    designation of the NMD lead Service.
        Question. Is there any reason why the Army could not successfully
    operate an NMD system which uses Minuteman boosters and possibly
    Minuteman command and control infrastructure?
        Answer. The Army supports the most cost and operationally effective
    system to defend America against ballistic missiles. If the decision is
    made to incorporate Minuteman components and/or infrastructure into the
    NMD system, there is no reason why the Army could not successfully
    operate these ground-based elements.
                     hunter unmanned aerial vehicle program
        Question. In view of the recent success of the Hunter Unmanned
    Aerial Vehicle (UAV) system at the Force XXI exercise at Fort Irwin, is
    the Army reconsidering its decision not to field any of the additional
    Hunter systems currently in storage?
        Answer. During the Task Force XXI Advanced Warfighting Experiment
    (AWE), the Hunter UAV system served as a surrogate Tactical UAV in
    support of the brigade and task force commanders training at the
    National Training Center. A preliminary ``lesson learned'' from the AWE
    was the demonstration of the clear potential of a tactical UAV in the
    hands of a brigade commander to provide responsive, relevant combat
    information. The Army has used and will continue to use the Hunter UAV
    system at Fort Hood for development and refinement of UAV operational
    concepts and tactics, techniques, and procedures. However, the Army's
    strategy for UAV support to commanders calls for a complementary
    ``Family of UAV's'' consisting of the Outrider UAV supporting the
    brigade commander, the Air Force-operated Predator UAV supporting the
    division and corps commander, and the High Altitude Endurance UAV
    supporting the corps and joint task force commander. We do not
    currently plan to field any additional stored Hunter systems.
        Question. The Tactical UAV program is suffering from serious
    developmental problems which could result in cancellation of the
    current program. Do you believe the Hunter UAV system could fulfill, at
    least in the near term, the Army's tactical UAV requirements?
        Answer. First, the Army does not plan to field any additional
    stored Hunter systems. Second, the Hunter UAV system was designed to
    provide UAV support to division and corps commanders, not brigade
    commanders. It is not mobile enough, nor capable of operating from
    brigade areas, and requires an operations and support infrastructure
    that is not compatible with quick, agile brigade operations. The Hunter
    is not the system to fulfill Army brigade commanders' needs. The Army
    supports the current Tactical UAV Advanced Concept Technology
    Demonstration as the way forward to ultimately meet those needs.
                                     ______

               Questions Submitted by Senator Christopher S. Bond
                              logistical equipment
        Question. General Reimer, if it is your intent to continue these
    types of missions, are not the needs for logistical equipment
    imperative? I find it incredulous that the Army makes no room for the
    Heavy Equipment Transport System (HETS) in its fiscal year 1998 budget
    request. The average thinking man would see a disconnect here. Please
    comment.
        Answer. The need for logistical equipment is imperative in any
    military operation. The Army ensures that soldiers sent on operations
    have the equipment they need, to include adequate food, clothing, and
    shelter.
        Regarding HETS, because of affordability, the Army was not able to
    budget for the procurement of HETS in fiscal year 1998, despite their
    importance in military operations. To date, we have been able to
    procure HETS for our highest priority units through our budget and with
    help from Congress. The Army appreciates your support. Our requirement
    is for 2,412 HETS and, with current funding, we will have 1,617 on
    hand.
                              supplemental funding
        Question. General Reimer, wearing my National Guard hat, I am also
    very concerned about the level of training and the funding stream that
    has been provided in the budget for National Guard core training
    requirements as well as advanced tactical training. Could you speak to
    this concern?
        Answer. The Army provides resources based on the first-to-fight
    principle. The fiscal year 1998 training budget funds Active Component
    and Reserve Component Operating Tempo (OPTEMPO) in relation to unit
    deployment timelines. It provides trained and ready forces for
    warfighting Commanders-in-Chief (CINC's) at levels of readiness
    specified in the Defense Planning Guidance, provides a continental
    United States based power projection capability and supports the Army's
    role in the National Military Strategy. The Army has resourced the
    National Guard subject to available resources. Early deploying maneuver
    units are funded at 100 percent of their requirements, based on their
    deployment timelines. Forty percent of National Guard units are in this
    category. Pre-mobilization training requirements include gunnery
    training to Table VIII and maneuver training at platoon level for
    infantry and armor units, and at the company/battery level for the
    combat arms, combat support, and combat service support units. Several
    aviation units are funded at minimum levels to maintain individuals
    skills only. Later deploying National Guard units receive reduced
    OPTEMPO funding. Sixty percent of National Guard units are in this
    category. Current resourcing levels support individual and professional
    development training requirements for Force Package 1 and 2 units and 3
    of 15 enhanced separate brigades.
                                     ______

                 Questions Submitted by Senator Mitch McConnell
                 status of urban warfare doctrine and training
        Question. In the context of October 1993 ``shoot down'' in
    Mogadishu; the potential for urban warfare in Bosnia or an incident
    similar to the seizure of the Japanese Ambassador's residence in Peru;
    and the potential for urban warfare worldwide, does the Army have
    adequate doctrine and training capacity to prepare for this threat?
        Answer. The Army does have adequate doctrine. Doctrine for
    conducting these operations is contained in Field Manual (FM) 90-10,
    Military Operations on Urbanized Terrain (MOUT), and FM 90-10-1, An
    Infantryman's Guide to Combat in Built-Up Areas. As with any doctrine,
    the Army must continuously evaluate and update the doctrine to reflect
    changing conditions. The Center for Army Lessons Learned, at Fort
    Leavenworth, Kansas, is tasked with collecting, analyzing, and
    disseminating lessons learned from Somalia, Bosnia, and current
    training.
        The Army recognizes the increasing probability of conducting
    military operations in urban terrain and is improving its capacity to
    conduct training for this type of operation. The Army opened a new,
    state-of-the-art facility at the Joint Readiness Training Center at
    Fort Polk, Louisiana, in fiscal year 1996. This facility supports
    battalion task force operations and is fully instrumented to record and
    document the training to facilitate the lessons learned for the rest of
    the Army. The facility offers airfield, urban terrain, and a military
    compound training sites. The implementation of the phase II
    instrumentation package will link the three training areas and improve
    the After-Action Report capability. Role players are used to prepare
    our forces to deal with noncombatant evacuation operations, peace
    enforcement, peacekeeping, and humanitarian assistance.
                            headquarters reductions
        Question. The Army has done very well in reducing overhead,
    especially at installations across the Army. How well is it doing at
    reducing its supporting headquarters elements in the Pentagon, Army
    Materiel Command (AMC), Training and Doctrine Command (TRADOC), Forces
    Command (FORSCOM), and the overseas commands? Are there plans to trim
    these headquarters in order to maintain the force in the field?
        Answer. The Army continues to downsize the structure of the Army
    Management Headquarters Activities (AMHA). Since the drawdown began in
    1989, we have reduced the number of our AMHA spaces slightly more than
    39 percent. Of these reductions, Headquarters, Department of the Army,
    has been reduced proportionately to the overall Army reduction; AMC,
    TRADOC, and FORSCOM have been reduced a collective 43 percent during
    the same period. Our overseas activities were similarly reduced, and we
    think that they are currently sized appropriately given the supported
    forces and missions. These are significant reductions to our Management
    Headquarters structure with more to come through the Future Years
    Defense Program and Quadrennial Defense Review cuts. We continue to
    review streamlining initiatives within all of AMHA to further
    consolidate major commands and reduce HQDA and separate operating
    agencies. Our operating forces should receive any valid savings that
    can be obtained from the reduction in infrastructure, but we will need
    time to make this happen.
                            force xxi brigade at ntc
        Question. Are there any early results or trends from the Force XXI
    Brigade tests just completed at the National Training Center (NTC)?
        Answer. We found that the employment of the industry/user team is
    an absolute winner. The experimentation concept is a clear winner in
    managing change and the substance of change. The Experimental Force is
    a more coherent, more capable force than what we have seen before.
        Situation Awareness (SA) is the ability to know where units and
    individual vehicles are located and what they are doing (moving,
    stationary, etc.). Friendly forces SA is the most powerful enabler on
    the battlefield, and there is great potential for enemy forces SA. The
    sensors we developed to detect the enemy force worked very well.
    However, the fusion of the multiple source data into meaningful
    information and knowledge of enemy intentions is the challenge we must
    work to solve.
        We are only scratching the surface in the Tactics Techniques and
    Procedures (TTP)/doctrine arena; it changes daily as we learn from our
    experimentation process. Results indicated that 85 percent of the
    experimental equipment provides significant contributions to combat
    operations (including Javelin and Applique); 10 percent require more
    work; and 5 percent will not work at all in supporting combat
    operations. The Army also must have training capabilities embedded into
    the systems. Further, leaders must be capable of both shaping the
    information derived from digitizing the battlefield and using the tools
    developed to use that information in the best possible fashion to
    maintain information dominance. We must include information management
    and digitization training at training institutions.
        Finally, wraparound simulation at NTC is a winner. The use of a
    simulation to replicate and provide a virtual combat environment
    (wraparound) to the live brigade enhances the situation from which that
    brigade develops and coordinates its combat operations.
                                     ______

                Question Submitted by Senator Ernest F. Hollings
                     reserve mobilization income insurance
        Question. In fiscal year 1996, the Congress directed the creation
    of the Ready Reserve Mobilization Income Insurance program, designed to
    protect our Guard and Reserve members from financial hardship created
    when they were mobilized and had to be away from their peacetime jobs.
    That was a good and justifiable idea, but the implementation has fallen
    short of the mark. As you know, service men and women, who signed up
    for this program, expecting and planning on being compensated, are now
    receiving only four cents on the dollar of what had been promised. We
    now have a belated request for $73 million in the Supplemental
    Appropriations measure to fix that, but in the interim, is there
    nothing you could have done in the way of an emergency reprogramming to
    help those people? I have about 500 families in South Carolina that
    this is affecting today.
        Answer. Under section 12529 of the National Defense Authorization
    Act for Fiscal Year 1996, the Army was unable to use appropriated funds
    to mitigate the reduction of payments. We worked with the Office of the
    Secretary of Defense to explore every option available to pay the full
    amount to enrolled members when it became due to them and to maximize
    payments to the extent of funds available. Additionally, we fully
    supported immediate submission of the supplemental appropriation to
    capitalize the Fund.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                                 inadequate pay
        Question. What are your current plans to address the problems of
    Army families whose incomes place them near or at the poverty level?
        Answer. Military pay for all grades in fiscal year 1997 is well
    above the poverty level for an average-size family. However, because
    there are some soldiers with very large household sizes (an E-1 with a
    household of five through an E-6 with a household of nine), a small
    number of members may have household incomes falling below poverty
    thresholds. We believe that the current military compensation system is
    fair and equitable, and able to attract and retain the best qualified
    force in the nation's history. The Army's commitment to soldiers is
    strong, and we take care of our soldiers with a vital quality of life
    program. We have worked vigorously to ensure military pay remains
    competitive and families get the support they need.
        Question. Could you submit to the Committee a proposal for changes
    to pay and benefits which addresses the problems of uniformed Army
    personnel who are living near the poverty level? Please go beyond a
    response that simply includes a simple across the board cost-of-living
    adjustments for base pay. Would these changes require Congress to enact
    statutory changes?
        Answer. As I have stated, only those soldiers who have very large
    family sizes are near or below the poverty level. Food Stamp
    eligibility requirements are 30 percent above the poverty level and
    increase with family size. Thus, an E-6 whose $34,573 salary is above
    the poverty level will qualify for Food Stamps with a household size of
    nine members. Additionally, because the Department of Agriculture does
    not require in-kind services in the calculation of their gross income,
    59 percent of soldiers eligible for Food Stamps are living in
    Government-provided family housing. A recent Department of Defense
    (DOD) study estimates the cost of eliminating eligibility for the Food
    Stamp Program to be approximately $20 billion, if basic pay was
    increased to ensure no member (DOD-wide), regardless of family size,
    could qualify. An alternative method of providing a supplemental
    allowance based on family size, so cash pay would exceed the Food Stamp
    eligibility limitation, would cost approximately $72.6 million (DOD-
    wide). Adjusting the military compensation system to account for the
    approximately 2,700 soldiers we believe are receiving food stamps and
    living off-base with above-average size families is complex, expensive,
    and unwarranted. DOD does not favor payments to soldiers based upon the
    number of dependents they acquire. The Army supports this position, as
    this concept would change the reason for pay from responsibility and
    performance to family size. The Army also feels that identifying
    programs targeted for potentially eligible Food Stamp users would be an
    unwarranted intrusion into a soldier's personal life. It is unfortunate
    that soldiers run into difficult times and may need help in feeding
    their families through the food stamp program. However, let me assure
    you that we remain committed to assist all our soldiers and their
    families in times of need.
                               inadequate housing
        Question. What is your estimate for when the current problems and
    shortfalls in housing for military personnel and their families will be
    corrected by the new initiative cited in your testimony? Please provide
    statistics showing the current shortfall in housing and a projected
    timetable for the initiative's affect on the numbers and percentage of
    inadequate or substandard housing.
        Answer. Approximately 76 percent of Army-wide, on-post family
    housing does not meet the Army's Whole Neighborhood Revitalization
    standard, and close to 10,000 families who live off post in the United
    States are unsuitably housed due to cost, condition, or availability.
    However, the Army cannot afford to fix these problems by using
    traditional methods. The Army is aggressively pursuing the use of the
    fiscal year 1996 legislation that enabled us to implement our Capital
    Venture Initiatives to remedy some of the housing problems at U.S.
    installations. The Army is in the process of evaluating its first
    project at Fort Carson that was solicited under the new legislative
    authorities. However, it is too early to project how much time it will
    take to correct the entire housing problem in the United States. Once
    the Army has evaluated the results and benefits of the Fort Carson
    project, we will have a better idea of what can be accomplished and how
    long it will take. The Army plans to use the new authorities to
    revitalize the housing inventory, and where economically feasible,
    reduce the shortfall in housing. Fifteen other projects are currently
    under development. In regard to family housing overseas, the new
    authorities do not apply. Therefore, the Army is looking at other ways
    of solving its overseas housing challenges.
                    increase in the number of army generals
        Question. Does the Army plan on requesting an increase in the
    number of generals?
        Answer. The Army has submitted a comprehensive set of
    recommendations to the Secretary of Defense. Our analysis indicates
    that we do not have an adequate number of general officers to support
    both internal and external active and reserve general officer
    requirements. The study was not used solely as a venue to increase
    general officer positions, on the contrary, the Army downgraded,
    consolidated or civilianized 14 recognized general officer
    requirements. However, even with these decisions, the continued demand
    for external requirements coupled with the Army absorbing 50 percent of
    all the general officer reductions during the drawdown has resulted in
    internal Army general officer shortages.
        Question. If such an increase is under consideration, how does the
    Army justify this increase considering the ``draw down'' in the number
    of Army personnel?
        Answer. This is a very valid question that can be answered in a
    number of ways. Our analysis indicates too much general officer
    strength was taken out of the Army without due consideration of
    increased joint and coalition requirements. QDR reductions on both end
    strength and force structure do not necessarily bring about a
    corresponding reduction in general officer requirements. For example,
    there are only three general officers in an 18,000 soldier division. A
    smaller operating force does not necessarily equate to a smaller
    command structure on a one to one basis. On the contrary, the increased
    complexity of operations, the consolidation of organizations, the
    duration and magnitude of joint and international operations, and the
    management of systems and programs have actually increased general
    officer requirements during this same time period. There is no longer
    an absolute relationship between force structure and general officer
    strength.
        Another unforeseen impact on general officer requirements not
    directly tied to the force structure are the demands generated within
    the joint community. The growth in joint requirements, both documented
    and undocumented, have reduced the Army's ability to meet internal
    demands. To ensure the Army did not reduce its level of joint
    participation, we made the decision to leave valid Army general officer
    positions vacant. We have seen and will continue to see greater
    reliance on general officers to lead joint and combined operations. The
    leadership requirements in relations to force size for these operations
    also defies the historical concept of leader to led ratios mentioned in
    the proceeding paragraph. We have also seen a growth in undocumented
    general officer external requirements. For example, for the past two
    years we have supported an undocumented logistics position in Bosnia,
    for nine months a general officer coordinated military support and
    security for the Olympics, and for well over a year, two general
    officers performed peacekeeping operations in Haiti, all while still
    assigned to their Army billets. Political considerations, not leader to
    led ratios, now dictate general officer requirements in numerous joint
    and combined operations.
        Statutory requirements have also added to the demand for general
    officers. For example, the provisions of the Defense Acquisition
    Workforce Improvement Act (DAWIA) has had a noticeable impact on
    general officer skill distribution. Supporting such obligations has
    forced reductions or vacancies to disproportionately occur in internal
    Army general officer billets.
        Finally, while not an ideal solution, the Army has historically
    relied on frocked general officers or promotable colonels to fill the
    delta between general officer requirements and the general officer
    authorizations. The Army's frocking authority, controlled by statute,
    is programmed to reduce from a ceiling of 29 to 12 over the next two
    years. The loss of this management alternative will acerbate the
    perception of general officer shortages.
        Question. Will the Quadrennial Defense Review (QDR) endorse this
    increase?
        Answer. The QDR will outline a force end strength for the Army of
    the future and provide a framework to define general officer
    requirements. Upon completion and impact determination of changes to
    force structure based on the QDR, the Army will reassess its general
    officer requirements and make appropriate adjustments to the study if
    warranted.
        Question. What are the budgetary implications of adding more Army
    generals?
        Answer. The budgetary implications will be minimal if there is a
    determination to request an increase in the number of Army general
    officers. The end strength of the Army's officer corps would remain
    constant, so any increase in the general officer corps would be offset
    by a decrease in the colonel population. That cost differential per
    general officer is less than $12,000 per year. It should also be noted
    that the study has identified several positions to be downgraded or
    changed to civilian positions as a result of the study. The cost
    savings associated with these decisions provide a potential offset to
    increases in general officer strength.
                             aircraft fleet upgrade
        Question. Is it true that budgetary constraints are forcing a delay
    of the navigational upgrades to the Army's C-12 fleet?
        Answer. Yes.
        Question. How much would it cost to upgrade the fleet with an FAA
    compliant avionics and communication suite?
        Answer. The C-12 upgrade costs $500,000 per aircraft. However,
    current plans do not call for upgrading the entire fleet. Older C-12's,
    that will be displaced over the next 1-10 years by new UC-35 and C-23
    aircraft, would not be upgraded. With additional funding, the Army
    would upgrade 12 C-12's in fiscal year 1998 ($6 million) and 12 in
    fiscal year 1999 ($6 million). As a result of reductions in the number
    of Operational Support Airlift aircraft, the Army has been able to
    acquire, by transfer from the other Services, newer C-12F-model
    aircraft. These aircraft have three different cockpits which result in
    training and aircrew coordination challenges--a less than optimal
    situation for the aircrews. Although the aircraft are equipped with a
    civilian Global Positioning System (GPS) navigation system, it does not
    have the military coding capability required for wartime operations.
    The cockpit upgrade of the fleet of C-12F-models will eliminate
    training requirements and improve flight safety by providing a standard
    and modernized cockpit configuration. Additionally, the upgrade
    includes a GPS with the military coding capability required for flight
    operations in austere wartime theaters of operation.
        Question. Do you require any congressional action to facilitate the
    upgrade?
        Answer. An additional $6 million in fiscal year 1998 would provide
    funds to accomplish the upgrade of the 12 C-12's in fiscal year 1998.
    Another $6 million would be needed for 12 C-12's in fiscal year 1999.
                     administrative aircraft fleet upgrade
        Question. Assuming the Congress would be willing to upgrade the
    fleet without delay, how much of a budget increase for the C-12 fleet
    would this require for fiscal year 1998?
        Answer. In fiscal year 1998, a budget increase of $6 million would
    be required to upgrade 12 C-12's.
        Question. Without an increase, how long would the upgrade be
    delayed?
        Answer. The upgrade would be delayed indefinitely, since it is not
    funded in the Future Years Defense Program.
                              rock island arsenal
        Question. I understand that the Army has decided to out-source the
    M-1A2 tank gun mount and 155 howitzer projects. Why has the Army
    decided not to allow the Rock Island Arsenal to compete on the contract
    proposals? Doesn't this contradict the letter and spirit of the Arsenal
    Act?
        Answer. This is really two separate acquisition requirements.
    First, we have not decided to outsource tank gun mounts. We still
    procure half from the prime contractor as part of the tank multiyear
    upgrade program, and we still produce half at Rock Island Arsenal. Last
    year, we initiated a privatization study under the provisions of Office
    of Management and Budget Circular A-76 to review those produced at Rock
    Island Arsenal. We stopped that effort early this year because of an
    internal Department of Defense legal ruling which reaffirmed Army
    authority to buy end items and components from private sources but gave
    priority to Title 10 U.S.C., section 4532, the Arsenal Act, when
    considering whether to outsource ongoing arsenal production. In these
    cases, we will study production costs under Arsenal Act standards.
        Referring to your question regarding the new lightweight howitzer
    program, the Army decided last year to procure the howitzer from
    private industry rather than produce it at a government facility
    because excellent prototypes were available from private industry. This
    decision stemmed from the results of a 1994 market survey. At the time
    the survey was conducted, Rock Island Arsenal did not have a prototype
    howitzer or funds to develop one. Moreover, the Arsenal Act is
    considered inapplicable to the acquisition strategy decision to fulfill
    a requirement for a new weapon from private industry. Our procurement
    decisions on both the gun mounts and the howitzer program have been
    closely reviewed and supported by Army legal counsel.
                            bosnia contingency costs
        Question. Will Brown and Root provide services to the redeployment
    of U.S. service personnel to Europe or the U.S.? If so, what services
    would they provide? Do you have cost estimates for this portion of the
    redeployment?
        Answer. Services to support the redeploymnent of U.S. forces is
    within the scope of the Operation Joint Guard Sustainment Contract
    currently held by Brown and Root Corporation. This contract was
    established to provide for a whole host of logistics support
    activities. If a service falls within the realm of logistics, the
    services are available under the contract. To date, there has been no
    requirement identified for Brown and Root to provide services in
    support of a redeployment. Because no requirement for redeployment has
    been identified, we are not able to estimate costs.
                         theater missile defense issues
        Question. Is the Medium Extended Air Defense System fully funded in
    the current DOD budget?
        Answer. The program's first phase, known as Project Definition-
    Validation is fully funded through the first quarter of fiscal year
    1999. The Ballistic Missile Defense Organization (BMDO) and the Army
    will consider funding the remainder of Design and Development phase
    during the next year's budget development for fiscal years 2000-2005.
    Because of recent Program Budget Decisions splitting Theater Missile
    Defense (TMD) program funding responsibilities, BMDO is responsible for
    Research, Development, Test and Evaluation funding, and the Army is
    responsible for procurement funding. The first year of procurement is
    expected to be fiscal year 2003. The Army and the Marine Corps continue
    to have a compelling need for the only system that can provide air and
    missile defense for maneuver forces, as well as serve as an effective
    lower tier TMD system under the Theater High Altitude Defense umbrella.

                              subcommittee recess

        Senator Stevens. We are going to stand in recess until 1
    week from today, at 10 o'clock, when we will hear from the
    Department of Defense health program.
        [Whereupon, at 11:47 a.m., Wednesday, April 16, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    April 23.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                           WEDNESDAY, APRIL 30, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:09 a.m., in room SD-138, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Domenici, Bond, Shelby,
    and Bumpers.

                             DEPARTMENT OF DEFENSE

                             National Guard Bureau

    STATEMENTS OF:
            LT. GEN. EDWARD D. BACA, U.S. ARMY, CHIEF, NATIONAL GUARD
                BUREAU
            MAJ. GEN. WILLIAM NAVAS, JR., DIRECTOR, ARMY NATIONAL GUARD
            MAJ. GEN. DONALD W. SHEPPERD, DIRECTOR, AIR NATIONAL GUARD

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning, Generals. My apologies.
    There are a few other things going on around here this morning.
        It is nice to have you with us again. I look forward to our
    attempt to acquaint the new members with the situation in
    Alaska this summer, General.
        General Baca. Yes, sir.
        Senator Stevens. We are going to hear from two panels this
    morning, beginning with the leadership of the National Guard
    Bureau testifying on their 1998 priorities and followed by
    several adjutants general who will testify on their respective
    funding priorities. We are going to commence the morning with
    the Chiefs of the Guard Bureau, Lt. Gen. Ed Baca, Chief of the
    National Guard Bureau, Maj. Gen. Bill Navas, Director of the
    Army National Guard, and Maj. Gen. Don Shepperd, the Director
    of the Air National Guard.
        I believe our committee has long taken a lead in addressing
    both the readiness and modernization requirements of the
    National Guard. We have enjoyed working with the Guard Bureau
    and the adjutant generals. In recent years we have witnessed
    the results of these investments, the tremendous performance of
    the National Guard in every overseas contingency mission, as
    well as support for national disasters across our country.
        I think the state of readiness is better than ever in our
    history. Beginning with the operation involved in Desert Storm
    and continuing today in Southwest Asia and Bosnia, the National
    Guard has demonstrated both their professionalism and their
    dedication. As we have traveled through the area we have met
    and seen the groups from various States of our Union who are
    participating along with the Active Army and Air Force in these
    missions.
        Despite the success story, we have proposed deep cuts in
    the force structure, the OPTEMPO, school training, and
    infrastructure support funding for the Guard. In partnership
    with Senator Inouye and other members of this committee, I
    assure you that we want to address the priorities that you
    articulated this year. All of your statements have been
    included in our record. We welcome your comments on the status
    of your forces and the priorities that you associate with your
    funding and suggestions that you have as to how this committee
    can help you perform your missions.
        General Baca. Thank you, Mr. Chairman.
        Senator Stevens. Now, does anyone have an opening
    statement?
        Senator Bond. I will. I have an opening statement. I will
    save it for the question session, or would you prefer to have
    it now?
        Senator Stevens. I would prefer to have it now.

                     STATEMENT OF HON. CHRISTOPHER S. BOND

        Senator Bond. All right. Well, let us get it out of the
    way.
        Thank you, Mr. Chairman. Generals, it is a pleasure to
    welcome you before the committee. I believe, as the chairman
    has already said, we are united in our belief that the National
    Guard's missions are crucial to our national and civil defense.
    As a cochairman of the National Guard Caucus, I am very proud
    to recognize that, in terms of military readiness, national
    disaster preparedness, and law enforcement, the Guard has
    distinguished itself with an unsurpassed level of
    professionalism, and at a bargain price.
        All you have to do is watch the news, follow what is
    happening that is of importance, and you will see the National
    Guard there. And we could not be prouder of the Guard and the
    men and women who serve in it.
        From my own State standpoint, the Missouri Guard units as I
    speak are stationed overseas in Hungary as a part of Joint
    Guard supporting NATO in the Dayton Peace Accords. Missouri Air
    Guard F-15's, in accordance with United States directives, are
    patrolling the United Nations no-fly zones over Iraq,
    containing and deterring acts of aggression by Saddam Hussein.
    And I also might point out that it was a National Guard unit
    which made the initial discovery of the U.S. Air Force A-10
    which crashed recently, which has been in the top of the news.
        I am very much concerned as we go into this cycle, when
    distinguished individuals such as the U.S. Army's Assistant
    Vice Chief of Staff, General Garner, is quoted as he was on
    April 14: ``The Army Guard would bear the brunt of whatever
    force cuts may occur as a result of the `Quadrennial Defense
    Review [QDR].' '' Since he is the guy in charge of the QDR, I
    find that statement very disturbing.
        The General went on to say there was a tremendous amount of
    pressure from Congress arguing that the Guard is too big. I do
    not know where that pressure is coming from from Congress. Last
    I counted there are 65 of us who are members of the Senate
    National Guard Caucus, and I do not see the pressure coming
    from that 65. Maybe there is among the other 35, but I am
    pretty good at numbers and I think that our caucus is strong.
        I can assure you as well that the Members of Congress from
    my State of Missouri do not share that opinion. You probably
    would not find that opinion from Members from North Dakota or
    Florida or California or any State where disaster has struck
    and the Guard has responded. I think, rather than being viewed
    as a billpayer, the Guard should be viewed as a vibrant, vital,
    and adequately funded part of the Defense Department.
        As I understand it, right now we are looking at a $743
    million shortfall in Army National Guard operations and pay
    allowance accounts, no funding for military schools for 12 of
    the 15 enhanced brigades, nor any of the National Guard
    divisions, a funding request sufficient for only 3 percent of
    special training exercise dollars for 1998, 25 percent of the
    new recruits, more than 6,000 personnel, will not be able to
    attend basic training.
        I look forward to discussing these items with you in the
    question and answer session.
        I thank you, Mr. Chairman.
        Senator Stevens. I am pleased to have that statement,
    Senator, as cochairman of the National Guard Caucus here in the
    Senate. We listen to your comments.
        Senator Cochran, do you have anything to say?

                         STATEMENT OF HON. THAD COCHRAN

        Senator Cochran. Mr. Chairman, I would just like to comment
    that many of us are concerned about the ``Quadrennial Defense
    Review'' and the fact that the National Guard apparently has
    not been invited to sit at the table or at least to be
    represented in a way that would have its views and interests
    reflected in the report that is being submitted to the White
    House on Thursday.
        I do not know what is in the report. We probably will have
    an opportunity later in this month or next month to review it
    in some formal way, through hearings or meetings here in the
    Senate. I hope that this committee will take advantage of the
    opportunity to carefully review it to be sure it is a proposal
    for new strategies or new ways of budgeting for military needs
    that takes into account not just the needs of the military to
    contribute to deficit reduction, but also to safeguard our
    Nation's security.
        For me this has to be the primary reason for this review,
    to find out how we can do that more efficiently, more
    effectively, and those go hand in hand.
        Senator Lott and I joined in writing a letter to Secretary
    of Defense Bill Cohen the other day to express our concerns
    about these comments that Senator Bond referred to that Gen.
    Jay Garner made about the fact that the Army was going to have
    to get its force reductions out of the Guard forces and that
    that would be where the emphasis would be placed.
        Well, we certainly do not want that to be a prejudgment of
    a decision of the ``Quadrennial Defense Review'' process. If it
    is, that is very unfortunate. But we want the Guard's interest
    to be carefully reviewed, if not by the QDR participants, then
    certainly by this defense panel that has been assembled by
    Secretary of Defense Cohen. At least three of those persons on
    that panel are former staff directors of the Senate Armed
    Services Committee. Some of them we have worked closely with
    over the years.
        But we are hopeful that we can work through this process
    and make sure that the Guard forces are treated fairly and that
    this budget request is also reviewed carefully to be sure it
    provides the funds to maintain readiness and training and all
    the things that would keep the Guard an active participant in
    the defense of our country.
        Senator Stevens. Senator Bumpers, do you have an opening
    statement?
        Senator Bumpers. I do not.
        Senator Stevens. Senator Domenici.
        Senator Bumpers. I thought we were on questions. You are
    still doing opening statements?
        Senator Stevens. Yes; yes, sir.

                       STATEMENT OF HON. PETE V. DOMENICI

        Senator Domenici. Mr. Chairman, I just wanted to lend an
    observation regarding the ``Quadrennial Defense Review.'' I
    mean, it is obvious that the ``Quadrennial Defense Review'' is
    not going to be an easy event for the Defense Department. They
    are going to have a big struggle to fit within the numbers that
    are assumed for the next quadrennial. I share the concern that
    the Guard be appropriately represented, because it is pretty
    easy for those in the standing military to pass on cuts and
    restraints on to some other group. I am hopeful the Guard is
    not just sort of an outsider to that.
        I would ask a few questions about that when my turn comes,
    as to where they are. And if they cannot quite give us their
    views, then I would ask that we ask the Secretary of Defense to
    assure us that they are properly represented with reference to
    their mission and their importance. I think that would be very,
    very important.
        I thank you very much.
        Senator Stevens. General Baca.

                      statement of Lt. Gen. Edward D. Baca

        General Baca. Thank you, Chairman Stevens, and thank you,
    members of this committee, for your considerable support in
    making the National Guard the force that it is today. I would
    like to make a few brief and very brief introductory remarks
    and submit a more detailed statement for the record. I will
    begin with a short overview of the current status of your
    National Guard, and my remarks will provide a broad foundation
    for more detailed discussion by Generals Navas and Shepperd in
    response to your questions.
        I am delighted to appear before you today representing the
    more than 480,000 Army and Air Guard members located in 3,400
    communities throughout America. As citizen soldiers, we are not
    only a professionally trained military force, but a military of
    professionals. We provide the critical link between the
    American people and our national defense. When the Guard is
    mobilized, the state of the Nation is also mobilized. We are
    not just the people's Army or the people's Air Force; we are
    the people--Americans at their best.
        Today's National Guard is a ready and flexible force,
    prepared to implement our national security strategies across
    the full military spectrum. Our primary mission has not changed
    since it was written into the Constitution by our Founding
    Fathers. It still remains the fighting and the winning of our
    Nation's wars.

                               A dual-role force

        I am proud to report to you that the Guard has answered
    every call from the President and the Governors, responding
    within the timelines required and performing to established
    standards. We have successfully accomplished every mission and
    task from traditional support to the Active Forces to
    nontraditional support of the new doctrine of preventive
    defense.
        Our State Partnership Program has become the genesis for
    the new Marshall plan of the 21st century. Our ability to
    answer these widely divergent calls is a direct result of the
    quantity and the quality of training we have been able to
    provide and the readiness levels that we have been able to
    maintain to perform that warfighting mission. We have worked
    very hard to provide the kinds of diversity of training
    necessary to ensure the utmost accessibility, and it is my view
    that if we continue to provide the proper levels of training to
    all members of the Guard we will be able to continue at the
    current levels and, in fact, make even greater contributions to
    the full range of military operations.
        Mr. Chairman and members of the committee, as I appear
    before you today I am proud to report to you that we have
    almost 12,000 members and units of the Army and Air National
    Guard deployed around the globe in 29 foreign nations, from
    Bosnia to Honduras, in Antarctica to the northernmost tip of
    Alaska. They are supporting respective CINC's in Bosnia,
    resupplying the National Science Foundation at the South Pole,
    conducting nation building in Central and South America,
    planning civil emergency exercises in the former Soviet Union,
    and aiding United States antidrug efforts both domestically and
    internationally.
        Here at home, the Guard is responding at the tip of the
    spear to the call of 12 Governors for domestic emergencies.
    That is from providing comfort and relief to the devastated
    victims of the Red River floods to assisting in the search for
    the missing Air Force A-10.
        But the Guard's active involvement in domestic crisis is
    not merely limited to on-call emergency response. Every day
    throughout America, guardsmen and women are involved in a wide
    range of youth and drug demand reduction programs that are
    improving the moral, social, and economic fabric of our great
    Nation.

                            adding value to America

        Our ability to be decisively engaged in such a wide range
    of important national and international activities is clear
    testimony to the quality of our force. We owe the success to
    the diversity, strength, and professionalism of the leaders,
    soldiers, and airmen of the National Guard. We have the finest
    led and most versatile force in our history. Our commitment to
    fair and equal treatment for all, combined with sound
    leadership practice and the best training available, has served
    the Guard and our Nation well.
        I believe our singular recruiting and retention success are
    the results of that commitment, training, and high operations
    tempo that we have maintained in the last year. Since the
    recall of the draft, the National Guard has been one of the few
    means available for American citizenry to exercise their right
    to participate directly in their Nation's defense while also
    serving their State and their local community.
        We believe that it is critically important that we be able
    to continue to provide the best and most meaningful training
    possible to those citizen soldier volunteers who make the
    sacrifices necessary to provide for the common defense. Their
    readiness and effectiveness is a direct function of the
    resources available to provide them that training.
        To date, through innovative leadership, frugal management,
    and focused training, we have been able to maintain that high
    standard required to contribute effectively to our national
    security strategy. But, Mr. Chairman, as the budgets continue
    to decrease, this is becoming one of our greatest challenges.

                             National Guard vision

        Finally, my vision of the Guard is to see that it remains
    the best, most combat-ready Reserve force in the world. We have
    deliberately invested in our future and, more importantly, in
    America's future. I believe that we have postured the Guard for
    the 21st century. We are committed to bringing to the QDR and
    the NDP a force that can make significant contributions to a
    cost-effective national defense and fulfill all of the other
    requirements of our national security strategy.
        The Guard stands ready to serve our great Nation in the
    first line of defense, as it has done continuously for over 360
    years.

                               prepared statement

        Thank you, Mr. Chairman. Thank you, members of the
    committee. We are ready for your questions.
        [The statement follows:]
                 Prepared Statement of Lt. Gen. Edward D. Baca
                        america--a militia-based nation
        As we move steadily toward the 21st century, the National Guard of
    the United States is playing a more vital and relevant role in
    maintaining the nation's security. In this period of fiscal austerity,
    with uncertain threats beyond the horizon and familiar enemies--
    domestic emergency and natural disaster--remaining at home, the
    nation's leaders and the American people alike, now more than ever, can
    see and appreciate the value of the citizen-soldier tradition that is a
    national heritage stretching back over 360 years.
        The early colonists believed it was both a right and a
    responsibility for the able-bodied to bear arms on behalf of their
    communities. They made the citizen-soldier the bedrock of survival,
    organizing militias to protect their homes and families in the New
    World. The system spread throughout the Colonies, producing similar
    cadres in each region. Then, as now, militiamen earned the trust and
    respect of their fellow colonists by stepping forward to provide for
    the common defense. These same militiamen formed a disciplined nucleus
    for action on the public behalf when natural calamity occurred. The
    concept evolved as part of our national character and was embedded in
    the Constitution by the nation's founders who chose to rely on State
    militias for Federal defense rather than maintain a large standing
    force. For most of the Republic's history, those proud and steadfast
    militias protected the nation with pride, dedication, and uncommon
    valor.
        Following World War II, however, with the emergence of the Sino-
    Soviet threat, national security strategy developed around the policy
    of ``Containment.'' This required extensive forward basing of U.S.
    military forces to physically deter communist expansion. It entailed an
    enormous shift in the security paradigm of the United States since it
    was impossible to man under the traditional militia concept.
    Containment led to the prolonged maintenance of a large standing active
    duty force and, for a period after the Korean War, reduced reliance on
    the nation's citizen-soldiers. The Vietnam conflict, though, convinced
    national leaders like Army Chief of Staff General Creighton Abrams and
    Secretaries of Defense Melvin Laird and James R. Schlessinger that
    there were both economic and moral imperatives for restoring
    volunteerism to national defense. They crafted a Total Force Policy to
    reinstate the National Guard and Reserve forces as full partners in the
    national military establishment. The wisdom of this was validated by
    the heroic contributions of National Guard men and women during
    Operation Desert Storm in 1991, and its success is now proven daily
    around the world as National Guard personnel support contingency
    operations side by side with their Active Component counterparts.
        The modernization of the Army and Air National Guard, and the
    restoration of their rightful place in the defense establishment over
    the past 25 years, are returning large dividends to the American
    people. As the U.S. military restructures itself into a smaller,
    predominantly home-based power-projection force for the post-Cold War
    national security environment, the National Guard is picking up a
    larger share of the load. We can and will do even more. A fully
    committed partner on the Total Force national defense team, we have an
    active voice in the Quadrennial Defense Review now underway, and are
    confident our ever-growing capabilities will receive favorable
    consideration by the National Defense Panel as it determines the
    structure of America's 21st century defense establishment. Meanwhile,
    we are continuing to enhance our ability to mesh seamlessly with the
    Active Components and perform the demanding, highly technical missions
    that will be required of tomorrow's warriors; find innovative ways to
    master accelerated operations tempo; and exploit new technologies to
    improve readiness and effectiveness.
        And the National Guard's responsibilities continue to grow. Under
    current planning, by fiscal year 1999 the Army National Guard will
    provide over 50 percent of the Army's combat manpower and more than a
    third of its combat support and combat service support strength. The
    Air National Guard already provides 100 percent of America's
    continental air defense and is involved across the full spectrum of Air
    Force missions, from strategic deep attack and satellite communications
    to special operations and civil engineering. Across the board, the
    National Guard is now a more accessible force that the National Command
    Authority and Unified Commanders-in-Chief expect to see and use on
    demand. This is a positive trend that we endorse and support
    wholeheartedly.
                   national guard vision--force of the future
        The National Guard is the force of the future--a solution--and not
    just a force of the past--an honored memory. We have made excellent
    progress under the Total Force Policy and are continuing to strengthen
    intraservice teamwork and evolve joint force applications. The road
    ahead has been mapped out by General John M. Shalikashvili, Chairman of
    the Joint Chiefs of Staff, in ``Joint Vision 2010''. It is one to which
    your National Guard is fully committed.
        The following vision keeps the National Guard's view of the future
    focused and our progress on track: Our Vision--The National Guard--the
    most ready reserve component in the world--led, trained, equipped, and
    resourced to accomplish national security and military objectives while
    providing the States a balanced force of units with organic chains of
    command capable of performing the military support mission.
        We intend to remain the Most Ready Reserve Component in the world.
    No one does more, better, more often in more places around the world.
    The National Guard will continue to extract maximum readiness from
    every dollar expended and maintain indisputable readiness reporting and
    management systems.
        We will maintain a Balanced Force of Units and will continue to be
    a relevant force capable of performing all missions across the national
    security strategy spectrum. This will be accomplished by continued
    integration into peace and warfighting operations.
        We will continue to provide Military Support. While the Federal
    mission remains at the forefront, the National Guard will continue to
    serve the States during domestic emergencies and support community
    programs that contribute to the stability, tranquillity, and well-being
    of this nation.
                        national guard people and values
        The National Guard's ability to handle missions at home and abroad
    flows from our people--dedicated men and women who carry on the militia
    tradition of service to nation and neighbor. It is imperative that we
    continue to attract talented new members and train them to the highest
    standards. The National Guard is not a People's Army or a People's Air
    Force--it is the people. We are proud that half of the signers of the
    Declaration of Independence were National Guardmembers, as well as 18
    of the 41 Presidents, but we are equally proud of the fact that the
    475,000 patriots serving today reflect the full demographic scope of
    modern American society. Representing more than 2,700 communities from
    all 50 States, the District of Columbia, Guam, the Virgin Islands, and
    Puerto Rico, these volunteers infuse into the National Guard a
    diversity that is one of our greatest strengths--diversity of
    education, political affiliation, vocation, and social and economic
    status, as well as race, color, creed, and gender. Quality and
    performance are the only discriminators the National Guard applies for
    promotion and opportunity, and we are richer for it. By the end of
    fiscal year 1996, the Army National Guard minority population had
    increased one full percentage point to 25.6 percent, and the Air
    National Guard had increased a similar amount. Vermont has recently
    appointed the nation's first female Adjutant General, and we continue
    to work closely with State- and national-level councils to identify and
    develop minority leaders.
        Last year was a relatively good one for recruiting and retention as
    the National Guard proved to be the ``force of choice'' for patriotic
    young Americans. Our sincere commitment to fair and equal treatment for
    all, quality training, and superior leadership all contributed to that
    success, as did the Montgomery G.I. Bill and the education assistance
    programs offered by some States. We see challenges ahead due mainly to
    the turbulence of ongoing military restructuring and the high
    operations tempo demanded in the current national security environment,
    but whatever the recruiting climate, our standards will remain high.
        The National Guard is more than a job--it is a way of life
    requiring exceptional commitment as well as performance skill. The core
    values we nurture as an institution--integrity, loyalty, dedication,
    service, selflessness, compassion, family, and patriotism--represent
    the finest qualities of our national character. These values, and the
    beliefs that inspire them, are steel threads woven into the fabric of
    American life, strengthening and enriching it. We are confident in our
    ability to continue drawing talented men and women from our communities
    into the National Guard Family to perpetuate these values and our
    militia heritage.
        The National Guard is a family business. We extend the same loyalty
    and care to the families of our soldiers and airmen that Guardmembers
    themselves receive. Our Family Partnership Program is one of the most
    extensively networked in the Department of Defense and has proven
    itself repeatedly during State activations and Federal mobilizations.
    Reciprocally, there is a high rate of volunteerism and community
    service by the families of Guardmembers which further perpetuates the
    National Guard neighbors-taking-care-of-neighbors spirit that has won
    us public trust.
        National Guard military technicians and Active Guard/Reserve (AGR)
    personnel merit special mention because they provide the full-time
    support that is critical for our current high state of readiness. They
    manage the comprehensive training programs necessary to maintain
    proficiency in the age of high-technology systems, and perform most of
    the daily equipment and facility maintenance. Their effectiveness and
    dedication had a direct impact on our ability to fulfill all State and
    Federal taskings in 1996, and to conduct other domestic programs
    designed to improve the quality of life for our friends and neighbors.
                    dual-role force with three mission areas
        In the Federal role, the National Guard is a key element in the
    President's National Security Strategy. Our mission here is to provide
    combat-ready forces during crises and contingencies, and engage
    proactively in Preventive Defense missions to promote democratic
    practices and values overseas.
        During 1996, almost 38,000 National Guard men and women deployed to
    more than 40 countries for peacekeeping and other contingency
    operations, and to conduct overseas training. The largest contribution
    was to U.S. European Command where members of the Army and Air National
    Guard were instrumental in the success of Bosnian peacekeeping and
    humanitarian support--Operations Joint Endeavor, Deny Flight, and
    Decisive Edge--and Kurdish refugee security--Operation Provide Comfort.
    Complementary support was provided to U.S. Central Command for
    Operation Southern Watch to deter further Iraqi regional aggression.
        In Operation Restore Democracy, the U.S. Atlantic Command continued
    to call on Army National Guard Special Forces and engineers for
    rotational peacekeeping support to help rebuild Haiti.
        Our ongoing support to U.S. Southern Command covers a broad variety
    of counterdrug and nation-building missions. National Guard pilots,
    engineers, medical personnel, and communications experts executed
    multiple deployments last year to Central and South America for
    important operations like Coronet Oak and Constant Vigil.
        To keep their skills sharp for U.S. Pacific Command contingencies,
    National Guardmembers performed training deployments and augmentation
    activities in several Asian and Pacific Rim countries. Hawaii Army
    National Guard maintenance specialists supported Active Component
    helicopter operations during Exercise Cobra Gold in Thailand, and the
    184th Bomb Wing, the first Air National Guard unit to fly the B-1B
    bomber, demonstrated its long-range prowess during an exercise in
    Indonesia.
        While the National Guard's primary mission is to fight and win the
    nation's wars, we also are performing an increasingly important
    National Security Strategy function through Preventive Defense
    operations. Foremost among these is our four-year-old State Partnership
    Program. Working in coordination with the Joint Chiefs of Staff, the
    National Guard has fostered 21 State partnerships in Eastern Europe and
    the Former Soviet Union, and 4 State partnerships in Central and South
    America. The State Partnership Program enhances American security by
    helping to forge relationships with friendly nations through which we
    can demonstrate--by the example of the American citizen-soldier/
    airman--the role of the military in a democratic society. This is
    possible because the National Guard is both a professional force and a
    force of professionals, making us uniquely qualified to extend the hand
    of friendship from grassroots America to any nation in the world where
    the diverse military and community skills of our people can help foster
    democratic values. Our Guardsmen and women serve as role models in
    making a compelling case for the ideals of democracy, professionalism,
    and deference to civilian authority.
        Under the State Partnership Program, Guardmembers visit partner
    countries in Traveling Contact Teams and provide detailed information
    on requested civil-military topics such as air search and rescue,
    medical evacuation, personnel management, budgeting, military law,
    professional military education, disaster response planning, and family
    programs. This provides an opportunity to demonstrate both the military
    effectiveness of militia men and women and their capacity for
    humanitarian and civil works that enhance the quality of life for all
    citizens. The program continues to show its potential in Eurasia where
    many newly democratic governments see our National Guard as a model on
    which to rebuild their own defense establishments. Last year, in
    affiliation with the North Atlantic Treaty Organization's Partnership
    for Peace initiative, National Guardmembers provided peacekeeping
    training to soldiers from Lithuania, Latvia, and Estonia; flew
    humanitarian medical airlift missions in Kazakhstan; and helped
    construct the first military chapel in Moldova, to name just a few of
    the activities conducted under this valuable bilateral linkage. We were
    active in our own hemisphere, as well, furnishing engineering, medical,
    and other support to Latin American neighbors with pressing social
    problems. Belize, Panama, and Costa Rica were some of the countries in
    which National Guard men and women employed their military and civilian
    skills to improve the lives of our neighbors while at the same time
    receiving excellent training.
        In our Constitutionally mandated second role, the National Guard
    mission is to provide emergency support to the governors of our States
    and territories. In 1996, we had another record year. On 419 occasions
    the National Guard responded when our fellow Americans needed help to
    cope with the ravages of blizzards, floods, hurricanes, forest fires,
    tornadoes and other disasters, providing military assistance to local
    civil authorities and easing the load for our neighbors. During the
    ``Blizzard of 1996,'' Guardmembers answered the call in 11 Eastern
    Seaboard States to help dig out from under three feet of snow,
    providing emergency transportation and medical support. When the post-
    winter melt brought treacherous flooding, many were recalled to rescue
    stranded victims and remove debris. Three major hurricanes--Bertha,
    Fran, and Hortense--lashed our coastlines from Puerto Rico and the
    Virgin Islands to Virginia. Again, your National Guard met the
    challenge swiftly and skillfully with assistance that saved lives and
    helped set communities on the path to recovery from devastation. And in
    Alaska, California, Colorado, and Oregon, the heroism of the nation's
    citizen-soldiers and airmen battling forest fires that raged across the
    countryside helped preserve treasured national timberland resources,
    personal property, and lives. National Guardmembers likewise provided
    recovery support and other special skills in responding to aircraft and
    train disasters, including the tragic crash of TWA Flight 800. On top
    of all this, nearly 12,000 Army and Air Guardmembers from 47 States and
    territories supported the Centennial Olympic Games in Atlanta last
    summer in the largest domestic operation we have ever undertaken,
    working unheralded behind the scenes to make the most heavily attended
    games in Olympic history a source of justifiable pride for all
    Americans.
        In discussing our third mission area, it is important to point out
    that a strong, broadly skilled National Guard is important to this
    great nation for several reasons. We are a warfighting organization,
    yes, and a resource of great value to the States and territories for
    disaster response. But we are also something more, as captured in the
    phrase: The National Guard ``Adds Value to America.'' The training and
    discipline that enable our soldiers and airmen to serve country and
    State so well also equip them to extend helping hands into their own
    communities to make them better places in which to live and work. Our
    third mission area derives from the unique character of the National
    Guard as a hometown organization with deep community roots. In this
    capacity, we conduct youth programs, provide health care, and perform a
    variety of other community service activities that promote good
    citizenship and help ease the burdens of the disadvantaged. These
    programs focus the talents of our outstanding young men and women--and
    often their families, as well--on their own towns and cities where they
    conduct mentoring and educational activities for young people who
    desperately need firm guidance from caring adults, help adult Americans
    develop the skills to pursue a better life, and foster the values that
    strengthen America.
        Currently, 29 States and territories are involved in highly
    successful youth programs. The ChalleNGe program remains one of the
    National Guard's most effective intervention programs for at-risk
    youth. Directed at unemployed high school dropouts, it provides
    academic instruction leading to a General Educational Development (GED)
    diploma, and training in job skills and life-coping behaviors.
    ChalleNGe corpsmembers also participate in community service projects
    where they learn the personal rewards of positive citizenship.
    ChalleNGe consists of a five-month residential phase followed by a year
    of mentoring from specially trained individuals in the corpsmember's
    community. Since its inception four years ago, the ChalleNGe program
    has graduated almost 10,000 young men and women in the fifteen States
    where it is now operating. As testimony to its effectiveness, over 80
    percent of ChalleNGe graduates have attained their GED, an impressive
    number considering that all participants originally were high school
    dropouts.
        The Youth Conservation Corps (YCC) is similar to ChalleNGe and is
    directed at the same at-risk youth population. Employing many of the
    same instructional components, YCC uses military-based training to
    improve life skills and enhance the employment chances for students
    dropping out of secondary schools. It is underway in four States and
    territories and has graduated over 500 young men and women since its
    inception four years ago.
        The STARBASE (Science and Technology Academics Reinforcing Basic
    Aviation and Space Exploration) program is oriented primarily towards
    students and teachers from inner city schools. It exposes them to real-
    world applications of math and science through experiments and
    simulations--``hands-on learning'' viation and space-related fields.
    STARBASE is conducted in fourteen States and territories and annually
    reaches over 20,000 students.
        These programs have been highly successful and merit continued
    support. In addition to producing better citizens, they benefit the
    American taxpayer in terms of cost avoidance by reducing the burden on
    social programs.
                      counterdrug operations and programs
        Illegal drugs continue to pose a serious threat to American society
    and remain one of the country's costliest problems. The men and women
    of the Army and Air National Guard have entered into a dedicated
    partnership with other government agencies to fight this scourge of our
    cities and citizens. We are proud of our role in directly supporting
    four of the five goals in the President's National Drug Control
    Strategy.
        Counterdrug operations constitute an increasingly important series
    of functions for the National Guard and range across all three of our
    mission areas. Under Title 10, Army and Air National Guardmembers
    support the Commanders-in-Chief in their detection and monitoring
    mission by providing aerial surveillance, radar tracking, linguist
    support, and similar assistance outside of the continental United
    States. The recurring deployments to Panama for Operations Coronet
    Nighthawk and Constant Vigil are excellent examples.
        Under Title 32, the National Guard provides equipment and direct
    support to law enforcement agencies within the States and territories
    to battle drug smuggling, distribution, and domestic cultivation. Our
    assistance to State and local officials employs the superior skills of
    National Guard personnel in a broad variety of activities that range
    from providing intelligence analysis, linguistic support,
    communications support, and marijuana eradication to inspecting cargo,
    conducting day and night surveillance missions, managing counterdrug
    operation logistics, and boarding up crack houses. Last year, 900
    National Guardmembers from eight States built a network of roads and
    fences along the California-Mexico border that successfully curtailed
    cross-border narcotics trafficking in the target area.
        And in our community-focused domestic role, we remain engaged
    heavily in many of the over 8,000 separate drug demand reduction
    activities underway nationwide. Drug demand reduction emphasizes
    community coalition building, promoting anti-drug messages, youth
    encampments, fostering family values, and leadership development. In
    most cases, the National Guard provides the supporting mechanism and
    allows local community groups to take the lead. But Guardmembers and
    their families also play a significant role in contributing to a drug-
    free community environment by volunteering their time to provide anti-
    substance abuse education and serving as role models. All of our youth
    programs have embedded drug-prevention themes. Last year, we entered
    into partnership with the Community Anti-Drug Coalitions of America,
    creating a truly formidable combination of homebased counterdrug
    resources that will extend the fight into thousands of new communities.
        Over 3,000 National Guardmembers participated in almost 10,000
    counterdrug missions in 1996 and assisted local, State, and Federal law
    enforcement officials in seizing almost 400 tons of processed marijuana
    and 90 tons of cocaine; accomplishing over 128,000 arrests; and
    confiscating more than 16,000 weapons, 8,500 vehicles, and almost $340
    million. It is important to note that this support--which the nation's
    law enforcement agencies now consider an indispensable weapon--was
    provided on a volunteer basis over and above normal training and
    mission requirements. As patriots imbued with a community-based set of
    traditional values, the soldiers and airmen of your National Guard can
    be counted on to remain at the forefront of the counterdrug effort.
                 posturing for tomorrow--a force in transition
        As responsible stewards for the American people, we must continue
    evolving the National Guard cost-effectively into a force that is
    structured, organized, trained, and equipped for the Federal and State
    missions of the 21st century. Our first priority is stabilizing and
    maintaining a balanced force structure and end strength. There will
    continue to be mission and alignment changes that enhance the National
    Guard-Reserve-Active Component but these have to be managed smartly to
    minimize turbulence and ensure the resulting National Guard force can
    meet its Federal and State mission taskings. The National Guard is a
    tremendous repository of capability that can make an extremely cost-
    effective contribution to national security given the stability to plan
    accordingly.
        The National Guard's second priority is the full resourcing of
    readiness requirements. With a national defense strategy that relies on
    the contributions of all three elements of the Total Force, it is
    imperative that each element be funded at levels which meet the
    modernization, personnel, and operations standards of today. While
    National Guard modernization in the past has depended heavily on the
    ``cascading'' of equipment from the Active Component, this process is
    nearing completion and our increased role in modern defense operations
    supports the direct funding of major weapon systems and equipment
    modernization.
        Our third priority is the sustainment of our infrastructure.
    Current and future missions mandate the modernization of basic
    infrastructure through both the construction of new facilities and the
    renovation of older existing ones. Continuation of the current downward
    funding spiral in this area will result in lower readiness, morale, and
    retention.
        The National Guard will work all of these priorities hard with our
    Total Force partners to fulfill our joint obligation to provide
    national leadership and the public with the best trained, most capable
    and ready defense forces possible.
        This year, the Army National Guard is on track to meet its fiscal
    year 1999 programmed build-down end strength of 367,000. The 15
    enhanced Separate Brigades that will be the centerpiece of our early
    deployment support for wartime contingencies under the fiscal year 1999
    force structure plan have begun transitioning into their new roles and
    are on the way to establishing the readiness levels that will give them
    critical combat punch. Other elements of restructuring include the
    Guard-Reserve force-balancing exchange of 12,000 positions--which was
    agreed to in the 1993 Offsite and will be completed this year--and a
    sweeping Division Redesign program that will affect some 50,000
    Guardmembers in over 30 States. Under this Army-approved plan--
    originally proposed by the National Guard--12 combat maneuver brigades
    will convert to combat support and combat service support units,
    providing the Active Component with augmentation in vital war
    mobilization and sustainment fields while ensuring that the National
    Guard retains the overall force balance necessary to meet mission needs
    at all levels.
        Equipment modernization--which still remains key to readiness--is
    progressing acceptably within the Army National Guard. Initiatives are
    in work to further cement the National Guard-Active Component personnel
    integration process. The first Active Army officer to command an Army
    National Guard unit since World War II is in place with Louisiana's
    141st Field Artillery Battalion, and the National Guard is
    participating actively in the Army's Force XXI process. On all counts,
    the Army partners of the Total Force team are in synch professionally
    and personally, working together to give America the cost-effective
    combat land force it requires.
        The Air National Guard is likewise transitioning through a series
    of force structure and mission changes in full partnership with the
    Active Component. Last year, with the assumption of air defense sector
    responsibility by Washington's Western Air Defense Squadron, the Air
    National Guard took full control of Air Combat Command's 1st Air Force
    and all of its subordinate Regional and Sector Operation Control
    Centers. As 1st Air Force commander, Major General Phil Killey is the
    first Air Guardsman to command a numbered Air Force. In activating the
    137th Space Warning Squadron, the Colorado Air National Guard fielded
    the Air Force's only mobile, survivable Space Warning Squadron.
    Kansas's 184th Bomb Wing became the first Air National Guard unit to
    achieve initial operational capability in a strategic long-range, deep-
    strike weapon system--the B-1B bomber--and will be followed in the
    coming year by Georgia's 116th Bomb Wing. Virginia's 192d Fighter Wing,
    the first of five Air National Guard units programmed to add tactical
    reconnaissance capability, employed its new reconnaissance pods to
    excellent effect in Bosnia. Several other units engaged in mission or
    equipment transitions last year, many are underway this year, and more
    lie ahead in fiscal year 1998. While the Air Force and the Air National
    Guard traditionally have enjoyed a highly cooperative relationship,
    personnel integration will be carried one step further this summer when
    Connecticut's 103d Fighter Wing becomes the first Air National Guard
    unit in recent history to be commanded by an officer of the Active Air
    Force.
                         poised to dominate the future
        The quality and readiness of today's Army and Air National Guard
    are indisputably high. As Air Force Chief of Staff General Ronald R.
    Fogleman testified in February: ``Our combatant commanders long ago
    ceased to ask whether the Air Force units deployed to their theaters
    are active duty, Guard, or Reserve. Warfighting commanders confidently,
    and rightly, expect that any unit from across our Total Force can
    provide the capabilities they need.''
        Getting there has been painful, though, and the financial
    challenges are daunting. Our task this year and in the years ahead is
    to continue developing and refining the skills and capabilities that
    not only keep us relevant to national strategy and the warfighters'
    needs but also allow us to help shape that strategy and anticipate
    those needs. On the threshold of the information revolution, the
    National Guard is an eager exploiter of new information technology to
    cut costs, accelerate responsiveness, increase individual and unit
    effectiveness, and examine potential future missions.
        The National Guard now uses distance learning to provide military
    education and occupational skill training at local units. We are
    expanding the Distance Learning Network further this year and will
    continue to do so until we have full linkage between all units. The
    true value of this exceptionally capable integrated system is becoming
    more apparent every day as new ways are discovered to exploit its
    telecommuting and training opportunities. For example, there is strong
    potential in the system for community-shared usage, and for time-share
    partnering with other Government agencies like the Federal Aviation
    Administration and the many agencies involved in counterdrug
    operations. Under the National Guard's dynamic sponsorship, the
    Distance Learning Network is rapidly becoming a national
    telecommunication resource of consequence.
        The Reserve Component Automation System, the personal computer
    network that will be linked to every armory and Army reserve center in
    the nation to provide automated information management and decision-
    making support, also continues to develop on track. This valuable tool
    of the Army Reserve Component greatly simplifies personnel management
    and resourcing. The Army National Guard also is breaking new ground in
    the application of technology for simulation. Projects like SIMITAR
    (Simulations In Training for Advanced Readiness) show great promise,
    and equipment like the GUARDFIST II (Guard Unit Armory Device Fullcrew
    Interactive Simulation Trainer II) and ARMS (Aviation Reconfigurable
    Manned Simulator) have proven they can provide critical training at a
    substantial cost discount.
        The Air National Guard employs the term ``CyberGuard'' to describe
    a synergistic system-of-systems approach to the future intended to
    encompass all aspects of the National Guard of the 21st century. More
    than just fiber-optic computer linkages, it involves developing new
    approaches to organizational decision-making, work processes, training,
    infrastructure maintenance, and management of the National Guardmembers
    of tomorrow. From producing paperless offices and expanding the
    employment of the Air National Guard's satellite-based Warrior Network
    to investigating the employment of the Air National Guard for new
    missions--such as the management of Unmanned Aerial Vehicles (UAV), or
    the assumption of responsibility for one or more of the Air Force's
    Battle Labs--``CyberGuard'' is marking a new path into the future.
        At the beginning of this testimony, I noted that as the U.S.
    military continues to restructure itself into a smaller, predominantly
    home-based power projection force, the National Guard will continue to
    pick up a larger share of the load. This trend is dictated by the
    simple economics of defense in our current budget environment.
    Fortunately, the technologies of today and tomorrow make it possible to
    strengthen national defense even as new duties are transferred to your
    militia men and women. While Guardmembers will always be found on the
    ground or in the skies over distant battlefields when America's
    national security is threatened, many of their future war preventing
    and warfighting operations may well be conducted from the American
    heartland. The same advanced skills and technologies that we are
    eagerly pursuing to provide more efficient and cost-effective training,
    and more responsive resource utilization--those that gave us the
    Distant Learning Network and will soon produce advanced unit training
    devices and simulators with interactive networking capabilities--will
    make it possible to conduct much of the business of defense via long
    distance.
        Looking ahead, there are a number of areas where the National Guard
    can help ease the national security budget burden while fulfilling
    existing defense needs or meeting emerging ones. One potential future
    mission area is serving as a Domestic Anti-Terrorism Force, a
    Constitutional responsibility that harkens back to the earliest days of
    the Minuteman tradition. Another entails providing domestic and
    international Anti-Terrorism Training, a field in which the National
    Guard's extensive experience in interagency and foreign training can be
    put to excellent use, along with the capabilities of the Distant
    Learning Network and World Wide Web access. Information Warfare holds
    particularly promising opportunities. Many traditional Guardmembers are
    full-time computer professionals and communications experts, working
    daily at the cutting edge of computer and information technology
    applications. Information Warfare is a potential future ``combat arms
    specialty'' in which expert security specialists armed with only a home
    computer and modem could prove critical in defending our own
    capabilities and defeating those of an enemy. Your National Guard has a
    ready trained force of such experts, waiting only to be tasked.
        National Guard men and women also have a greater role to play in
    Expanded Peacetime Engagement, making use of their combined military
    and civilian skills to build bridges to America for those who would
    emulate us. Remote Weapon Systems offer another area in which
    Guardmembers can employ their military and civilian skills in concert
    in performing important defense missions like the operation of UAV's
    and the other unmanned combat systems destined to emerge. There is a
    greater role for the National Guard to perform in supporting U.S. Space
    Operations. Satellite and space system management, the ultimate in
    telecommuting, is a natural for National Guard professionals. And as
    the nation perfects launch-on-demand and other rapid reaction space
    systems, the National Guard can field teams of highly trained experts
    to augment Active Component launch staffs. Further, the diverse
    professional skills of National Guard scientists and technologists,
    coupled with their military training and discipline, allow the National
    Guard to serve as a pool of unique skill resources for America's manned
    space activities.
        Finally, the eventual fielding of National Missile Defense systems
    promises another excellent National Guard-mission fit, capitalizing on
    our technical strengths to provide the defense of America to which
    America's militia has been dedicated for so long. These and other
    similar future mission areas, highly technical and predominantly home-
    based, offer win-win opportunities to satisfy national security needs
    cost-effectively while providing many dedicated Americans whose
    occupations would otherwise prohibit it a chance to contribute to their
    nation's defense.
        The future offers exciting new opportunities for expanding the role
    your National Guard men and women play in America's defense. These
    militia men and women constitute a low-cost, high-quality, reliable,
    commercial-off-the-shelf resource that comes ruggedized, missionized,
    and ready for service. They are proud to be full partners in the Total
    Force, accessible and ready to serve, and are committed to moving ahead
    in an era of transition, continuing the proud militia tradition in the
    unfolding era of cyber-warfare.

                  statement of Maj. Gen. William A. Navas, Jr.

        Senator Stevens. General Navas.
        General Navas. Thank you, Mr. Chairman, members of the
    committee.
        I have submitted a statement for the record. I would like
    to make some brief comments to expand on that comment.
        We see the Army National Guard as a Guard in transition,
    and in that transition period we see basically three functions
    that the Guard is providing. First is providing highly trained,
    ready units into high priority units, our force package units;
    second, to provide a repository of capability as the Army moves
    from to a capabilities-based force versus a threat-based force;
    and third, very important, to be able to provide the domestic
    support to our communities.
        It has been a very successful year last year. Fiscal year
    1996 we completed our drawdown to the numbers of 367,000 in the
    Guard. Our budget continued to go down. Yet we maintained our
    end strength. Last year was a banner year where we made our end
    strength numbers and our attrition rate went to an all-time
    low. This year as we speak almost halfway through the year, we
    are above our end strength. We are making our end strength. We
    are almost 2,000 soldiers above our end strength, and our
    attrition rate is an annualized 16 percent.
        Our retention is the best ever. We have exceeded our goals
    of 70 percent goal of first termers. We are at 87 percent
    retention rate in first termers. Our category is an 80 percent
    goal; it is at 110. Our quality is very good. We have 100
    percent high school equivalency with 83 percent high school
    diploma graduates. Our category IV is less than 1 percent or
    less than 2 percent.

                               prepared statement

        So as we evolve and continue in this transition, we will
    like to maintain that level of readiness, that level of support
    that we have been providing, not only to our communities but to
    the CINC's. But we see some challenges ahead that we will have
    to deal with as we become the good stewards of the public trust
    placed on us to maintain those levels in the Army National
    Guard.
        I appreciate the opportunity to be before your committee
    and I look forward to your questions.
        [The statement follows:]
             Prepared Statement of Maj. Gen. William A. Navas, Jr.
        The Army National Guard continues to accomplish ever increasing
    numbers of missions while simultaneously restructuring/modernizing its
    force structure; leveraging resources and infrastructure/installations;
    and recruiting, training and retaining quality soldiers. Greater
    reliance on the community-based component of America's Army, in a
    period of austere defense budgets and high demand for overseas
    presence, has enabled our soldiers to participate in a broad range of
    domestic and international requirements traditionally assigned to
    active forces.
        During fiscal year 1996, the Army Guard provided a record 1.6
    million workdays in support of both federal and state missions. More
    than 25,200 soldiers deployed overseas in support of operations and
    training for a total of 417,506 workdays. Of this total, 331,038
    workdays were directed to Operational Mission Support (OMS) in relief
    of active Army operations/personnel tempo. The OMS missions were
    supported by the Office of the Assistant Secretary of Defense for
    Reserve Affairs and funded with $7.3 million in Reserve Component-to-
    Active Component support funding.
        The Army Guard also provided over 389,700 workdays in support of
    the Presidential Selected Reserve Call-up (PSRC) for Operations Restore
    Democracy (Haiti) and Joint Endeavor (Bosnia) as well as 19,177
    workdays in Temporary Tours of Active Duty (TTAD) to various overseas
    and continental United States Army commands. Additionally, a record
    716,120 state active duty workdays were provided to support 419 state
    call-ups for various emergencies, natural disasters (Hurricanes
    ``Fran'' and ``Hortense'') and 1996 Summer Olympics requirements.
        These mission requirements were accomplished simultaneously with
    the inactivation of 145 Army Guard units, personnel reductions in
    excess of 17,700 positions, changes to unit missions as well as
    individual soldier job reclassifications, and ambitious annual training
    and equipment modernization programs.
                                     budget
        The Army National Guard is funded by three separate budget
    appropriations: Personnel (NGPA), Operations and Maintenance (OMNG),
    and Military Construction (MCNG). The President's fiscal year 1998
    appropriations budget of $3.2 billion NGPA, $2.25 billion OMNG and $.45
    billion MCNG, totaling $5.5 billion for the Army National Guard,
    represents only about 9 percent of the Army's proposed $60 billion
    budget. The Guard requires a budget of approximately $17,000 for each
    Army Guard soldier to train to levels of individual proficiency.
        The Army National Guard operates 3,160 owned and 62 leased armories
    in 2,700 communities in all 50 states, Puerto Rico, the Virgin Islands,
    Guam, and the District of Columbia. In addition, the Army National
    Guard federally supports the operation and maintenance of more than
    16,000 training, aviation, and logistical facilities located throughout
    the nation.
        During fiscal year 1996, 46 major construction projects authorized
    from 1992-1996 were awarded for a total of $187 million, of which 21
    projects (70 percent of all fiscal year 1996 projects) were awarded in
    the first year of appropriation. An additional 34 projects are
    scheduled to be awarded in fiscal year 1997. The fiscal year 1996
    appropriations of $137.11 million for 32 projects included $124.402
    million for major construction, $7.408 million for planning and design,
    and $5.3 million for unspecified minor construction.
        Congress appropriated $78.086 million for 16 projects in fiscal
    year 1997. The appropriated amount includes $52.586 million for major
    construction, $20 million for planning and design, and $5.5 million for
    unspecified minor construction.
        As a result of the DOD-wide Congressional plus-up for Real Property
    and Maintenance in fiscal year 1996, $234.8 million was provided for
    real property and maintenance, about $66.8 million more than in fiscal
    year 1995. This program pays for salaries required to support facility
    operations and maintenance as well as paying for utilities, minor
    construction, maintenance and repair projects and supplies required to
    extend the useful life of National Guard facilities. The federally
    supported square footage grew from 55.6 to 62.6 million square feet and
    equipment modernization and aging facilities are increasing overall
    maintenance requirements. In fiscal year 1988, $3.41 per square foot
    was available to operate and maintain Army National Guard facilities.
    In fiscal year 1996, that amount was $3.59 per square foot, or $2.86 in
    constant fiscal year 1988 dollars.
                                force structure
        The Army National Guard is authorized a 405,000 force structure
    allowance (required spaces) and 366,516 end strength (authorized
    spaces) for fiscal year 1997. This represents the targeted fiscal year
    1999 end state for the Army Guard, a cut of 38,484 positions (resulting
    from 1993 Off-Site Agreement which restructured the Army's reserve
    components).
        Currently, the Army National Guard is a balanced land force with a
    force structure allowance comprised of 54 percent combat, 16 percent
    combat support, 21 percent combat service support and 9 percent
    training/mobilization support. The mix of forces is projected to remain
    at current levels through fiscal year 1999.
        The Guard's highest priority units are the approximate 200 early
    deploying Force Support Package (FSP) units, 15 early deploying
    enhanced Separate Brigades (including one armored cavalry regiment) and
    two Special Forces Groups. In September 1996, all 15 enhanced Separate
    Brigades began their transition to achieve fiscal year 1999 readiness
    goals. All these units are aligned for the warfight and apportioned to
    warfighting commanders in chief.
        Army National Guard enhanced Separate Brigades are organized and,
    most importantly, resourced to mobilize, train and deploy to the
    warfight within 90 days after initial notification (mobilization). They
    are trained to respond to the ever-present threat of regional conflicts
    and/or to reinforce Active Army forces in crisis. They are presently
    configured as seven ``heavy'' brigades (with armored/mechanized
    vehicles), seven standard infantry brigades and one armored cavalry
    regiment.
        When one considers the overall strength and combat power of these
    high priority units, the Guard is capable of projecting nearly 110,000
    trained and equipped soldiers worldwide.
        In addition to the high priority units, the Guard maintains eight
    fully structured divisions, two separate brigades, and a scout group in
    strategic reserve along with a complement of support training/
    mobilization structures in each state. These forces are required to
    react to extended crises or backfill active forces for an extended
    period. Additionally, these units can serve in peace operations that
    would require an extended commitment, serve as a deterrent hedge, form
    a basis for expansible force structure and provide domestic mission
    support during civil unrest or natural disasters. The eight divisions
    are presently configured as four ``heavy'' (with armored/mechanized
    vehicles), three ``medium'' (with mechanized infantry) and one
    infantry. These organizations are funded and resourced at equipment and
    personnel levels commensurate with their strategic role. At current
    levels of resourcing, these divisions are highly cost effective
    national assets that require less than 4/10ths of one percent of the
    Department of Defense Budget.
                           restructure/modernization
        The modernization of the Total Army's field artillery force
    resulted in the Army Guard being funded for 16 PALADIN self-propelled
    M-109A6, 155 mm howitzer battalions. Nine battalions will be placed in
    echelons above division (EAD) field artillery brigades and six will go
    into the heavy enhanced Separate Brigades, and one will go to a
    strategic reserve brigade. Fielding will take place from fiscal year
    1998 through fiscal year 2001. Planning for Multiple Launch Rocket
    Systems (MLRS) battalions to be fielded to Kansas and South Carolina
    have been finalized and fielding will be completed by fiscal year 1997,
    bringing the total to 10 ARNG battalions. One field artillery battalion
    in Florida converted from the eight-inch cannon system to the MLRS.
    Fiscal year 1996, also saw AVENGER activations in New Mexico. In fiscal
    year 1997, AVENGER activations will occur in Florida and Ohio and MLRS
    activations in Florida, Kansas and South Carolina. In Air Defense
    Artillery, Avenger/MANPADS (Man Portable Air Defense System) battalions
    were approved for the Army Guard as replacements for current Hawk and
    Chaparral battalions. Eight battalions will activate in fiscal year
    1998.
        Other modernization programs included M-1A1 Tanks, Bradley Fighting
    Vehicles, Multiple Launch Rocket Systems (MLRS), PATRIOT and Avenger
    missiles, and Single Channel Ground Airborne Radio Systems (SINCGARS).
    In fiscal year 1996, the Army Guard fielded the M-1A1 Abrams Tanks to
    the 30th and 81st Infantry Brigades. Three tank battalions and one
    division cavalry squadron fielded the M-1IP Abrams Tank. The 30th
    Infantry Brigade and the 31st Armor Brigade received the M-2A0/M-3A0
    Bradley Fighting Vehicle. During fiscal year 1997, the ARNG will field
    the M-1A1 Abrams Tank to the 31st Armor Brigade. By the end of fiscal
    year 1997, the ARNG will complete the fielding of the M-1 Abrams Tank
    to all armor and cavalry units.
        The Army Guard completed over 800 aircraft movements during fiscal
    year 1996. We accepted the transfer of 413 aircraft into our units from
    the production line, refurbishment program, the Army Reserve, and as a
    result of cross-leveling due to force structure changes within the Army
    Guard. As the number of modernized systems increased, 397 of our oldest
    aircraft were retired from service. While aviation fleet modernization
    continues, the Army Guard is projected to have shortages in UH-60
    Blackhawk utility helicopters that will greatly impact the Medical
    Evacuation (MEDEVAC) mission. The Guard is also planning to field UH-1H
    aircraft assigned to the Light Utility Helicopter Battalions with new
    Comanche engines, thus providing a ``bridge'' for future fielding of
    the Comanche.
        During fiscal year 1996, Dedicated Procurement Program (DPP) funds
    were used to field SINCGARS to 50 Force Support Package (FSP) units.
    The remaining FSP units will complete SINCGARS fielding in fiscal year
    1998. Headquarters, Department of the Army (DA), will field all
    remaining Echelon-Above-Division (EAD) Artillery, Separate Brigades,
    all non-FSP and non-Separate Brigade units, and Divisional units. The
    EAD Artillery fielding starts in fiscal year 1997 and will be completed
    in fiscal year 1999. Fielding to enhanced Separate Brigades is underway
    with four Brigades fielded and a fifth to be completed in December
    1996. The remaining ten Brigades will receive SINCGARS by fiscal year
    2001. The Department of the Army estimates completing SINCGARS fielding
    to the ARNG by fiscal year 2006.
        On May 23, 1996, the Secretary of the Army approved the plan to
    convert limited Army Guard combat structure to reduce the Army's combat
    support/combat service support shortfall. The Secretary of Defense
    accepted the plan on August 26, 1996, and expressed interest in the
    active Army--Army National Guard Integrated Division concept. If
    funding is programmed and budgeted, 12 ARNG combat maneuver brigades
    will convert to CS/CSS.
        The ARNG is actively in the Force XXI process through its
    integration in the redesign of the Army's operational forces and the
    participation of Guard units in Advanced Warfighter Experiments
    designed to validate force redesign from brigade to EAD level.
        Total Army Analysis 03 also determined that approximately 20,000
    personnel spaces of force structure will be converted from
    Transportation Corps to Quartermaster Corps. The focal point of this
    conversion was the acquisition of 75 Truck Companies and the conversion
    of 13 Combat Support Battalion Headquarters Detachments to Petroleum
    Supply Battalion Headquarters. These conversions represent an overall
    increase in combat support capabilities for the Army National Guard.
        On August 14, 1996 a State Area Command (STARC) Redesign Study was
    initiated over an 18-month period. In-progress reviews have been
    conducted and now occur quarterly with the Director, Army National
    Guard.
        By fiscal year 1999, the Guard will comprise more than half the
    Army's total combat power and more than a third of its combat support/
    combat service support strength. In field artillery alone, the Guard
    will comprise 67 percent of the Army's force. These figures illustrate
    the significance of the Army Guard as part of the Total Force. More and
    more, America will depend on the Army National Guard to provide its
    domestic support and global missions alongside the active Army.
                                   recruiting
        The Army National Guard end strength at the close of fiscal year
    1996 was 369,976 or 99.2 percent of the 373,000 authorized positions.
    This remarkable recruiting effort was achieved at a time when
    operational requirements for the Guard reached an all time high with
    1.6 million workdays in support of federal and state missions.
        The compositions of officer, enlisted and minority categories are
    summarized as follows:

    ----------------------------------------------------------------------------------------------------------------
                       Category                       Strength                        Percentage
    ----------------------------------------------------------------------------------------------------------------
    Officer.......................................       41,834  97.5 percent of authorized.
        Black Officers............................        2,743  6.6 percent of assigned.
        Hispanic Officers.........................        1,615  3.9 percent of assigned.
        Other Minority Officers...................        5,364  12.8 percent of assigned.
        Women Officers............................        3,456  8.3 percent of assigned.
    Enlisted......................................      328,142  99.4 percent of authorized.
        Black Enlisted............................       55,254  16.8 percent of assigned.
        Hispanic Enlisted.........................       23,373  7.1 percent of assigned.
        Other Minority Enlisted...................       89,234  27.2 percent of assigned.
        Women Enlisted............................       28,362  8.6 percent of assigned.
    ----------------------------------------------------------------------------------------------------------------

        Non-prior service accessions was 23,511 or 38.9 percent and prior
    service was 36,933 or 61.1 percent of assigned strength. Of all non-
    prior service accessions, 100 percent had high school or equivalent
    degrees with 55.6 percent scoring in the highest test categories. Only
    1.7 percent scored in the lowest test categories.
        The Army National Guard is projected to cut 6,000 authorized spaces
    by the end of fiscal year 1997 with an end-strength of 366,516
    authorized positions.
                                     safety
        In fiscal year 1996, the Army Guard experienced the fewest number
    of accidents in its history. Both ground and aviation safety
    experienced milestone years. Much of this success can be attributed to
    the Army National Guard's accident prevention program ``Be A Part of
    the SafeGuard Team''. The program included a videotape by the Director,
    Army National Guard, explaining his safety philosophy and several other
    promotional and educational items. Ground accident prevention focused
    on lightening strike prevention, tactical safety, and safe parachute
    operations. The aviation accident prevention program emphasized
    avoiding rotor blade tree strikes while conducting low level flight
    operations. In occupational health, the Army National Guard instituted
    a automated tracking program to monitor the health of employees that
    work in hazardous industrial areas.
        Army National Guard aviation experienced zero Class A flight
    accidents in fiscal year 1996. This exceptional accomplishment was
    obtained despite an aggressive flying hour program of over 310,000
    hours which included challenging tactical training, multi-ship night
    vision goggle training and operational missions including overseas
    deployments, support to the states for disaster relief, and support of
    law enforcement in the war on drugs. The Army National Guard has flown
    over three years and one million flight hours while experiencing only
    one Class A flight accident. The three year Class A accident rate is .1
    accidents per 100,000 flight hours, the lowest rate in the history of
    military aviation.
        Although the Army National Guard was successful in reducing the
    number of ground training accidents, this success was offset by a
    significant increase in fatal automobile accidents. Sixty-five percent
    of the Army National accident fatalities occurred while soldiers were
    commuting to and from training in their privately owned vehicles. A
    comprehensive automobile accident prevent program is now in place.
        The Army National Guard's total commitment to soldier health and
    safety has not wavered during the challenges presented by increased
    federal and state requirements and missions, downsizing,
    reorganization, and shrinking resources.
                                   readiness
        In July 1996, the 41st Personnel Services Company, Oregon Army
    National Guard, tested a Home Station Mobilization and Direct
    Deployment to Germany for Operation Joint Endeavor. Science
    Applications International Corporation (SAIC) conducted a study that
    found Home Mobilization provided at least a five-day advantage over
    Centralized Mobilization Station and Deployment processing. The 41st
    also deployed at 100 percent military occupational specialty
    qualification (MOSQ) using in-state assets, cut down on travel
    expenses, and arrived earlier and spent more time in the theater of
    operations.
        Trends in the total funds available for schools, special training
    and annual training has declined for several years prior to fiscal year
    1996 and will continue to be one of the more difficult challenges that
    we face. It becomes apparent in these fiscally challenging times that
    declining resources require a capitalization of existing assets through
    greater efficiencies and conscientious stewardship. The National Guard
    Bureau's Operations, Training, and Readiness Directorate is fielding
    the Training, Readiness, Operations Unit Planning, Execution and
    Resourcing System (TROUPERS). TROUPERS links the Training Assessment
    Model (TAM) with State training plans and provides this information to
    NGB for resourcing. In addition, TROUPERS generates a unified national
    training plan than is shared with Forces Command (FORSCOM) and the
    Continental United States Army (CONUSA).
        Unit training was highlighted by the highly successful unit
    rotations at the Joint Readiness Training Center (JRTC) at Fort Polk,
    Louisiana and the National Training Center at Fort Irwin, California.
    Florida's 53rd Infantry Brigade and Georgia's 48th Infantry Brigade
    (MECH), in the midst of their conversion to enhanced Separate Brigades,
    made good use of their respective training opportunities. The
    preparatory leader development training, as well as the exercises
    themselves, demonstrated the viability of the enhanced Separate Brigade
    concept and the capability of the Army National Guard to fully meet its
    assigned readiness goals in a crisis or wartime scenario. As the
    enhanced Separate Brigades continue their transition, we anticipate
    similar success stories as the Army National Guard demonstrates its
    ability to train to the required standards.
        The Army National Guard also made great use of command post
    exercises again this year. As in the past, these constructive
    simulations provide a stressful environment for commanders and staff to
    practice those synchronization tasks necessary for fighting and winning
    on today's modern battlefield. An added benefit, these exercises,
    through the application of computer technology, provide the same degree
    of difficulty attaining the standards as generated by a ``full up''
    field training exercise, and all at a fraction of the cost.
        Perhaps the most promising application of technology to unit
    training is the Defense Advanced Research Projects Agency (DARPA)
    Simulations in Training for Advanced Readiness (SIMITAR) project. The
    goal of the SIMITAR project is to change the way an Army National Guard
    maneuver brigade trains. Through the application of advanced
    technologies and simulations devices, as well as innovative training
    strategies, we hope to achieve a 3 fold increase in unit training
    readiness in less time, when compared to that reported in the 1991
    Desert Shield mobilization. Indications of this potential were evident
    during the 116th Armored Brigade's annual training (AT). On the second
    day of their AT, five of seven crews qualified on Tank Table VIII--a
    considerable feat of crew level preparedness and marksmanship. This
    success followed with platoon gunnery, where all platoons passed the
    tactical evaluation phase. Observers on site, including active
    component master gunners, attribute this success directly to the
    revised training procedures. As the SIMITAR project concludes its final
    years, we expect to reap similar dividends.
        Another unit training initiative involved the integration of Army
    National Guard divisional units in support of FORSCOM's lane training
    for the enhanced Separate Brigades during the 1996 annual training
    period. Divisional units from the 40th Division (California Army
    National Guard) and 35th Division (Kansas Army National Guard) provided
    quality opposing forces to assist in the training of two enhanced
    brigades: the 41st Brigade (Oregon Army National Guard) and the 81st
    Brigade (Washington Army National Guard). This novel approach to
    training provides a dual benefit to readiness; as the enhanced brigades
    train on their missions of attack or defend, the opposing force is
    given the opportunity to train on the opposite task. This provides an
    excellent force-on-force training environment in a cost-effective
    manner. Units received observer comments from the soldiers of the 2nd
    Regional Training Brigade (Fort Lewis, Wash). In sum, this experience
    provided a multi-component training opportunity not available elsewhere
    and its success will lay the groundwork for similar activities in the
    upcoming years.
        Army National Guard simulations delivered quality gunnery and
    maneuver training with the fielding of the Abrams-Fullcrew Interactive
    Simulation Trainer (A-FIST), the Engagement Skills Trainer (EST), and
    the Guard Unit Armory Device Fullcrew Interactive Simulation Trainer II
    (GUARDFIST II). These devices train critical skills for the mounted and
    dismounted combat force at a fraction of the cost (saving in terms of
    ammunition and preparation time for training). However, the cost of
    these devices prevents their wide-spread use at unit level and limits
    the opportunities for units to overcome their traditional handicaps:
    great distance to training areas and available time. Although
    underfunded by 50 percent, the A-FIST, the success of which was visible
    during the 116th Brigade's 1995 annual training experience, allows the
    entire M-1 Abrams crew to train to Tank Table VIII qualification
    standards without firing a shot or leaving the armory. The GUARDFIST II
    suffers a similar funding shortfall, and forces a unit fire support
    team to practice its shooting skills on a live fire range. While the
    ammunition offset may be minimal, the increase readiness created by
    having a quality training opportunity available immediately in the
    armory is more than a mitigating factor. A similar situation exists
    with the EST; the only method available to train dismounted soldiers in
    fire control techniques without ammunition constraints. These virtual
    simulations devices offer the promise of increased readiness at
    decreased cost and time. They are critical to an efficient, modern
    training strategy.
        The Army National Guard led the force with their participation in a
    unique distance learning initiative mandated by Congress. The
    demonstration project involved investing over $7 million in a four-
    state system, electronically connecting armories and their surrounding
    communities to provide both education and information. The National
    Guard and communities benefit from this leap into the information age.
    In fiscal year 1996 and 1997, the Guard expanded this project as part
    of a web of primary stations through which further nodes will be
    connected, expanding its touch. While providing community-based
    learning opportunities, distance learning will also allow training in
    military occupational skills (MOS) at the local level, again overcoming
    the challenges of time and distance while adding to unit readiness.
        The Army Guard developed the Aviation Reconfigurable Manned
    Simulator (ARMS) concept as a cost effective solution to enhance safety
    and readiness through simulation. ARMS is a flight simulator
    reconfigurable to each of the Guard rotary and fixed-wing airframes.
    The first prototype ARMS is expected in fiscal year 1997.
                    leveraging infrastructure and facilities
        In June 1995, the Base Realignment and Closure (BRAC) Commission
    announced its findings and recommendations, many of which had a
    dramatic impact on the Army National Guard. As a result of the BRAC
    process, the Army Guard will receive four installations transferred
    from the active component over the next several years. The purpose of
    creating these enclaves is to provide those facilities necessary for
    keeping the National Guard trained and ready. Because the National
    Guard is maintaining a much lower profile on these closing
    installations, costs will be substantially reduced over current
    operations. Nevertheless, the necessary land, ranges and facilities
    will be available for use by all services.
        The National Guard is also fielding the Integrated Training Area
    Management (ITAM) system which can assist in tracking the training
    impact on these areas. With the information provided by this system,
    managers can obtain the maximum use from the limited available land
    resources while minimizing the impact of that use. We intend to have
    all primary Army National Guard training sites under the system by
    1999. As we reduce maneuver damage to these training areas, we also
    reduce the direct costs while protecting the environment.
        In order for the Army National Guard to ensure that it will
    continue to be able to provide the forces needed to meet the needs of
    the nation, we need to have quality installations. One of the Army
    Guard's goals is to provide state-of-the-art, community based power
    projection platforms that facilitate communications, operations,
    training and equipment maintenance in which to station, sustain, and
    deploy the force.
        The Army Guard's Environmental Program is an integral part of our
    ability to provide the quality installations needed. For the past few
    years, the Army Guard did not receive sufficient funding to meet all
    its environmental requirements. As a result, the Guard focused its
    limited funding on ensuring that the most critical facilities it
    managed complied with environmental laws and regulations.
        This year, the Department of the Army programmed $99 million in
    fiscal year 1998 and $87 million in fiscal year 1999 for the Army
    Guard's Environmental Program. This increased funding will allow the
    Guard to complete many deferred projects, as well as continue our shift
    to a more challenging and proactive approach focused on pollution
    prevention and environmental stewardship. The Army Guard will have the
    resources necessary to support and enhance training and to provide
    power projection platforms from highly dispersed Stateside locations.
        The future of the Army Guard Environmental Program faces both
    opportunities and challenges. Our first opportunity will be to build on
    our recent successes in pollution prevention. Focusing on solvent
    substitution as our immediate priority in pollution prevention, the
    Army Guard will continue to reduce our hazardous waste generation and
    disposal costs, as well as reduce the exposure risk to our soldiers and
    civilian work force. The Army Guard will also continue to be aggressive
    in the area of energy conservation by increasing our participation in
    the Environmental Protection Agency's Green Light program, already the
    highest percentage within DOD.
        Another opportunity will be to continue our aggressive
    implementation of Integrated Training Area Management (ITAM) at 54
    separate locations with the goal of having all primary training sites
    under the same system by fiscal year 1999. This system will allow the
    Army Guard to capitalize on emerging technologies within Geographical
    Information Systems (GIS), a component of the ITAM program, to better
    analyze and manage the environmental impacts on training facilities and
    maneuver areas. This system will ensure that we provide realistic,
    safe, and environmentally sound training for our soldiers.
        The Army Guard's most significant environmental challenge will be
    the clean-up of past practice contamination. The Army Guard will
    continue to evaluate our own sites for evidence of past practice
    contamination per the Superfund law and clean up those sites where
    contamination is identified. This, combined with the Army Guard
    inheriting facilities and lands formerly owned by other agencies within
    the Department of Defense, many of which are contaminated from past DOD
    practices, will adversely impact the funding of our current programs.
                                   fort state
        The Army National Guard is prepared to provide dramatically
    increased support to the Army under the ``Fort State'' concept. The
    ARNG is uniquely postured to provide broad ranging, cost effective
    alternatives to current sources of many Army needs. As the Army's
    largest major command (MACOM), located in almost every community in
    America, the Army Guard is the most physically accessible branch of the
    Armed Forces.
        Army downsizing has critically understaffed many operations while
    sustaining requirements have not correspondingly decreased; in may
    situations, they have increased. This dilemma has forced the Army to
    rely on high cost external providers of services. As budgets and
    resources continue to decrease, a cost effective alternative to
    external providers of support is required. We can support Army Guard
    missions and requirements while additionally providing exceptional
    services and support to the Army, other DOD and Government agencies.
                           logistics and maintenance
        In fiscal year 1997, Army National Guard Logistics will obtain the
    complete complement of logistics automation systems components that
    encompass the logistics Standard Army Information Systems (STAMIS). By
    3rd quarter fiscal year 1997 the Standard Army Retail Supply System--
    Objective (SARSS-O) will be fielded to all authorized users thus
    eliminating the last of the Guard's antiquated logistics automation
    systems. As a result, the STAMIS will improve Army Guard logistics day
    to day operations and further support Army Logistics future objectives.
        This radical improvement in automation will help transform the Army
    Guard supply program from a stockpile or supply based logistics system
    to a transportation based logistics system. The improved modern support
    methods rely on high speed automation and transportation to release
    support operations from large storage sites. Delivering materiel in
    one-tenth the total time eliminates much of the stockage, improves
    mobility, lowers inventory value, reduces excess, reduces manpower and
    facilitates requirements, and improves readiness.
        The evolution to this transportation based logistics system is the
    foundation of many initiatives being developed and implemented in Army
    Guard Logistics. The State Supply Support Process Review is a valuable
    reengineering tool that provides the Army Guard with immediate results.
    Elimination of echelon repair parts stockages, closing of self service
    supply store operations, and centralizing clothing issue operations are
    but a few examples of this effort. Logistics leaders are embracing
    these changes and will reap the benefits of greater efficiency and
    lower costs.
        The Army National Guard's Aviation Systems Division (AVN-A) at the
    National Guard Bureau closely coordinated with many Department of the
    Army agencies and Guard units involved in maintaining the operational
    readiness of over 2,700 Army National Guard (ARNG) aircraft. AVN-A
    invested a great deal of time and effort increasing the relevancy of
    the entire ARNG aviation maintenance program. The Aviation
    Classification and Repair Depot (AVCRAD) 21 Project takes our aviation
    logistical depots into the 21st Century, creating truly efficient
    regional support centers of excellence designed to support modernized
    aircraft. The AVCRAD's will orient on component repairs and their
    return to the Army Guard supply system, thus avoiding costs incurred
    from the Army wholesale supply system.
        The decreasing trend in funding resulted in a change in the Army
    Guard aviation logistics approach for the purchase of repair parts.
    Stock Funded Depot Level Repairables (SFDLR) have always been
    intensively managed at the national level. Due to financial
    considerations, we are reorganizing Army Guard aviation supply support
    through regionalization of the Authorized Stockage Lists, to include
    the stockage and repair of high cost/high payoff SFDLR's.
        The Army Aviation Support Facility (AASF) 2000 Project determined
    the organization that is required to support the modernized aircraft
    now being fielded into Guard units. This includes the facilities,
    support equipment, tools, manning, training and missions necessary to
    maintain the relevance and readiness of the entire Guard aviation
    fleet. Selected AASF's will test the project recommendations during
    fiscal year 1997.
        Automation is critical to the management of operational readiness
    information. Guard aviation fielded the Aviation Logistics Readiness
    Module (ALRM) 1352 Report to enable the electronic transmittal of real-
    time aircraft readiness data. AASF's are linked directly to the
    National Guard Bureau, facilitating the early identification and
    resolution of readiness issues. The use of the ALRM program resulted in
    increased readiness, relevancy and a more efficient use of critical
    resources.
                                   conclusion
        The Army National Guard's performance throughout this period of
    limited defense spending validates the cost effectiveness and vital
    importance of maintaining a citizen-soldier force to support federal
    and state missions. With minimal resourcing, the value of community-
    based military organizations will no doubt prove their worth in both
    national and domestic arenas. As we face the uncertainties and promise
    of the next century, the Army National Guard will be well positioned
    and ready to answer the call to accomplish any mission.

                   statement of Maj. Gen. Donald W. Shepperd

        Senator Stevens. General Shepperd.
        General Shepperd. Thank you, Mr. Chairman. It is a pleasure
    to be here. I have also entered a statement for the record. I
    would just like to say that as I am speaking there are 6,428
    Air Guard men and women deployed around the world side by side
    with our active duty and Reserve counterparts.
        We are proud of our performance. We are proud of our
    readiness. We are proud of our training. We are proud of our
    relationship with the U.S. Air Force that organizes, trains,
    equips us, and respects us.
        I look forward to responding to your questions.
        [The statement follows:]
               Prepared Statement of Maj. Gen. Donald W. Shepperd
        Mr. Chairman and members of the committee: Thank you for the
    opportunity to appear before this committee on behalf of the proud men
    and women of the Air National Guard (ANG). We ask this committee's
    support of our fiscal year 1998 budget. As I begin my last year as
    Director, Air National Guard, I reflect on the accomplishments of the
    ANG. I am pleased to report the ANG is a highly trained and adequately
    equipped member of the Total Force. We are actively improving the Air
    Guard and the Air Force of today while we steadfastly look forward and
    prepare for the 21st Century.
                                improving today
        We are actively improving the way we train and operate today while
    we continue to ease the active Air Force operation tempo (OPTEMPO). We
    improve by accepting new missions, modernizing our equipment, focusing
    our organization, participating in exercises, and staying involved in
    real world contingency operations. We do all of these while we maintain
    our community involvement.
                                  new missions
        The Air National Guard is continuing our transition into new
    missions. These missions include bomber missions at McConnell AFB, KS
    and Warner-Robins AFB, GA; a Mobile Ground Station Space mission at
    Greeley, CO; a tactical manned reconnaissance capability at Richmond,
    VA; a reimbursable National Science Foundation mission in Antarctica;
    and 1st Air Force command and control operations at Tyndall AFB, FL. We
    are also modifying our security mission to reflect today's need for
    force protection. While all of these areas improve our current
    operations portfolio, we view space and information warfare missions as
    a vital part of preparing for tomorrow.
        Putting the B-1 in the Air National Guard has proved to be a great
    decision for the Air National Guard and the country. The ANG has two B-
    1 units, McConnell AFB, KS and Robins AFB, GA. McConnell AFB, with ten
    aircraft, has completed conversion and will receive its first
    Operational Readiness Inspection (ORI) within the next year. Robins AFB
    will receive its last four (of eight) aircraft in fiscal year 1998
    first quarter, completing their conversion process. Both units have
    adapted to the bomber mission well, introducing highly experienced
    personnel with varied backgrounds whose insights improve operation and
    maintenance of the aircraft. These attributes combined with a
    relatively low OPTEMPO make the mission ideal for the Air National
    Guard.
        Combat capability of our bomber units will be improved within the
    next year when necessary hardware delivery and training are complete
    for cluster bomb munitions (CBM) capability. It is crucial that we
    continue to fund programmed modifications if the B-1 is to remain the
    backbone of the nation's conventional bomber fleet.
        The 109th Airlift Wing at Schenectady, NY will assume a fully
    reimbursable National Science Foundation mission in Antarctica starting
    in fiscal year 1999. The Navy is currently performing this mission but
    it will transition to the ANG over the next two years. The 109th
    Airlift Wing has the only snow-ski capable aircraft in our inventory.
    They are the perfect choice to support the National Science Foundation
    with airlift support for scientific Antarctica missions.
        We successfully transitioned the fighter-RECCE mission from the RF-
    4C to the multi-role F-16. By adding reconnaissance pods to F-16's, we
    retained cost-effective, manned tactical reconnaissance capability.
    Such capability provides theater commanders the ability to send
    reconnaissance aircraft into a combat area to perform battlefield
    damage assessment or to collect intelligence on short notice.
    Additionally, current cameras store images digitally. This feature not
    only provides high quality, high speed images, it does so without the
    hazardous chemicals that accompany wet film developing.
        The Richmond, VA unit used prototype pods in 1996. The unit was
    ``mission capable'' in April 1996 and they deployed aircraft and
    personnel to Air Warrior 96 at Nellis AFB, NV. Air Warrior is an Air
    Combat Command exercise designed to provide air-land battle training
    for Army and Air Force combat and theater air units. The unit flew two
    successful reconnaissance missions each day. This exercise provided the
    equipment and operations demonstration necessary before the units flew
    an operational mission.
        The unit then deployed to Aviano, Italy to support Bosnia missions
    in June and July 1996. There, they flew 124 sorties in 45 days without
    one mission cancellation due to equipment.
        Based on this success, the ANG is procuring pods and processing
    stations for four additional units: 127th FW, Selfridge, MI; 181st FW,
    Terre Haute, IN; 113th FW, Andrews, MD; and 185th FW, Sioux City, IA.
    We complete this program in early 1999.
        The transfer of all air defense command and control operations
    clearly is a milestone in our history. By the end of fiscal year 1997,
    the historic transition of 1st Air Force, its three assigned sectors,
    the 701 Air Defense Squadron that operates the CONUS NORAD Regional Air
    Operations Center (RAOC), and the 702 Computer Systems Squadron that
    operates the NORAD Systems Support Facility (NSSF) to the Air National
    Guard will be complete. We accomplished this transfer while maintaining
    continual 24 hour, 7-day alert at all three sectors and at the RAOC.
    This realignment was ``totally seamless and transparent''; accomplished
    through the joint efforts of the Air Combat Command and the Air
    National Guard. This successful transfer is another example of the
    closeness in management and philosophy that has grown over the years
    through the Air Force's implementation of ``Total Force.''
        This integrated transition required a close-knit team effort
    between Air Combat Command and the Air Guard. It far exceeded the scope
    of any previous transfers and sets new benchmarks in the cooperative
    efforts possible between Active and Guard units. This is also a
    dramatic example (and precedent) of how the Guard can perform in the
    day-to-day mission arena to assist the active Air Force in meeting a
    variety of mission taskings. These new missions make sense for the Air
    Guard as we respond to changing military force requirements. When
    properly trained and equipped, we have the skill and capability to
    cost-effectively execute Air Force missions.
        The ANG gained another new mission when the active Air Force
    established the 820th Force Protection Group at Lackland AFB, TX.
    Eighty-six Air National Guard Security Police personnel from El Paso,
    TX, have been assigned to the Force Protection Group to provide the
    unit heavy weapons support. Within the National Guard Bureau we have
    established a Force Protection Team which is a multidisciplined team
    formed to develop Air National Guard force protection policy, programs,
    and guidance; ensure implementation of DOD and Air Force directives,
    and to guarantee that force protection considerations are an integral
    part of our operational planning. Like the Air Force, the Air National
    Guard values its people and seeks to protect them from all threats.
        In conjunction with the Air Force Force Protection Program, the
    OPTEMPO of our Air National Guard Security Police units has
    significantly increased as we send security personnel to backfill CONUS
    Air Force bases and support OCONUS theater locations.
                             equipment improvements
        Our ability to improve and provide properly equipped Guard men and
    women to operational commanders and warfighting CINC's relies on
    modernization. Your Guard and Reserve Equipment Account support, along
    with Air Force equipment transfers, have helped us insure
    interoperability with modern Air Force systems. Our fiscal year 1998
    focus is to continue modernizing aircraft and equipment to provide the
    greatest capability to our customers. Such efforts include improved
    self-defense systems, C-130J acquisition, networked training devices,
    night vision enhancements, portable Air Combat Measurement
    Instrumentation (ACMI) units, precision guided weapons, and theater
    deployable communications (TDC).
        With our Air Guard airlift fleet increasingly called upon to go in
    harm's way in a host of worldwide contingencies, we enthusiastically
    support Air Force initiatives to equip our airlift aircraft with
    defensive systems. The Air National Guard operates 43 percent of the
    total C-130 theater airlift forces. We have thus far configured 56
    aircraft with defensive systems and have Air Force support for
    additional systems. We must continue this program.
        Further, funds provided by Congress to modernize the C-130 theater
    airlift fleet have allowed us to complete the replacement of the 1950's
    vintage C-130B models with modern, more capable C-130H and now C-130J
    aircraft.
        The Air National Guard and the Air Force have worked hand-in-hand
    to develop a unit level training device that supports our F-15 and F-16
    units. This low cost device uses off-the-shelf equipment. It replaces
    existing simulators that are 20 to 30 times more costly. These training
    devices are more capable and accessible, and provide our pilots user-
    friendly training. To date, we have received 10 unit level trainers. In
    the future, we expect to continuously improve by adding visual systems
    and networking. Each capability enhancement improves realistic training
    and ensures our aircrews are ready to respond to any tasking. We are
    also in partnership with the Air Force in investigating the use of low
    cost, unit level trainers for our larger aircraft, such as the C-130.
        In the night operations arena the Air National Guard is working
    closely with Air Combat Command in testing low cost, off-the-shelf
    capabilities that will allow our A-10's, F-15's, and F-16's to perform
    more effective operation at night. The Air National Guard received a
    proportional share of the Air Force's near-term night capability
    upgrade for the A-10 fleet. Our testing has been successful and we are
    moving forward with a similar program for Air National Guard F-15's and
    F-16's. Overall, we have a working partnership with the Air Force to
    provide quality warfighting improvements. The Air National Guard goal
    is to achieve a night warfighting capability and install adequate
    defensive systems on all our aircraft. We will then have the capability
    to fly and fight around the clock. The Air Force has pursued a course
    that allocates new equipment resources to the Guard and Reserve based
    upon relative share of force structure, response time, and weapon
    system capability. We support this approach.
        Portable ACMI's allow units to use their ``backyard'' ranges to
    train on instrumentated missions. Units can then debrief their missions
    via graphically computed playback without deploying. These cost-
    effective systems save time and resources. Three of the Air National
    Guard's four combat readiness training centers (CRTC's) have fixed ACMI
    sites to enhance training. We plan to fund the fourth. It will allow
    units deploying to Alpena, MI to get the same type of training that is
    available at the other three CRTC's. Moreover, the ACMI allows units to
    train without attending the Nellis AFB, NV Red Flag/Green Flag training
    cycles that typically occur only once every three or so years. Units
    may also use portions of this equipment at their home station.
        Precision and standoff capability along with improved electronic
    countermeasures are a must for future warfare environments. Weapons
    modifications include Joint Direct Attack Munitions (JDAM), Wind
    Corrected Munitions Dispenser (WCMD), Joint Air-to-Surface Standoff
    Munitions (JASSM) and Joint Standoff Weapon (JSOW). Electronic
    countermeasures modifications include the towed decoy in the short term
    and Defensive Systems Upgrade (DSUP) in the long term.
        We are currently equipping our fighter units with targeting pods in
    order to incorporate precision guided capability. This will further
    enhance our warfighting capabilities.
        With 70 percent of the Air Force's wartime deployable
    communications capability residing in the Air National Guard, our
    communication OPTEMPO is high. We constantly provide tactical
    communications equipment and personnel to meet the deployed
    warfighter's battle management and communication system needs. To
    continue to meet this ever expanding challenge, our units require
    Theater Deployable Communications (TDC) equipment. TDC is the only
    program the Air Force has to modernize our current communications
    equipment. TDC offers many advantages over the existing family of
    equipment. Program features include leading edge digital technologies,
    efficient centralized management, modular flexible design, fewer people
    and reduced airlift requirements. Most critical however, is the fact
    that there is an unambiguous operational imperative behind the need for
    TDC. The new family of Theater Battle Management systems is predicated
    on a TDC communications architecture and infrastructure in the deployed
    environment. The current suite of equipment will not meet the need. TDC
    is the communications equipment required to support automated command
    and control (C\2\), battle management and information dominance on the
    electronic battlefield of today and tomorrow. With your support of the
    TDC funding in our current budget, we will be outfitting a few ANG
    deployable communications units in the near future. However we are only
    able to fund a small percentage of our total ANG communications
    capability. We appreciate your continued support in this critically
    important area.
                          organizational improvements
        As we assume new missions and procure modern equipment, we also
    strive to focus our organization. Our goal is to embed a culture and
    environment that promotes continuous improvement, customer orientation,
    empowerment of people, and measurement.
        We've developed a long-range strategic plan that reiterates our
    vision and values, details our historical foundation, and postulates
    possible futures based on future world characteristics, common future
    traits, and joint vision elements as they impact the Air National
    Guard. We believe we are preparing our organization to meet this future
    by adhering to our guiding principles.
        The first of our guiding principles is ``Not for themselves, but
    for their country.'' Our business is about the privilege of service,
    not the joy of personal success--but we can do both and make the Air
    National Guard the most exciting, empowered, effective, and fun place
    to work in America.
        Next, we must remember we are Guardsmen first. We are citizen
    soldiers--Guard men and women. That's who we are, not what we do. We
    are officers, NCO's, airmen, and civilian members of the Guard first--
    then we are pilots, navigators, boom operators, maintainers, and
    administrators.
        We have an awesome responsibility. ``We send young men and women
    (our kids) into combat. There is no more sobering responsibility * *
    *.'' We must never forget that we are not about jobs and units or force
    structure, or the size of our organization. We have a greater
    responsibility--making a better world for our children and our nation.
        We have two basic responsibilities--take care of the troops and
    make our units and the ANG better. That's what people in world class
    organizations do.
        We are a learning organization. We commit ourselves to learning
    something new every day. We can improve ourselves and our organization
    dramatically by attending PME in residence and participating in self-
    directed learning programs, leadership training, quality training, and
    other training. We must stay personally committed to learning something
    new every day.
        We will improve something every day. We commit ourselves to
    continuous improvement. We strive not just to perform work but to truly
    improve something every day.
        Finally, we embed quality. We use the principles of customer
    orientation, continuous improvement, empowerment of people, and
    measurement to continuously and incrementally improve our organization.
        We have taken great strides in our quality journey. We have
    maintained our personnel strength, maintained 94 percent of our units
    in C-1 or C-2 readiness status, increased our performance on
    inspections, and achieved our second safest flying year in the history
    of the ANG in fiscal year 1996--all while also maintaining our highest
    OPTEMPO. We achieved these successes by implementing our guiding
    principles and increasing our reliance on cross functional teams.
        During the past year we have formalized and improved a new matrix
    style organization, the integrated process team (IPT). The IPT concept
    has not replaced our functional organization, rather it offers an
    additional approach to solving organizational issues which cut across
    functional lines. IPT's allow us a standing team to bring together
    people from each functional area to work these tasks. As an example, in
    the past if a unit commander from an F-16 fighter squadron had an
    aircraft problem which required headquarters help, frequently they grew
    frustrated calling each functional area in-turn, without any single
    area being able to solve their problem. Now, the commander calls the F-
    16 IPT, the IPT leader calls together the team from all functional
    areas and together they jointly solve the problem. Although this seems
    simple, in reality it is a major change in how we do business and a
    definite step forward.
                       real world contingencies (optempo)
        Although we remain engaged in our state and local communities, we
    also regularly participate in contingency operations. The citizen
    soldier can and should play a greater role in today's contingencies. We
    are meeting that challenge. By actively participating in contingency
    operations, our forces are easing active Air Force OPTEMPO. We can do
    much through volunteerism, but we must be mindful that we need to keep
    employers and families on our team and supportive of our participation.
    When possible, we need planning and notification time. Removing federal
    employee military leave or the military compensation for that service
    will hurt us. Approximately 25 percent of our traditional force are
    federal, state and municipal employees. Our retention success, in large
    part, is due to the military compensation for serving. If no longer
    attractive, federal, state and municipal employees will not come, nor
    will they stay. We need them in the Air Guard, and we need your help to
    preserve military leave compensation. We believe the nation will depend
    more on Guard and Reserve forces in the future. We are an important
    participant in contingencies, exercises, and overseas presence. We have
    been involved in every major Air Force operation and exercise, and most
    of the smaller ones, conducted during fiscal year 1996. Some of the
    participation highlights included hurricane relief efforts; Operations
    Joint Endeavor, Uphold Democracy, Deliberate Guard, Joint Guard,
    Northern and Southern Watch; Partnership for Peace mission in Romania;
    Exercise Nuevos Horizontes in Honduras; and, providing limited medical
    support to some undeveloped countries.
        The Air National Guard and the Air Force Reserve involvement in
    peace enforcement and peacekeeping operations included continued
    enforcement of the no-fly zones over Iraq and Bosnia-Herzegovina and
    continued airlift support to U.S. forces in Haiti, Bosnia-Herzegovina,
    and other theaters of operation. During fiscal year 1996, Air National
    Guard units provided medical services to communities in 18 states under
    the Medical Innovative Readiness Training (MIRT) program. This program
    enables National Guard health care professionals to obtain training in
    wartime clinical skills while concurrently providing medical care to
    the indigent or underserved civilian population.
        The Air National Guard is part of a continuing counterdrug program
    focused on providing support to national efforts designed to detect
    trafficking aircraft moving illicit drugs to North America from source
    countries in South America. In operation Coronet Nighthawk, fighter
    aircraft intercept and identify suspected narco-traffickers aircraft.
    The aircraft range in size from small, single-engine airplanes, to
    multi-engine jet cargo aircraft. At the request of U.S. Southern
    Command and host nations in South America, Air National Guard personnel
    have manned counterdrug radar sites since 1992. Operating 24 hours a
    day, 365 days a year, Air National Guard control units provide the
    personnel who rotate in and out of the sites on an average of every 30
    days. In addition to manning radar sites, the Air National Guard
    operates and manages a counterdrug logistics support facility at
    Dobbins Air Reserve Base, near Atlanta, GA. This facility logistically
    supports Air National Guard counterdrug radar assets in the United
    States, as well as counterdrug radar deployed in South America and in
    the Caribbean.
        The Air National Guard is working closely with the staff at AMC to
    find the best fit for ANG crews and assets. ANG presently provides the
    in-place Northeast Tanker Task Force at Bangor ANGB, ME and Pease ANGB,
    NH to support overseas movements of U.S. forces. New proposals are
    being discussed with AMC to expand ANG participation in the AEF
    missions.
        We remain committed to the Total Force Policy and will continue to
    work with our gaining MAJCOM's, AMC and Air Combat Command (ACC), to
    find the best fit for ANG crews and assets in the entire AEF. This
    mission represents the way our Air Force will respond to future
    contingencies and the ANG stands ready to participate as a full
    partner.
                              community activities
        Complementing our federal role of preparing for national
    emergencies, we are a vibrant force in our state and local communities.
    We have begun youth programs in 15 states. These programs capitalize on
    our facilities and equipment and take advantage of the experience and
    training of Guard men and women. We are involved in STARBASE (Science
    and Technology Academics Reinforcing Basic and Space Exploration)
    National Guard ``ChalleNGe'' programs that are financed separately from
    our primary readiness accounts. Our goal in these programs is to be a
    positive influence on the youth of America with our Air Guard men and
    women serving as role models to portray a spirit of pride, tradition,
    and service to community, state and nation.
        In addition to youth programs, we are active participants in
    military-to-military and civilian-to-military initiatives with foreign
    countries. Complementing these initiatives is our involvement in
    humanitarian and civic action programs worldwide, including deployments
    of civil engineers and medics to assist the CINC's with ongoing
    initiatives. Fourteen states have formed ``nation-state partnership''
    programs with countries in Eastern Europe or republics of the former
    Soviet Union. We serve as positive examples of how citizen-soldiers
    integrate with active duty militaries in democratic societies.
                            preparing for the future
        Today's Air National Guard is actively preparing for the future by
    attracting and retaining a quality force of diverse citizens, moving
    forward in space missions, using technology to improve education and
    training, and strengthening our Total Force interaction.
                                 quality force
        In fiscal year 1996 the ANG met end strength objectives. Our
    recruiters assessed over 11,000 new members into the Air National
    Guard, while reducing our attrition rate from 12 percent to 10 percent.
    We are working with the states to develop initiatives to ensure we
    continue reaching our strength goals, while filling critical skill
    vacancies through the extensive use of enlistment bonuses and the
    highly visible incentives of the Montgomery G.I. Bill (MGIB).
        The MGIB continues to be a major motivation for six year
    enlistments with over 66 percent (72,829) of our Air Guard men and
    women qualified for benefits and 33 percent (24,190) of those personnel
    already applying for benefits. Retention of trained members is a
    continual challenge. Competing demands, higher personnel tempo, and a
    decreasing propensity to join, make keeping a member's family and
    employers satisfied a top priority. Additionally, we must ensure we
    recruit and retain a diverse force.
                               diversity program
        The work force of the 21st Century will be more diverse than that
    of today by the standard measures of race, gender, and ethnicity. The
    Air National Guard is conducting a project to improve its ability to
    manage a diverse work force, called ``People Potential 2000 . . . and
    Beyond'' (PP2B+). The project is sponsored by the Director, ANG and is
    being run by the ANG Human Resources Quality Board (HRQB). PP2B+ will
    be the first true ``CyberProject'' run under the ``CyberGuard'' vision
    of the Air National Guard. As such, the project will use highly
    innovative methods and new technology to study the issue of future work
    force diversity and to build strategies for effective management. A
    core project team, drawn from ANG units across the country, will rely
    heavily on computer modeling and simulation for its study. Two new
    methods for building consensus across large organizations, ``Future
    Search'' and ``Real Time Strategic Change'', will be used to formulate
    the strategies and build local action plans, respectively. Throughout
    the project the PP2B+ core team and the HRQB remain in contact by
    employing special Internet software that allows ``any-time, any-place''
    meetings. By project end, PP2B+ will directly involve 500 people in the
    creation and implementation of new human resources policies. This
    example of collaborative policy creation will eventually become the
    norm for the Air National Guard.
                                     space
        We are also pursuing potential roles for the Air National Guard in
    space missions. In January 1996, the ANG activated the 137th Space
    Warning Squadron in Greeley, CO as the Mobile Ground System for the
    Defense Support Program satellites. This mission provides survivable,
    enduring, strategic missile warning to USCINCSPACE and the National
    Command Authority. The 4th Space Warning Squadron, Holloman AFB, NM has
    accomplished the mission since 1983. By Summer 1997, the 137th will
    have assumed the entire mission and reached full operational
    capability. The Louisiana ANG has also received tasking from Air Force
    Space Command to provide deployable communications and integration
    capability in support of the Air Force's space support teams for space-
    related tools for theater operations.
                                   technology
        We have coined the term ``CyberGuard'' to embrace all actions being
    taken to prepare for the 21st century. This term encompasses every
    aspect of the Air National Guard--our organizations, our people, our
    infrastructure, our processes, our technology--the way we work, live,
    train and fight in a new world driven by rapid advances in technology.
    Toward that end we are investing in the latest computer technology and
    fiber-optic backbones at all Guard units. This ties us to the worldwide
    web and positions us for rapid decision-making, communication,
    training, and education in the CYBER world.
        We continue to expand our use of technology to communicate rapidly
    and efficiently and to improve availability and versatility of
    education and training programs. For our Warrior Network satellite
    based system, with one-way video and two-way audio, we are installing
    the last of our 208 downlink sites. Our uplink site at McGhee-Tyson Air
    National Guard Base, TN continues to expand its capability and is
    becoming a World Class production studio. Our uplinks at Andrews AFB,
    MD and Tyndall AFB, FL have all the necessary equipment in place and
    will be operating by this summer.
        The Warrior Network is fully interoperable with the Air Force's Air
    Technology Network and the Government Education and Training Network.
    This allows us to share our system with the Air Force and other
    Department of Defense, government and community agencies. An example of
    our shared use is our partnership with Fort Rucker, AL. Fort Rucker is
    connected to our uplink by a fiber optic line and broadcasts Army
    courses out of our uplink. The Federal Aviation Agency has used our
    classrooms and downlink sites in all parts of the country to deliver
    critical training to their employees. We are also exploring the use of
    the Warrior Network by local law enforcement agencies throughout the
    country to help train law enforcement personnel in the counterdrug
    effort. Finally, we are beginning to join forces with the Army National
    Guard and local community colleges to realize a larger economy of scale
    and return on investment for Distance Learning.
        These joint and community shared uses are continuing to increase
    every day. They assure that the American taxpayers will realize a
    healthy return on their investment in Distance Learning. This will be
    visible in our communities across the United States as we share with
    our community agencies to assist in programs such as the counterdrug
    effort. Partnering with the Army National Guard and other components
    and agencies assures that we will be able to reach virtually every
    community, large and small, in every state.
                                  total force
        The Air National Guard has been an essential piece of the Total
    Force--we will continue to play a vital role in the nation's defense as
    we look to the future. We want to strengthen our already excellent
    working relationship with the active Air Force.
        Our staff integration initiative supports the Air Force strategic
    vision statement, ``The Air Force will seek new opportunities to
    capitalize on the synergy of the Air National Guard and Air Force
    Reserve in an integrated Total Force''. This initiative moves Air Guard
    members to unified commands, the Joint Staff, and the MAJCOM's. This
    program is vital to the future of the Air National Guard because it
    puts the right people at the right location where the decisions on
    force structure, equipment, and force employment are made. By the end
    of fiscal year 1998, approximately 100 Air Guard personnel will be
    assigned to various commands. Staff integration is one step toward an
    increasingly seamless Total Force.
        Assigning active duty officers to positions within the Air National
    Guard is another step toward increased integration. While active duty
    members have always served with the Guard, we are taking this concept
    to the next logical level. When and where it makes sense we are opening
    ANG command billets to active duty officers. We recently selected an
    active duty Colonel to command the 103rd Fighter Wing, a Connecticut
    Air Guard unit based at Bradley International Airport. This is a three
    year tour which we believe will provide new ideas and perspectives to
    the ANG unit while also teaching an outstanding Air Force officer more
    about the Air National Guard.
        In summary, fiscal year 1996 was an outstanding year for the ANG.
    We strengthened already strong ties between Total Force components.
    When and where it made sense we continued to implement new missions.
    With active Air Force help--and yours--our modernization program
    remained strong and viable. Our professional, committed people engaged
    in contingency operations and community service. Our future also looks
    bright. We move toward the 21st century completely engaged as a full
    partner in the Total Force.
        If we continue the path we have prepared, early in the morning on a
    calm summer day in the year 2050 the great grandchild of a current
    Guard man or woman will be strapping into the seat of the first manned
    mission to Mars. The journey will take two years. If we have stayed our
    course and managed change smartly our organization will flourish and
    our nation will thank us--and--as the Guard man or woman touches down
    on Mars in the year 2052--the message back will be, ``Hello to all my
    Air Guard friends back on earth and thanks for what you did to get us
    here.''
        I sincerely appreciate your support during my tenure as ANG
    Director and I leave ``our Air National Guard'' in good hands--those of
    the citizen soldier who has made this a World Class Organization.

                         America--militia-based nation

        Senator Stevens. Thank you.
        Gentlemen, I was thinking about the days when Senator
    Stennis and I in the early eighties tried to encourage, as the
    forces were starting to be reduced in Europe, the insertion of
    Guard units, both Army and Air Force, for the purpose of
    training in some of the spots that were being vacated. You have
    taken this now to a partnership in terms of deployment on a
    much longer basis than we envisioned.
        But I do think you have really raised the level of
    anticipation for experience and just basic full-time
    performance for the people in the National Guard to the point
    where a citizen soldier really can know that he or she is
    trained for what might come in the event of a real serious
    crisis. Certainly, as I said in my opening statement the Desert
    Storm situation demonstrates what the Guard can do.
        We do have some questions. I will tell you, I do not know
    how much support I am going to get, but I am drafting a bill to
    require that we have a member of the National Guard Bureau on
    the Joint Chiefs, and that there be a deputy of one service to
    move into that slot after 3 years. I think this partnership
    must be recognized by the Congress and by the American people
    as a permanent thing, because, as you say, General Baca, it is
    efficient from the point of view of the commitment of our
    defense dollars to insist on a more robust experience as far as
    the Guard is concerned in the current crisis and in the
    planning for the future.
        As we face the drawdown--and we do face a drawdown--I think
    we have to understand the value of the Guard in terms of the
    economics of that restructured force. We want to work with you.
    I want to make sure that someone is sitting there articulating
    that concept that we have tried to drum away on now for almost
    20 years.
        I think it has been this committee that has done that above
    all others. That is why I am delighted that Senator Bond is
    here as one of the cochairmen of the Guard Caucus. It is a very
    formidable group, with Senator Ford and Senator Bond committing
    a substantial amount of their time to making certain that what
    we are intending is carried forward in the total operations as
    well as the planning of our national defense.
        I do have some questions. Notwithstanding what General
    Navas said, my staff tells me you probably will not meet
    recruiting goals in 1997. Is that right?
        General Navas. No, sir; we are above our recruiting goals
    in 1997. We actually are 2,500 above our end strength now. We
    will have to come down to the 367,000 to meet our assigned end
    strength, but we are exceeding all the goals.
        Senator Stevens. Let me apologize. My staff's statement to
    me was that the Army would not meet its recruiting goals, but
    you would. Is that right?
        General Navas. Yes, sir; at present the Army National Guard
    is the only component that is meeting and exceeding its
    recruiting goals, that is correct, sir.
        General Baca. The Army Guard and the Air Guard.
        Senator Stevens. I understand that, but I am trying to get
    to the reasons for this. There is an imbalance right now in
    recruiting. As I understand it, the active components are not
    meeting their goals, the Guard and Reserve components are
    exceeding their goals. Now, what are the reasons for that, in
    your opinion, General? General Baca?
        General Baca. Mr. Chairman, I cannot speak for the active
    component, but I can speak for the Guard and Reserve--for the
    Guard, excuse me, not the Reserve, but the National Guard, Army
    and Air. And as I said in my opening statement, Mr. Chairman,
    there's no question that the increased OPTEMPO is directly
    related to the fine recruiting and retention that we have.
        People, when they have a meaningful mission, when they feel
    that they are being a part of the national security strategy
    they seem to be more willing to join and certainly more willing
    to be retained. I think it has a lot to do, too, with the
    morale of the Guard as it stands today. In spite of the
    turbulence that we have had with the downsizing, as we have
    been downsizing since the end of the cold war, they have been
    able to maintain a high state of readiness, and that always
    contributes to recruiting and retention, Mr. Chairman.

                               Full-time support

        Senator Stevens. What is the ratio now of the AGR to the
    people who are citizens, soldiers, and airmen? What ratio do
    you have?
        General Navas. Sir, in the case of the Army National Guard
    about 11 percent, 11 to 12 percent of our force is full time,
    either military technicians or active Guard and Reserve.
        Senator Stevens. What is yours, General Shepperd?
        General Shepperd. Ours is about 27 percent full time, sir,
    and about 8 percent of those are AGR.
        General Navas. Sir, if I may----
        Senator Stevens. Now wait a minute. You are telling me two
    different statistics. What is your full time as opposed to
    citizen soldiers, General Navas?
        General Navas. Sir, we are different in the Army and the
    Air Guard. Our percentage of full-time support in the Army
    Guard is much lower than in the Air Guard. In my case it is
    about 11 percent, between 11 and 12 percent of AGR's and
    military technicians, as a percent of my total force.
        Senator Stevens. Now, have you ever quantified, General
    Baca, the difference in costs for units of either Air or Army
    Guard as compared to active?
        General Baca. Sir, it largely depends on the type of unit,
    and I'll let the Directors address the question in more detail,
    but basically a Guard unit is about one-fifth the cost. It
    would cost approximately $17,000 per individual to maintain an
    Army National Guard members, a little higher on the Air side.
    But roughly about one-fifth the cost, and again depending on
    the kind of unit.
        Senator Stevens. I am going to run out of time here.
        Senator Bumpers. Is that just on the Air side, General,
    one-fifth?

                        cost of Air National Guard units

        General Shepperd. No; on the Air side, a flying unit costs
    approximately 60 percent of active duty; a support unit costs
    about 20 percent of the cost of active duty.
        The main reason that we are so much higher on full-time
    personnel is it requires full-time personnel to maintain the
    airplanes.
        Senator Stevens. Maintenance of systems, yes.
        But what I'm looking for is to try and find out how that
    cost relates now to training and to skill level of attainment.
    Your people who are not regulars are still basically what we
    used to call in my day weekend warriors, right?
        General Baca. Mr. Chairman, I think that term has become
    obsolete.
        Senator Stevens. We called them the weekend warriors.
        General Baca. If anybody believes that a guardsman just
    trains on the weekend--now, you understand that every Guard
    enlisted soldier as well as the officers has to meet all the
    standards of their active component counterparts in their
    individual as well as their collective training. So guardsmen
    spend much, much more than 39 days a year. I would say the
    average, Mr. Chairman, is probably, even among the lower ranks,
    is about 60 days a year, and the senior leaders much, much more
    than that.
        Senator Stevens. Let us be fair now. In Desert Storm we
    were lucky that we got the time to train some of those units to
    integrate with the regular force. Now, are you saying that
    today we would not have to have that delay time to integrate
    these units with the regular force?
        General Baca. Mr. Chairman, if you look at the units that
    were deployed, the units that were called to be deployed, the
    artillery units, for example, that were used and deployed in a
    very quick period of time. They went and performed and they
    performed, by all accounts, active and Guard, exceptionally
    well, with very minimal postmobilization training, sir.
        I'll let General Navas address it in more detail for the
    Army and General Shepperd address it in----
        Senator Stevens. Maybe you can do that on someone else's
    time. My time has run out.

                         Distance learning initiatives

        I have one other question. That is, last year we gave you
    $35 million for the Army Guard distance learning initiative.
    General Navas, how has that worked?
        General Navas. Sir, we have had some rough spots on our
    distance learning initiative. As you know, this is a new
    program. It is an investment program. Our vision is to have one
    distance learning classroom within 60 minutes driving distance
    of every Guard member. Some of that we have been able to
    accomplish. We have nine sites already in operation.
        The money was held up because of internal issues. It is
    about to be released. We are making progress, however. In the
    future years we would like to maintain that momentum, because
    we think that that is going to be one of the key issues in how
    we can train our soldiers and how we can save some dollars,
    because we are spending a lot of money in travel and in getting
    individuals out of their jobs to go to resident schools and 2-
    week training periods. If we can build on this concept of
    distance learning, distributed training, it is going to pay big
    dividends down the road.
        This is, again, it is a fledgling program. We are very
    excited about the results we have had initially, but we need to
    continue supporting that program, sir.

                       alternatives to Flight Simulators

        Senator Stevens. I lie a little. That is not my last
    question. This is. General Shepperd, I am told that your people
    are now using a low-cost alternative to flight simulators using
    off-the-shelf equipment. Tell us about that.
        General Shepperd. Yes, sir; we have for years been
    depending upon very expensive simulators, not only expensive to
    buy, like $12, $15 million, but expensive to operate, around $1
    million a year. We basically started about 6 years ago to
    develop low-cost simulators that provide off the shelf, with
    modern computer and visual systems. We have got them up and
    running for all of our F-16 units. We are introducing them for
    our F-15's. We are also beginning to design them for our C-
    130's and B-1's.
        It basically enables us to stay current with the aircraft
    and update quickly. We are using them now in the field. There
    is essentially very little operating cost and no personnel
    involved.
        Senator Stevens. What is the cost break?
        General Shepperd. One of these systems will now cost
    between $400,000 and $600,000, as opposed to $12 million. And
    the O&M cost, rather than $1 million a year, is down in the
    neighborhood of $6,000 to $8,000 a year. Extremely cheap and
    very effective and better than the old simulators.
        Senator Stevens. You ought to give somebody some bonuses on
    that one.
        General Shepperd. Sir, we are working very tightly with the
    Air Force on this to do it, and the whole idea is to develop a
    distributed interactive simulation where people in New Orleans
    can fight people in Portland on a bad weather day when they
    cannot fly real world, with virtual reality helmets, using the
    data for real data bases over Bosnia that day. And it is all
    possible and all there.
        Senator Stevens. Can you bring us a show and tell some day
    on that?
        General Shepperd. Absolutely. We will let you fly it, sir.
        Senator Stevens. That is all right with me as long as you--
    I did that once with a Harrier and I crashed it. [Laughter.]
        Senator Bond.

                               Tiered resourcing

        Senator Bond. Thank you very much, Mr. Chairman. You
    covered some of the important questions I had wanted to hear
    covered, but I do want to ask the General and perhaps the
    others to focus on this.
        General Baca, I understand because of the funding crunch
    there is a policy of tiering the resources of our defense
    forces. The first tier goes in, then the second tier. And
    having said that, in light of what General Garner has said
    about the Guard, are you concerned that preparedness too might
    be tiered and that once you start cutting back on the training
    and the preparedness of the secondary tiers, the mission's
    readiness level will atrophy, they would begin to be called
    inadequate or unable to fill their mission requirements?
        I would like to find out how you think this might come
    about. I am particularly concerned in light of the $344 million
    that comes out of the statutory requirements in military
    schools and training funds. It looks like we are setting up a
    downward spiral in preparedness, and I would appreciate your
    discussion of that view.
        General Baca. Senator Bond, first of all let me thank you
    for your leadership and thank you for your support on the
    National Guard Caucus.
        Let me just say that, as I mentioned in my opening
    statement, readiness is directly related to resources, and
    tiered readiness as far as the Army National Guard and as far
    as the Army in general is not anything new. The basic element
    of tiered readiness and when you have tiered readiness is that
    you try to maintain a force, the ones that are at the higher
    tier, the ones that are prepared to move the quickest and have
    to be prepared to move the quickest, are at a higher--are
    maintained at a higher level of readiness.
        But you should always maintain the rest of the force at a
    C3 level or better. So then what you have then is the haves and
    the have-mores, rather than the haves and the have-nots, and
    you never reach a force, as you say, where you get into the
    downward spiral and you get into a force that is not effective,
    that goes below the C3 or the C4 level. That is definitely,
    always definitely a concern.
        I would like, if you do not mind, I would like for the
    Directors both to comment in even more detail with regards to
    that, sir.
        General Navas. Yes, sir; in the case of the Army Guard, we
    had a bottom-up review and an offside agreement in 1993. The
    first expression of that, of that agreement, was the 1995
    budget. At that time we had expected for the budgets to remain
    stable and we were putting more resources into what we
    understood would be the high priority units that would be
    required to fight the two nearly simultaneous MRC's. That is
    our combat support and combat service support units that had to
    deploy anywhere between zero and 30 days. Our second tier units
    which were supposed to deploy between zero and 60 days, and our
    15 enhanced brigades were supposed to deploy within the 90-day
    window.
        We made a conscious decision to maintain the rest of the
    force, which was a strategic hedge, and basically the force
    that we use for our domestic mission, at a basic level of C3,
    which meant that they would have 15 days annual training, 48
    drills a year, and enough schools money to maintain their
    professional education and enough OPTEMPO dollars to do
    collective training at those levels.
        As the budgets have gone down, as operations have gone up,
    and we have still protected those high priority units, we are
    seeing then that the units at the lower level are getting less
    resources because we are protecting our high priority units.
    That is where you find that, compared with the fiscal year 1995
    level of funding, we would have today the shortfall that you
    alluded to.
        There is a point there where we must maintain our
    commitment to our soldiers of providing them the training
    required to maintain that base level of readiness, and we are
    in 1997 struggling to maintain that and we see very tough,
    tough times ahead to maintain that level of readiness.

                           Air Force tiered readiness

        General Shepperd. Sir, on the Air Force side, our Guard and
    Reserve in the Air Force are our tiered readiness. We fly one-
    half as much as our active duty counterparts. Your people in
    your F-15's in St. Louis will fly 7 to 9 times a month, while
    their active duty counterparts will fly 17 to 20 times a month.
        We get repeated calls to fly them more. We do not need to
    fly any more than that to maintain our proficiency, because in
    reality what we do is we spin up for exercises, we spin up for
    contingencies, and we always have a little time to prepare for
    war.
        I am reluctant to go into any further tiering because when
    you start taking an F-15 and flying fewer than seven to nine
    times a month you get into real safety problems, and we will
    see it almost immediately. But we do tier our readiness with
    the Guard and Reserve by flying one-half as much, and I think
    that is a proper way to do it.

                         Army National Guard resources

        Senator Bond. Will the $743 million maintain the level?
        General Shepperd. Sir, that is not an Air Force issue. That
    is an Army Guard issue.
        General Baca. That is an Army issue.
        Senator Bond. That is an Army issue.
        General Navas. Sir, the answer is the $743 million would
    bring us back to the fiscal year 1995 levels of funding.
        Senator Bond. So that would be----
        General Navas. That would be to go back to 1995. If we want
    to maintain the 1997 level, it would be considerably less.
        Senator Bond. All right.
        Mr. Chairman, thank you. I have further questions I may
    submit for the record, but I would like to have the other
    members have an opportunity to question.

                               Enhanced brigades

        Senator Stevens. Senator Cochran.
        Senator Cochran. Mr. Chairman, thank you very much.
        One of the ways in which the Army National Guard is
    involved in combat support and integration activities is
    through these enhanced brigades that they are now called. At
    one point when Desert Shield/Desert Storm came along, we talked
    about a roundout brigade for the First Cavalry, which was one
    of Mississippi's units.
        What is your impression of this enhanced brigade concept
    and whether it is going to work at the requested levels of
    funding for the Army National Guard, General Baca?
        General Baca. Senator Cochran, first let me say in answer
    to that question and also to the question that I did not, I do
    not think I answered properly to Senator Stevens, with regard
    to the response during the Persian Gulf war: In those days we
    did have the roundout brigades, and, of course, the 48th
    Brigade was called. It was never intended to be mobilized
    because of the fact that in those days we just had a 90-day
    deployment time and it would have been useless to deploy them
    for 90 days and then have to--they could not have deployed with
    their division anyway.
        But they were called and their time was extended, and even
    during that time they were expected to do it within 90 days,
    because I recall from the time that they were mobilized to the
    time that they were certified at the NTC was exactly 91 days.
    So they were a day off.
        I say, with all of the enhancements that we have had since
    then and with the title 11, with the support that we have got
    from the Congress, and quoting the Chief of Staff of the Army
    in his testimony last March, we are very comfortable now with
    90 days for the enhanced brigades, a 90-day postmobilization
    training period for 90 days.
        I would like to yield to General Navas for his comments.
        General Navas. Yes, sir; if you recall, after the gulf war
    it was decided that, as far as the ``Bottom-Up Review,'' there
    would be 15 National Guard brigades that would be enhanced in
    order to provide that hedge and that ability to deal with two
    nearly simultaneous MRC's.
        What we did was, in a multiyear program starting in fiscal
    year 1996 which will culminate in 1999, in fiscal year 1999, we
    took a group of units--some of them were the old roundout
    divisional brigades, some separate brigades--and we came up
    with 15 separate brigades, and we produced, provided some
    enhancements.
        The enhancements are not structural enhancements, but are
    basically training enhancements. We manned those brigades at a
    higher level. We provide full-time support technicians and
    AGR's at a higher level. That is why when you do the tiered
    readiness that I mentioned earlier the brigades get a lot more
    resources to be able to maintain the levels that are required.
    Those levels are they have to maintain a C1 in personnel, C1 in
    equipment readiness, and maintain a training level of C3, to be
    able to train up within a 90-day window after mobilization.
        I am happy to report that we are making progress. We are on
    track with that program and those brigades are on their way by
    1999 for all of them to be able to meet the 90-day window after
    mobilization.
        Senator Cochran. Does your budget request have a specific
    line item for these enhancements to be integrated into the
    training of these brigades----
        General Navas. No, sir, it is not a specific line item.
    What we do is we justify our budget based on the requirement
    for these brigades, and everything is done in our resource
    allocation model. Of course, when we wind up with lower levels
    of funding then we need to adjust and that is what happens.
    Then you are not able to provide the level of funding that
    would be required to maintain them at those levels.
        Senator Cochran. But is my suspicion correct that, if this
    budget request is approved as submitted, that we would not have
    the training resources or funds necessary to maintain the
    enhanced readiness of these brigades?
        General Navas. Sir, not at the level, not at the highest
    levels. We would probably, as an illustrative example, we might
    not be able to provide all the schools training that we need to
    provide to all of them, because if we would do that then we
    would be zeroing out the drills and the AT accounts of some of
    the later deploying units.
        Senator Cochran. So the point is, unless we do increase the
    funding levels for these training exercises, we are going to be
    writing a recipe for failure for the enhanced brigade concept?
        General Navas. We would not be able to accomplish what we
    set out to accomplish in 1996 when we established the criteria
    for the enhanced brigades, yes, sir.

                         Air National Guard integration

        Senator Cochran. During Desert Storm we also saw the Air
    National Guard participating quite actively from our State. The
    unit at Jackson, MS, flew hundreds of missions in support of
    that activity. Now that the C-17's have arrived, I was curious
    to know what the C-141's will be used for. Will they still
    remain in service at that facility in Jackson, or will you send
    them to some other units?
        General Shepperd. We will send them to the boneyard, sir.
    The idea of the C-17 is to replace 240 C-141's that are aging
    and need a lot of money to be fixed with 120 C-17's. Your unit
    is getting C-17's to replace your C-141's. We will be parking
    the C-141's rather than replacing them as they are phased out.
        Senator Cochran. Do you have any information you can give
    us about the likelihood for the use of that unit or those
    planes in any of the missions that are going on right now in
    Bosnia or the Middle East or elsewhere?
        General Shepperd. They will be integrated just like your
    141's, which are used in the air mobility, air transportation
    system wherever they are needed. The same thing will happen to
    the C-17. Your airplanes at Jackson were the first airplanes
    from the U.S. Air Force airborne in support of Desert Shield,
    the first ones, and they will be used in the same way in the C-
    17 business.
        Senator Cochran. We are very proud of the record that they
    have had and we look forward to continued involvement wherever
    you suggest we can participate effectively.
        General Shepperd. They lean forward. I do not know how they
    get as much time off as they do, but they are dynamite people.
    You can always depend on them. If we need an extra airplane, we
    call them or Memphis in the 141 business and it is there. Very
    proud of them.

                            Biloxi/Gulfport airport

        Senator Cochran. That is good to know.
        We also have training activities down at the Gulfport-
    Biloxi, MS, airport. They have got some runway problems down
    there. We are trying to work with the local airport authority
    and the FAA and the Air National Guard officials. The
    facilities director has written a letter regarding the efforts
    to rehabilitate some of those runways.
        We hope that you will work with us to try to help make that
    a success. I do not know the extent to which you can become
    involved through your funding through your budget, but if you
    can lend whatever support you can that would be appreciated.
        General Shepperd. Sir, we are heavily involved in that. We
    are going to fix that runway. We need it to operate off that
    training site. That training site is very cost effective. It is
    a bare-base operation where you deploy in, you have got
    everything you need. It is just like when we go to war. That is
    the kind of base that we will have when we go to war. We want
    to maintain it and we will.

                            training at Camp Shelby

        Senator Cochran. I know my time is about out. I just want
    to put in a plug for continued training at Camp Shelby in
    Hattiesburg, MS. We are trying to get some funds to improve the
    gunnery range opportunities. We have a tank gunnery range there
    which is being designed and looked at. We hope you will be able
    to support that.
        A nodding the head means yes, you will?
        General Navas. Well, sir, Shelby and the other training
    sites are critical to the Army Guard. They are a very cost
    effective means of training the National Guard, and, of course,
    we are very supportive of those State-operated training sites,
    Shelby being one of them.
        Senator Cochran. Thank you very much.
        Senator Stevens. Senator Domenici.
        Senator Domenici. Mr. Chairman, I have essentially run out
    of time. Of course, I have to be somewhere at 11 o'clock. I am
    going to submit seven or eight questions in writing, if you
    would ask that they be answered as soon as possible.
        Let me ask just a couple of quick questions.
        Senator Stevens. Yes, sir.

                    Telecommunications link to rural America

        Senator Domenici. First, I want to talk a little bit about
    the extension of your participation with civilian groups and
    with local communities, which has been such a hallmark. You
    know, one of the things that is really tough for the United
    States is the issue of rural economic growth, and it turns out
    that a lot of the armories and facilities that you all run,
    own, and operate are in rural communities.
        It also turns out that you are busy in these facilities
    expanding the telecommunications capacity of those facilities.
    In other words, you are adding some of the equipment that
    enhances that local community's participation in the so-called
    telecommunications highway. You are bringing in computers, you
    are going to educate through a series of computers in those
    facilities, bringing in a lot of the hardware and a lot of the
    connecting equipment.
        I wonder if it would be possible for you to report to us
    what inhibitions there are in Federal statutes for that kind of
    capacity to be used by a local community where you have excess,
    either in private partnerships or community partnerships? You
    see, I am convinced that rural communities are going to grow in
    proportion to their having telecommunications capacity. If they
    have that, you can locate a service center there and it does
    not have to be in the big city. You have a lot of the fiber
    optics being brought into your centers and the like, and I am
    fully aware that there is a lot of extra capacity.
        We are trying to put something together statewide, and the
    Guard is participating. But I think we need to know if we need
    to change any laws protecting your needs in the capacity, but
    permitting the capacity to be used by others in a community
    environment.
        Could you comment on that?

                      Reserve component automation system

        General Baca. Yes, Senator, I would be more than happy to
    comment on that. If you recall, when I was the Adjutant General
    of New Mexico you and I worked on a program with the Defense
    Evaluation and Support Agency to start, some 4 years ago, to
    start bringing the information management highway to our rural
    communities and our armories.
        Well, I am proud to say now that during the past 2 years we
    have refined the Reserve component automation system and we
    have changed it from the old Unix-based system that was a
    closed system now to an open system, completely with all of the
    Internet facilities available to it. And we are installing that
    in every armory in the United States.
        So with that as the base and with the support that we have
    gotten from the Congress to implement that program, we will
    have the hardware out there in those communities to be able to
    do exactly that. We are in the process of testing the system
    right now. We are doing--our beta test site is in Iowa. Iowa,
    as you know, is one of the lead States in fiber optics and they
    actually have a fiber optic network out to all of their
    armories right to date.
        As you recall, we were doing the same thing with DESA using
    an open architecture system. Maybe we cannot afford to take
    fiber optics out to Ratone or Clayton or whatever, but using
    satellite, using microwave, using all other means of
    communication, we can maybe come up with the same kind of a
    poor man's Iowa.

                  sharing the technology of Distance learning

        We are doing that, Senator Domenici, and we are also
    working our distance learning into these networks. We are
    establishing a classroom right now in every armory that will be
    available to the communities. We are looking at using a shared
    usage approach to where not only the Guard benefits by this,
    this wide area network and the local area networks in the
    communities, but that also the communities can ride on the same
    network. We will have the bandwidth that we will be able to do
    that.
        In your State right now, General Montano is working with
    the universities, both the University of New Mexico and New
    Mexico State University, to utilize their satellites to start
    doing a lot of that right now, Senator.
        So I see us as the National Guard being able to bring that
    information management highway out to all of the communities,
    and eventually to all our units and to our people in the units,
    because eventually maybe we might issue a laptop to an
    individual instead of giving them a $2,500 bonus to enlist.
        Senator Domenici. Mr. Chairman, I think the issue that I
    raised is a very important one. I believe many, many rural
    communities are short of what they need to be on the
    telecommunications highway. The Government is not going to go
    pay for it all. But if you have an armory or a Guard facility
    there that has more capacity than it needs, I would like very
    much for us to explore whether we could at least give authority
    to them to share it, because you might immediately build in a
    telecommunication capacity in a rural community that may never
    be there otherwise. And if they have excess, I think we ought
    to see if we can do that.
        I have one last question. You know, I am always on the side
    of let us give defense what they want. I wonder if it would be
    asking too much--perhaps it is--for you to suggest to us where
    you might save some money. I do not intend to wait around while
    you think about that, but--because I have got to decide whether
    we are going to get a budget that has enough money in it for
    the next few years for all these things you need.
        But it would seem to me that it would be nice, since we are
    so generous and kind, that if you would occasionally come up
    here and make us feel good by telling us, well, we looked it
    all over and, since we have budget problems, we could get by
    with a little less here or there.
        Thank you very much.
        Senator Bumpers. Would you like to address that question to
    me, Senator Domenici?
        Senator Domenici. No. [Laughter.]
        Senator Stevens. Later, later, later.
        Let me, just while you are here, talk about that question
    of use of the telecommunications. It would be helpful to this
    Senator if you would not talk about the information highway. We
    have fewer highways than King County in Washington, so we do
    not relate computers to highways up our way.
        But I do think the Senator's suggestion has a lot of merit
    in terms of attracting from the rural area a lot more of these
    very qualified young people who might see the computerization
    aspect of your operations as a magnet to them, an opportunity
    for them to really get into the 21st century ahead of what they
    might get in their schools or their homes.
        So I would like very much to work with the Senator from
    North Dakota. I am sure we all would.
        Before you leave, I hope you realize that General Shepperd
    just told us how he is saving about $1.6 million on the
    training simulators he is not buying. We may not reduce him
    that amount for each one, but at least there is a built-in
    saving there. His budget will not grow up because of the
    increased cost of simulators.
        Senator Domenici. Oh, I heard that. I am very pleased.
        Senator Stevens. I think the Guard and Reserve have been
    very active in pursuing some cost-saving mechanisms because
    they had to assume a great deal more of a role in our defense
    and yet their budgets have not gone up. So I hope when you look
    at this long-term problem, Mr. Budget Chairman, you keep in
    mind that the Guard is living within its budget right now and
    meeting its goals right now.
        Senator Domenici. Mr. Chairman, I just cannot leave without
    correcting the record. People on the right and the left are all
    accusing me in this budget, but you just made me a Democrat.
        Senator Stevens. Did I say North Dakota? I read the paper
    this morning and I had him in mind. [Laughter.]

                      repair of Army equipment from Europe

        Senator Domenici. Thank you.
        General Baca. Mr. Chairman, if I could just reply very
    briefly that there are several initiatives that we have taken
    together with the Army in the area of cost savings. In the
    Senator's home State of New Mexico, for example, in the
    RETROEUR program, we did that program where we repaired all the
    equipment that was coming back from Europe. Several of the
    items were repaired there, in Mississippi, as well as in New
    Mexico, and we did it I think for about $30 an hour using State
    labor with State Guard members performing it, rather than maybe
    the $90 or $120 if we had done that elsewhere.
        Of course, there in Camp Shelby, as you mentioned, we have
    got the first controlled humidity preservation site in the
    United States and one of the best probably in the world, that
    has a tremendous cost avoidance factor. So anything we can do,
    Senator, to try to save money jointly with the Army, with the
    Air Force, with the services, we stand ready to contribute to
    that.
        Senator Stevens. We want you to go to that meeting,
    Senator, because I was just reading the press release that said
    you could get a budget agreement within 24 hours if you put
    your mind to it. [Laughter.]
        Senator Domenici. I did not write that thing.
        Senator Bumpers. I saw in the paper this morning that, if
    Congress does nothing, the deficit still is going to come down
    by $37 billion, so I would prefer you not even go. [Laughter.]
        Senator Domenici. Well, we are at least not going to spend
    more, so that will still work out.
        Senator Stevens. I do not know why I am sweating over the
    supplemental for, because the President spent $4.8 billion more
    than we gave him already in one account.
        Senator Domenici. Yes.
        Senator Bumpers. All very meritorious spending, too.

                             Antiterrorism training

        Senator Domenici. Mr. Chairman, before you go on let me
    just say, you remember, because of your leadership, the Nunn-
    Lugar-Domenici bill incorporated in your funding last year
    regarding proliferation of biological and chemical weapons by
    terrorists. I believe that we are engaged now for the first
    time in trying to make, trying to begin to prepare some local
    communities for the eventualities.
        I am convinced, as I read about it, that the Guard probably
    ought to be playing a vital role in that kind of preparation. I
    did not get a chance to ask that question, but I would say to
    you that, since you were so interested and instrumental--and we
    do not know quite how to organize that yet. How do we organize
    for a potential biological terrorist? It may very well be that
    the best organization, institutional organization, might be the
    Guard. I just leave that before you to think about.
        Senator Stevens. I would like to explore it with you,
    Senator. I am sure our generation remembers the backyard bomb
    shelters and a few other things that we spent money on. I would
    hope that we can find some way to prepare for this contingency
    by convincing the manufacturers of our raincoats and weather
    gear to incorporate in them things that are automatic
    protections against some form of chemical or perhaps even
    biological warfare concepts.
        I think that it is possible for us to be more alert to the
    threat for the future and to get there without causing a great
    deal of fear in our society.
        Senator Bumpers.

                                Fort Chaffee, AR

        Senator Bumpers. Thank you, Mr. Chairman.
        Mr. Chairman, first of all I would like to take up a
    parochial issue in my own State with General Baca, and I am
    sorry that General Baratz, Chief of the Army Reserve, is not
    here this morning because it goes to the Reserve question, too.
    And I would assume, General Baca, that you and General Baratz
    have discussed some of the problems that the Reserve sees in
    training at Fort Chaffee, for example. Has he discussed that
    with you?
        General Baca. Senator Bumpers, no, he has not.
        Senator Bumpers. Well, let me restate it, then. As you
    know, the Base Closing Commission picked five bases to be
    turned over to the National Guard--Indiantown Gap, Pickett,
    McClellan, Hunter Liggett, and Chaffee. Chaffee will be the
    first one to actually be turned over to the Guard, on October 1
    of this year.
        But last year General Baratz and Senator Pryor and a whole
    bunch of other people met here in the Capitol, and General
    Baratz said he would contribute a little over $2 million to
    operate Fort Chaffee. He wanted 5,000 of the 71,000 acres
    there. The Guard said they wanted 61,000. So we had a very
    amicable meeting, an amicable meeting and a meeting of the
    minds on how we were going to finance Chaffee as a Guard
    training base.
        Then suddenly just a few months later General Baratz said
    he was not going to pay his $2 million. You are not familiar
    with this?
        General Baca. No, sir, I am not. I am sorry.
        Senator Bumpers. I hope you will familiarize yourself.
        General Baca. It is a separate organization, General
    Baratz.
        Senator Bumpers. I understand that, but the reason I am
    asking you--he is the right person to ask about it, which I
    have done on the phone. But my point is, it took the Reserve
    and the Guard both to make the financing of Fort Chaffee work,
    and he was going to contribute $2 million to it in order to
    have 5,000 acres for his own training, and the Guard was going
    to put up $6.85 million when it is turned over to them this
    fall for training.
        It is a big bargain because our Guard and many Oklahoma
    guardsmen would have to travel long distances to train anyplace
    else.
        Well, in any event, I thought you might be familiar with
    that. But I just wanted to say----
        General Baca. Senator, this is the first I have heard of
    it. I had not discussed it with him, I am sorry.
        Senator Bumpers. Well, it has presented a lot of heartburn
    to the Arkansas Guard, trying to figure out what they are going
    to do. I think they can probably make it this year.
        Are you familiar with it, General Navas?
        General Baca. Let me turn it over to General Navas.
        General Navas. Sir, the issue is basically a BRAC issue, as
    you are very aware. The Guard took over from the BRAC Chaffee,
    Pickett, Indiantown Gap, and McClellan. The first two posts to
    be taken over in this year, in October 1996, is Pickett and
    Chaffee, and we are working for the transition coming from the
    Army Reserve to the Virginia Guard and to the Arkansas Guard.
        I am, my staff has been working some of the issues. I have
    not discussed it personally with General Baratz, because this
    is basically the end of the Army Reserve tenure at Chaffee and
    we would be taking that over October 1 of this year.
        The issue that we are dealing with is that, with the taking
    over of Pickett and Chaffee, there was some commitment for some
    dollars to support Chaffee and Pickett. I think in the case of
    Fort Chaffee it was $6.6 million a year to maintain the base
    operating, and in the case of Pickett it is a similar amount.
        In the same POM that we put those dollars there, that was
    the POM that we got caught by $60 million. And we had to then
    go to an across-the-board cut of about 30 percent to all our
    installations, to include Shelby and all the other
    installations, and in addition the two that we were getting. So
    right now what we have in the 1998 budget is less than that
    $6.6 million. It is about $4 million some.
        We are working very close with the Adjutant General and the
    staff to see how we can deal with this issue and defer some
    maintenance and work out some efficiencies to be able to manage
    the budget.

                              Base support program

        Senator Bumpers. Well, I think they can make it this year,
    but now we have one small problem and that is the 1998 budget
    of the President cuts the Army National Guard base support
    program by $69 million.
        General Navas. That is right.
        Senator Bumpers. And you have distributed that among all
    the Guard bases. So as a result, as you pointed out--I think
    this is what you were saying--Chaffee will only get $4.6
    million. So we are going to have to obviously find another $2
    million in order to----
        General Navas. Well, I need to find almost $60 million for
    all the posts.
        Senator Bumpers. Yes; well, I just wanted to make you aware
    of that, and also----
        General Navas. No; I am aware of that part, sir.

                         ``Quadrennial Defense Review''

        Senator Bumpers. Now, Mr. Chairman, if I may just point
    out, the ``Quadrennial Defense Review'' report is due Thursday
    at the White House and I assume later this month to Congress,
    and there was a big story in the New York Times yesterday about
    what is going to happen, and you can hear everything but meat
    frying about what the Quadrennial Review Commission is going to
    say.
        But I just want to say that when Senator Domenici asked
    you, are there places where you could save and I made that flip
    response, my response was based on the Pentagon. I mean, you
    give me a chance to cut budgets at the Pentagon and I can do
    it. But so far as I am concerned, Mr. Chairman, the Guard has
    been living on starvation wages just about ever since I have
    been in the Senate, and the suggestion that they are going to
    lose 60,000 billets or something so the Army will only have to
    take a cut of roughly 5,000 is going to set off a firestorm
    around here with people like me.
        I do not agree with that. We have 900,000 Guard and
    Reserves. They supply 70 percent of the field artillery, 50
    percent of the aviation, 40 percent of the manpower, and they
    get 7.6 percent of the budget.
        So I am not going to ask the Reserves where they can save
    money. It is quite obvious you cannot save money when you are
    being treated in such a way.
        Well, finally, let me also say that at some point, and I do
    not know when this is going to happen--I have been screaming
    like a pig under a gate for the last 3 years about not building
    any armories. We have 3,100 armories in this country and about
    1,400 of them are considered to be inadequate. And at some
    point--you know, we cannot just keep going that way.
        We have armories in my State that leak so badly they ruin
    equipment. You cannot get the equipment away from the leaks.

                           State partnership program

        Finally, I will not beat that dead horse any longer, but I
    also want to just point out to you, so that when it comes to
    your attention you are familiar with the partnering concept in
    the Guard. The Arkansas National Guard under its previous
    adjutant was working on partnering with the Russians. We have a
    new Adjutant General who has just simply said that he had not
    had time to pursue that.
        But I just want to say, he is going to pursue it, and when
    that comes to you requesting your permission for the Arkansas
    Guard to partner with Russia I would hope you would approve it.
    You are familiar with this partnering?
        General Baca. Yes, sir, absolutely, totally familiar with
    the State partnership program.
        Today we have 23 States partnered with 21 of the former
    Eastern bloc nations. We are establishing five partnerships
    right now in Central and South America. We have got several
    States that are waiting in line to establish these
    partnerships, several of the States, by the way, that have
    spoken for Russia. I think Russia is big enough, as we have
    done in other States, that we can partner more than one State
    to Russia. We have got--even in some of the smaller nations, we
    have used more than one State and it works exceptionally well.
        Senator, let me tell you, that is the--as I said in my
    opening statement, I see this as the foundation for the new
    Marshall Plan of the 21st century. As you partner these States
    with these nations, it goes way beyond the military-to-military
    relationship. What happens then is that the State is partnered
    and the Governor and his cabinet as well as the State
    legislators then also have an influence on that partner nation.
        I could give you example after example as to how that has
    worked effectively. Just, for example, right here in Maryland
    with Estonia, the Governor has made the University of Maryland
    Trauma Center in their medical school available to the
    Estonians to help them establish their medical center, and also
    John Hopkins University. They have made leaps and bounds, they
    have advanced in leaps and bounds in their medical arena,
    because of that.
        Many of them are developing the economic partnerships. They
    are developing sister city relationships, Birmingham with
    Bucharest and Montgomery with Constantia, Romania, for example.
    This is expanding where we are bringing our guardsmen out
    there, and they are the best Ambassadors you could ever find,
    Senator Bumpers. What we are doing is we are bringing the
    grassroots values of America with these guardsmen to these
    partnership nations, as we have been doing now with our nation-
    building projects for the last 10 years in Central and South
    America.
        Senator Bumpers. General, I am very pleased with your
    enthusiasm, which I share. I think it is a great idea.
        Thank you, Mr. Chairman.
        Senator Stevens. Yes, sir, Senator Shelby.

                  prepared STATEMENT OF HON. RICHARD G. SHELBY

        Senator Shelby. Mr. Chairman, I was at another committee
    hearing and I would like for my opening statement to be made
    part of the record in its entirety.
        Senator Stevens. Yes, sir, it will be.
        [The statement follows:]

                Prepared Statement of Senator Richard C. Shelby

        Thank you, Mr. Chairman. I commend you for holding a
    hearing which for the first time since I have been a member of
    the Committee is exclusively on the National Guard. The Guard
    is accomplishing more missions while withstanding the
    turbulence of force restructuring and financial uncertainty.
    Considering the increasing number of demands shouldered by the
    Air and Army National Guard, it is appropriate to highlight
    force structure and modernization issues facing our citizen-
    soldiers.
        Generals Navas, Shepperd, and Baca state that the Guard is
    positioned to be the cost-effective force that is relevant to
    and prepared for future missions. Yet, without adequate
    resources, training, and modern equipment, the Guard is being
    treated like the unwanted step-child of the Total Force.
    Funding for training and education has been cut to the point
    that Guardsmen are being forced to attend schools while in
    drill status or annual training status. When a soldier must use
    drill time for individual training, that soldier is not able to
    train with his or her unit. This undermines unit cohesiveness
    and impairs readiness. Unless remedied soon, this trend will
    become more pronounced as more units are inactivated and more
    Guardsmen require individual training in order to serve in
    units that remain in the force structure.
        National Guard units have been deployed to support
    operations in the Persian Gulf, Haiti, and Bosnia. They serve
    next to active components, but do not come to the fight with
    the same equipment or capability. For example, the F-16's of
    the 187th Fighter Group that were deployed to Southern Watch
    are not equipped with the precision munition capability that
    their active duty counterparts provide. These planes need to be
    upgraded so that CINC's and others in the battlefield cannot
    distinguish between the capabilities of the Guard and Active
    components.
        I look forward to a dialogue with the witnesses on these
    and other issues with the National Guard. Thank you, Mr.
    Chairman.

                               Tiered resourcing

        Senator Shelby. And I have several questions.
        I am concerned about the National Guard's use of tiered
    resourcing, as we call it, and with which all three of you are
    familiar.
        General Baca. Yes, sir.
        Senator Shelby. I believe there is a disconnect between
    funding for the so-called first to fight units and the higher
    deployment rate of lower tier units. How does your tiered
    resource model guarantee the readiness of lower priority units
    that are being called up a lot more frequently to support
    peacekeeping operations? General, do you want to explain this?
        General Baca. Yes; Senator, let me say this. I am going to
    pass the question to General Navas because it is an Army
    question and the Army does use, has been using, tiered
    readiness for many years.
        Just let me say that we stated earlier that we understand
    that readiness is a direct result of resourcing and that if you
    are not properly resourced you cannot maintain the established
    level of readiness----
        Senator Shelby. Absolutely.
        General Baca [continuing]. To do all those missions,
    including the one you just mentioned now of those peacetime
    deployments that are being performed by the lower tiered
    readiness units. We understand that very well, and so we have
    been endeavoring to maintain the level of readiness where we
    maintain a base of at least a C3 level of readiness across the
    board for the lower tiered units, and at the same time using,
    resourcing the higher tiered readiness to the levels of
    readiness that are required for their immediate deployments.
        What we have been endeavoring to do is have the haves and
    the have-mores rather than the have-nots.
        With that, I will turn it over to General Navas and let him
    explain it in a little bit more detail.
        Senator Shelby. General, is that not a problem now?
        General Navas. Well, we went through this earlier, but let
    me briefly go over it. What happened here, sir, is in 1993 when
    we had the bottom-up review and we saw that basically the high-
    risk low probability would be two major regional contingencies,
    we tiered our resources to provide higher levels of readiness
    to those units that would be required from zero to 90 days.
        We did not expect to have a lot of the things that we have
    been doing in the last 6 years. So we thought that we could
    maintain a basic level of C3 to maintain kind of a warm base in
    our lower priority units that would take longer to deploy.
        That has not come to reality in two counts. The budgets
    continue to go down. That is why we have today basically a
    difference from the 1995 levels. And also, we have been
    involved in the Bosnias, the Somalias, the Haitis, and it is
    the units in the lower tier that have been picked and called up
    to do this. So that right now we are at an imbalance.
        What we are trying to do is maybe assume some risk in the
    earlier deploying units, to take some dollars from that to be
    able to maintain the solid level C3 across the board to be able
    to provide this repository of capability that we have in the
    Guard to be able not only to meet the requirements of the
    services and the CINC's, but also the requirements of the
    States' Governors in the domestic arena, because when you have
    an aviation unit at a lower tier level of readiness and you
    cannot provide enough flying hours to maintain training at the
    levels required for safety, but that is that same unit that
    might not be in a high priority for a war fight, but it is a
    high priority to deal with the citizens of that State in the
    case of an emergency. We need to provide that level, and that
    is a challenge that we have, basically where we feel that we
    have this imbalance and we are trying to come to grips with
    that.
        Senator Shelby. It is also a challenge for us to fund you.
    Without the money it is going to be hard to achieve high states
    of readiness, is it not?

                          UH-60 Blackhawk helicopters

        General Navas. Yes, sir.
        Senator Shelby. Regarding the UH-60 Blackhawk helicopters
    for a moment, just in that area, what is the current shortfall
    of Blackhawks in the National Guard?
        General Navas. Yes, sir; right now we have, after all is
    bought and purchased, the Guard would still have close to a
    shortfall of 500 UH-60's.
        Senator Shelby. A 500 shortfall.
        General Navas. Plus about 131 light utility helicopters
    that we are using Hueys now, that we do not have a program to
    do that.
        We were expecting to get anywhere from 18 to 36 Blackhawks
    per year under the program.
        Senator Shelby. But the Army is only requesting 12, are
    they not?
        General Navas. Yes, sir, because that program has been
    canceled. Those Blackhawks would have gone to our high priority
    units, which are the aerial med units and the force package
    support units, and then later on the 500 would be to modernize
    our aging Huey fleet in the lower priority units.
        Senator Shelby. How does this lack of enough Blackhawks
    effect your warfighting and medevac requirements?
        General Navas. Sir, it would not allow me to modernize all
    the medevac units in the high priority units, and it would----
        Senator Shelby. It will not allow you to do your job, in
    other words?
        General Navas. Well, we would do it with older aircraft,
    which are more expensive to maintain and to operate. And then
    it would defer modernization to the lower priority units by
    maintaining those, the older aircraft there, which again my
    comment that they might not be a high priority for a Federal
    mission, but they are certainly high priority aviation assets
    for our domestic mission.
        Senator Shelby. Have you discussed the implications of this
    with the senior Army leadership?
        General Navas. Yes, sir; this has been discussed inside the
    Army. It is basically a prioritization and dealing with a
    budget and fiscal realities.
        Senator Shelby. Ultimately, General, what impact will
    terminating the Blackhawk program have on the Guard?
        General Navas. Sir, the impact would be that we would not
    be able to replace--we would not be able to field a requirement
    for almost 500 helicopters in the Guard. We would have to
    retain our aging Huey fleet a longer time.
        Senator Shelby. Sooner or later they are going to just by
    age terminate, are they not?
        General Navas. Yes, sir.
        Senator Shelby. So it is going to cause you trouble, is it
    not?
        General Navas. Yes, sir.
        Senator Shelby. The bottom line.
        General Navas. If we do not fix this, in the long term it
    would cause problems. In the short term there might be work-
    arounds, but it is not a long-term solution.
        Senator Shelby. Thank you, Mr. Chairman.
        Senator Stevens. Yes, sir.

                         Additional committee questions

        Generals, we appreciate your appearance before the
    committee. This year we are going to do something a little bit
    different and listen to four of the Adjutant Generals for a
    while. We will appreciate your responses to the questions that
    have been submitted. I am going to submit some of mine rather
    than go into them now. They are questions for the record. We
    look forward to working with you. I again congratulate you for
    your work to date. Thank you very much.
        General Baca. Thank you, Mr. Chairman. Again, thank you for
    your support and the support of the committee.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                   Question Submitted to Gen. Edward D. Baca
                 Question Submitted by Senator Patrick J. Leahy
        Question. General Baca, will the impending Quadrennial Defense
    Review consider the National Guard's state mission in their evaluation
    of force structure and modernization requirements? Will the
    congressionally mandated National Defense Panel, in your opinion,
    consider the state mission in their examination of force structure
    alternatives?
        Answer. In the process of the Quadrennial Defense Review, a series
    of force allocation exercises were conducted by the OSD and the DOD
    Joint Staff which considered several domestic emergency scenarios
    oriented to National Guard forces, including domestic nuclear and
    chemical terrorist events, as well as hurricanes. The Army has utilized
    the data from these events in their analysis to imply that National
    Guard forces would be committed to counter domestic terrorism, and
    therefore may not be available for overseas deployment. There was no
    consideration to National Guard modernization requirements in this
    phase of the review.
        Based upon this experience, additional information must be provided
    to the National Defense Panel to ensure warfighting forces allocated to
    the Army National Guard are also adequate to respond to state missions.
                                     ______

              Questions Submitted to Maj. Gen. William Navas, Jr.
                Questions Submitted by Senator Pete V. Domenici
                                 budget issues
        Question. Are the Guard and Reserves being accorded full
    partnership in the deliberations of the Quadrennial Defense Review?
        Answer. The Army National Guard Directorate has been involved in
    the Quadrennial Defense Review, within the Army Staff, from the
    beginning of the Strategic Synchronization Cell, under the direction of
    the Assistant Vice Chief of Staff--Army. At the Colonel (06) level and
    below, the ARNG was afforded the opportunity to participate in Task
    Force meetings within the Army Staff.
        Question. Are you being given every opportunity to express your
    point of view on questions of the Guard and Reserve force structure and
    mission?
        Answer. No, although National Guard Bureau staff did participate in
    the QDR process, we have not been afforded the same opportunities to be
    represented in all decisions and discussions. Many decisions were being
    made without adequate input from the ARNG. All components must be
    involved throughout the process to ensure the most feasible and
    equitable decisions regarding the future force structure of the Army
    are rendered.
        Question. Where, in your judgment, are the places where the Guard
    and Reserves can offer additional savings.
        Answer. There are numerous proposals for efficiencies and cost
    savings that the Army National Guard submitted for the Quadrennial
    Defense Review. Some of the most promising are the ``Fort State''
    proposal, Multi-National Force-Sinai, and Environmental Services.
        Under Federal law, each state, the District of Columbia and U.S.
    territories are required to appoint an Adjutant General to lead the
    National Guard. The Adjutant General has command, control and staff
    capabilities organized in a State Area Command (STARC). The ``Fort
    State'' concept leverages that presence. If a state is viewed as an
    installation, the concept of AR5-9 support can be applied across a wide
    range of activities. The ARNG can provide BASOPS support for all Active
    and Reserve Component military installation within a state. The ARNG
    can provide construction management for military facilities and by
    using state contracting procedures, the ARNG can significantly lower
    construction costs as compared to federal contracting procedures. The
    capability to manage installations is already inherent in each state
    National Guard. With additional resources, the ARNG can centralize
    management and engineering responsibility of Army or all military
    installations at the state level. The ``Fort State'' concept can also
    provide aviation training and aviation logistics support; contracting
    and comptroller support; and personnel services support to active and
    retired military personnel in the state. These are just a few of the
    potential savings that could be achieved.
        Under the Camp David accords, the Army is required to maintain an
    infantry battalion in the Sinai. A different battalion is rotated every
    six months. The arrangement effectively commits an entire brigade to
    this mission for 18 months. The use of ARNG forces would allow an
    existing Active Army brigade to be available for other missions. During
    fiscal year 1995, the Army successfully conducted a multi-component
    test rotation with personnel from the Active Army, the ARNG and the
    U.S. Army Reserve. Under the ARNG proposal, an ARNG division sponsors a
    six-month battalion rotation.
        A last example of efficiencies is in the area of Environmental
    services. The ARNG has Environmental Management Offices in 54 states
    and territories. The ARNG can leverage this capability and provide
    support to active Army installations within a state. With its existing
    relationship with state regulatory agencies, the ARNG can provide
    natural resources management for the Department of the Army and as well
    as serve as the Department of the Army's executive agent for assigned
    DOD Regional Environmental Offices.
        Question. Can the Guard and Reserves streamline headquarters and
    reduce the number of headquarters units?
        Answer. As part of the Headquarters Department of the Army (HQDA)
    Staff, the Army National Guard Directorate of the National Guard Bureau
    is part of the ongoing HQDA redesign. HQDA redesign is anticipated to
    reduce staffing. National Guard Bureau is currently reviewing the
    organization and functions of the fifty four State and Territorial Area
    Commands seeking possible ways efficiencies may be gained. This State
    Area Command (STARC) Table of Distribution and Allowances (TDA)
    Redesign Study will conclude with recommendations being presented by
    February 1998. As far as headquarters units are concerned, the ARNG is
    short of various doctrinal command and control (C\2\) units which
    administer to their respective subordinate units maintained in the ARNG
    force, and we cannot afford to lose additional units. Some of the more
    critical shortages occur in Transportation and other logistics
    headquarters.
        Question. Do you believe it prudent to reduce your force structure
    to provide funding for procurement of modern hardware?
        Answer. No. Force structure reductions impact on the Army National
    Guard's ability to support the Unified Commands, as well as the needs
    of the fifty four States and Territories. The cost of retaining Army
    National Guard force structure is far less expensive than comparable
    Active Component structure. Forces targeted for possible reduction are
    the nation's insurance policy during this period of uncertainty.
    Retaining this structure is analogous to having a whole life policy at
    term rates.
        Question. What is the return on the dollar invested in the Guard
    and Reserves to states and local government?
        Answer. The Army National Guard does not maintain this data at the
    national level and this is not a standard item reported by the states.
    However, some anecdotal information is available. Studies by the Alaska
    National Guard show a direct economic impact of $2.27 for every $1
    spent on National Guard payroll or operational expenditures. In many
    cases, the dollars invested by the Guard are leveraged by the state to
    garner even greater returns. For example, two National Guard facilities
    employ 121 employees at a payroll expenditure of $315,360. Using a
    payroll multiplier of 1.8, their total economic contribution is
    $567,648. It costs the state of Alaska $68,192 to maintain these two
    facilities. In this case, the return on Alaska's contribution is
    greater than 8 to 1. As you can see, the return on the investment in
    the Guard and Reserve is quite substantial and is a significant
    contributor to the state and local economy and government.
                            guard/reserves missions
        Question. What roles can the Guard and Reserves play in managing
    and responding to chemical and biological domestic Terrorism?
        Answer. The National Guard has a dual role in combating domestic
    terrorism; response and training. The National Guard is capable of
    responding to a WMD incident at both the state and federal level. As
    the first military responder, National Guard forces under the command
    of their respective governors in a state (non-federalized) status have
    the primary responsibility for providing military assistance to state,
    territorial and local governments. National Guard units and personnel
    can typically respond to incidents within one to four hours after an
    incident occurs.
        All National Guard personnel, both Army and Air, are trained to
    operate in a chemical and biological environment. Thus, units located
    in over 3,000 armories country-wide are capable of providing a trained,
    disciplined force to respond to a WMD incident. The National Guard's
    role is one of augmentation and as a force multiplier. In a WMD
    incident, the National Guard can provide additional manpower, equipment
    and resources to assist the Federal, State and Local civil authorities
    as appropriate. When assigned a federal mission by DOD, the National
    Guard can task organize to augment the federal response capability or
    provide a rapidly deployable operational base of personnel and
    equipment to receive or support deploying DOD and other federal assets.
        Units such as divisional chemical companies (within the ARNG) and
    HAZMAT teams (within the ANG), can provide the resources, both in
    training and response, required for the chemical detection,
    decontamination, and casualty management subsequent to a WMD incident.
        Currently, programs are being developed to provide readily
    accessible, community based training programs for Federal, State and
    Local first responders in the areas of WMD detection, monitoring,
    decontamination, and personnel protection. The training programs will
    be available to first responders and emergency management personnel
    through Mobile Training Teams, National Guard Bureau National
    Interagency Counterdrug Institute, and community-based Distance
    Learning Sites.
        With its trained, disciplined and jointly-coordinated staff, the
    National Guard is best-suited to conduct interagency community training
    exercises. In 22 states, the Adjutant General is also the agent
    primarily responsible for Emergency Management. As such, these
    Adjutants General and their staffs regularly provide training and
    expertise to their civilian counterparts. Training exercises, a regular
    part of military operations, can serve to identify community shortfalls
    in training and response capability as well as to train response
    agencies in the different aspects of joint interoperability within
    their areas of responsibility.
                               new mexico issues
        Question. Has the New Mexico Guard been able to start construction
    on the Taos Armory that was funded in past years?
        Answer. The Army National Guard has funded the Taos Armory,
    (Readiness Center, add/alt) for 100 percent of the design cost, but
    Congress has neither authorized nor appropriated funds for
    construction. This Armory is in the Army National Guard's Future Years
    Defense Plan for fiscal year 2001.
                                     ______

                Questions Submitted by Senator Patrick J. Leahy
        Question. General Navas, isn't it true that the Army has only
    included 19 Black Hawk helicopters in the fiscal year 1998 budget
    request--none of which are designated for the Army National Guard, and
    that in fiscal year 1999, the Army is requesting only 12 more Black
    Hawks and is then planning on terminating the Black Hawk program?
        Answer. It is true that the Army will terminate production of the
    UH-60L Black Hawk helicopters after procuring 18 in fiscal year 1998
    and 12 in fiscal year 1999. The Army has not indicated to the Army
    National Guard their intention to field any additional UH-60L or UH-60A
    Black Hawks to the Reserve Component beyond the current UH-60 fiscal
    year 1997 Congressional ``add on''.
        Question. What impact will terminating the Black Hawk program have
    on the National Guard and your aircraft modernization program?
        Answer. The termination of the UH-60L Black Hawk program will have
    a significant effect on the Army National Guard. The Army National
    Guard has a requirement for 872 UH-60 Black Hawk helicopters and 457
    are on hand. After the completion of current fielding plans, the Army
    National Guard will be short 406 UH-60L. Currently, Black Hawk
    requirements are being filled with aging UH-1 ``Huey'' helicopters. The
    UH-1 has significant operational limitations and is becoming
    increasingly difficult to support logistically. The future
    deployability of Army National Guard UH-1 aviation units is
    questionable.
        Question. How does this shortfall impact your warfighting and
    medevac requirements?
        Answer. The Army National Guard currently has a shortfall of 105
    UH-60's for warfight and medevac requirements, specifically; 58 for
    medevac, seven for assault, eight for general support aviation, 10 for
    command aviation support and potentially 22 for aviation intermediate
    maintenance. The Army National Guard is currently developing plans to
    move modernized UH-60 Black Hawk helicopters from strategic reserve
    missions to warfight and medevac missions. This is a monumental task,
    considering the sensitivity of the Adjutants General reference UH-60's.
    Any UH-60 movement from the strategic reserve to warfight and medevac
    requirement, will reduce the 105 UH-60 shortfall.
        Question. Finally, General Navas, I would like to ask a question
    about Army technician pay. I have heard from Vermont's adjutant general
    that the Army Guard's budget request does not provide enough funding to
    pay for the complement of civilian technicians who perform critical
    maintenance work. In my state, that will mean that the adjutant general
    will have to divert funding from other activities to pay the
    technicians, further exacerbating the problems in operations and
    maintenance. General, is this a problem in other states? How can DOD
    underfund personnel accounts like this?
        Answer. Vermont is not alone in having to adjust to this adverse
    situation. States were Congressionally funded to support a current
    expenditure rate of nearly 98 percent of what was authorized; thus,
    virtually all states shared in enduring the technician payroll
    shortfall.
        In accordance with recognized DOD costing models, the fiscal year
    1997 ARNG technician pay program was budgeted at 25,500. However, data
    entered into the federal costing models did not adequately reflect the
    actual historical execution. This historical execution coupled with
    projected inflation factors forms the baseline for our technician
    funding and thus our two percent shortfall.
        Efforts are ongoing to include involvement of contractors and the
    Army Budget Office to more correctly capture and analyze pay data
    submitted to these costing models to ensure a more accurate depiction
    of actual usage, thereby ensuring adequate funding.
                                     ______

              Questions Submitted to Maj. Gen. Donald W. Shepperd
                Questions Submitted by Senator Pete V. Domenici
                             guard/reserve missions
        Question. The Air National Guard has been assigned the relatively
    new B-1B bomber. What problems are you encountering with this
    assignment that provide useful lessons for the assignment of new
    aircraft in the future?
        Answer. Moving a portion of the B-1B fleet into the ANG has taught
    us that we're very capable of accomplishing the bomber mission and
    stand ready to accept more B-1B's in the ANG if that is what the Air
    Force decides. The B-1B bomber has been a great addition to the ANG and
    adding this mission to the ANG has been a great decision for our
    country. We're having great success with this weapon system. Our two
    units include the 184BW at McConnell AFB, Kansas and the 116BW at
    Robins AFB, Georgia. The 184BW has completed their conversion to the B-
    1B and will receive their first operational readiness inspection this
    fall. The 116BW will complete their conversion in fiscal year 1998/
    2001. Both units, like their active duty counterparts, are
    participating in exercises, deployments and Global Power missions that
    span the globe.
        Question. When will the B-1B be able to perform all relevant
    conventional missions?
        Answer. As a Total Force partner, ANG B-1B aircraft and aircrews
    are capable of performing all of the same relevant conventional
    missions our active force partners are performing. We are currently
    tasked to provide forces in several potential areas of conflict and
    regularly participate in exercises, deployments and Global Power
    missions which span the globe. The airplane today is capable of
    carrying Mark 82 and cluster bomb munitions (CBU's). ANG B-1B
    capability will only improve as we receive programmed improvements
    which include precision and standoff weapons, communications,
    navigation and defensive system upgrades. We look forward to the B-1B
    remaining the backbone of the conventional fleet well into the future.
                               new mexico issues
        Question. Please describe the requirements that would be addressed
    with new Squadron Operations and Composite Support Facilities at
    Kirtland AFB. What are the problems with the existing facilities?
        Answer. The Air National Guard (ANG) unit at Kirtland AFB has
    identified two Military Construction (MILCON) projects to alleviate
    severe space deficiencies and replace antiquated facilities. The first
    project will alter the existing Squadron Operations facility and
    construct an addition to the building. Besides the degraded conditions,
    the existing facility is undersized as a result of two recently
    assigned missions--Low Altitude Navigation and Targeting Infrared for
    Night (LANTIRN) and Defense Systems Evaluation. The Composite Support
    Facility will house the unit's communications and audio visual
    functions, and New Mexico National Guard Headquarters. The project also
    alters vacated space for the unit's Operations and Training (O&T)
    function. The existing facilities are unsatisfactory; contain numerous
    operational, health, and safety deficiencies; and negatively affect
    training and quality of life. Due to constrained funding neither
    project could be included in the President's Budget, but both projects
    are in the ANG's Future Years Defense Plan.
                                     ______

                    Question Submitted by Senator Judd Gregg
                            radar warning receivers
        Question. The Air Force active F-16 fighters are equipped with the
    AN/ALR-56 radar warning receivers which provide the aircraft and pilots
    warning of impending missile attack. The Air National Guard (ANG) F-16
    aircraft are currently equipped with less capable radar warning
    receivers. Does the Air National Guard support upgrading its fleet of
    F-16 fighters with the AN/ALR-56M radar warning receiver? To what
    extent is the self-protection capability of the ANG F-16 aircraft
    improved with such an upgrade?
        Answer. The earlier model of F-16's assigned to the Air National
    Guard must be kept compatible with Total Force requirements by
    continuing the F-16 Modernization, Survivability and Combat Capability
    Improvement Program. The tactical effectiveness of all front-line
    fighters is directly linked to their ability to survive through use of
    electronic countermeasures integrated through modernized avionics.
    Early model F-16 aircraft operated by the Air National Guard are
    limited against current threats and fail to cover anticipated future
    threats. Survivability modifications which provide warning, denial and
    deception across the threat spectrum are absolutely necessary and
    should be pursued with the AN/ALR-56M upgrade or follow-on improvements
    to the existing AN/ALR-69.
                               Adjutant Generals

    STATEMENT OF MAJ. GEN. RICHARD C. ALEXANDER, ADJUTANT
                GENERAL, STATE OF OHIO

                               welcoming remarks

        Senator Stevens. My apologies, gentlemen.
        We are now going to hear from the Adjutant Generals: Maj.
    Gen. Richard Alexander of Ohio, Maj. Gen. Raymond Rees of
    Oregon; Maj. Gen. Jake Lestenkof of Alaska; and Brig. Gen.
    Daniel James of Texas. I do welcome you all here, gentlemen. I
    am sorry about the interruption of the votes. I am not sure
    that any of my colleagues are going to come back under the
    circumstances of the votes on the floor, but I do want to
    proceed with our proposal that you would make your statements.
    We will print all of your statements in the record and I look
    forward to hearing your comments today and may have some
    questions, please.
        Let us see. Who would go first?

                     National Guard today and in the future

        General Alexander. Bill Alexander. Mr. Chairman, good
    morning, and members of the Senate Subcommittee on Defense. On
    behalf of the Ohio National Guard and the Governor of Ohio, the
    Honorable George V. Voinovich, I thank you for the opportunity
    to offer my views regarding the National Guard today and its
    prospects for the future. I have submitted a statement and ask
    that it be submitted for the record. In the interest of
    brevity, I would like to revise and extend my remarks.
        The committee's support of the National Guard over the past
    several years has earned its gratitude of every member of the
    National Guard. Your support is further evidenced by the fact
    that we are here today at a hearing dedicated to issues
    relating to the National Guard that will become increasingly
    important as the Department of Defense attempts to define the
    requirements of our national military strategy and alternative
    force structures to meet that strategy.
        With me today are three other Adjutant Generals: Major
    General Rees, the Adjutant General of Oregon; Maj. Gen. Jacob
    Lestenkof, the Adjutant General of Alaska; and Brig. Gen.
    Daniel James III, the Adjutant General of Texas.
        Mr. Chairman, I believe that hearing directly from these
    Adjutant Generals on issues facing the National Guard will
    provide an invaluable insight to you and members of the
    committee. We are here to provide the committee with
    information regarding the National Guard readiness, training,
    and accessibility for mobilization and to discuss the impact of
    the fiscal year 1998 budget on the Department of Defense
    request for important National Guard personnel and readiness
    accounts.
        As you know, the National Guard is proud of its history,
    accomplishments, and service to our Nation and to the States
    and territories in which we serve. We are anxious to continue
    to provide those services today and hope to remain a
    cornerstone of our national defense for the years to come. As
    you have heard from Generals Baca, Navas, and Shepperd, the
    contributions of the National Guard over the past year have
    been notable. I would like to highlight a few examples of the
    role the National Guard has played over the past year.
        The Army National Guard has contributed over 892,000 man-
    days in support of various military operations around the
    world. Mobilization and deployments of both Army and Air
    National Guard units in response to Federal missions
    requirements have increased significantly since the end of the
    cold war. State mission requirements have also increased.
        The National Guard's response to recent State and local
    emergencies relating to flooding and other natural disasters
    has been nothing short of heroic. All in all, a total of
    716,000 man-days have been provided by the Army National Guard
    over the past year in support of our domestic and emergency
    response missions requirements. In my home State of Ohio, the
    National Guard contributed more than 15,000 of those man-days
    during one single incident, the southern Ohio floods of 1997.
        The level of National Guard participation in recent
    peacekeeping operations, missions designed to support the
    warfighting commanders in chief, Partnership for Peace, nation-
    building programs, and domestic and State-related missions is
    reason to give all of us a sense of great pride. It also
    reaffirms our belief that during periods of reduced threat or
    economic constraints the dual Federal and State domestic roles
    of trained, ready, and accessible National Guard provide the
    Nation with the highest return on defense personnel, readiness,
    equipment modernization investments.
        I am concerned, however, that the funding levels requested
    for the National Guard for fiscal year 1998 are not adequate to
    maintain readiness, operations tempo, or modernization programs
    that are required to accomplish assigned Federal and domestic
    missions. In short, we cannot sustain the capabilities of the
    National Guard as you know them today within the fiscal year
    1998 budget request.

                               Readiness funding

        Despite the considerable capabilities and leadership of the
    Chief of the National Guard Bureau, Lieutenant General Baca,
    and his Directors to achieve and maintain high readiness levels
    in this environment of declining resources, the fiscal year
    1998 Department of Defense budget will not be sufficient to
    ensure minimum readiness levels in the Army National Guard.
    Over the past few years Lieutenant General Baca and his
    Directors have done an outstanding job managing the declining
    resources afforded the National Guard. In fact, General Baca
    and his staff have provided us the leadership to achieve
    unprecedented levels of readiness over the past few years.
    Under the leadership of the National Guard Bureau, the National
    Guard has done more with less.
        Severe funding shortages in important National Guard
    readiness accounts, namely pay and allowances and operations
    and maintenance, have now jeopardized the recent readiness
    improvements made by the National Guard. Despite efforts by the
    Congress to increase readiness funding throughout the Armed
    Forces, those accounts are still greatly underfunded. With the
    growing requirements for peacetime support of the active
    components and the need to provide combat-ready forces for
    contingencies, these readiness accounts are becoming more
    critical.
        Readiness funding shortages are particularly acute in this
    year's budget request for the Army Guard. When compared to
    fiscal year 1995, the last year when resources provided for the
    Army Guard were commensurate with assigned missions, the fiscal
    year 1998 budget falls $743 million short of meeting readiness
    funding requirements.
        The Department of Defense budget request does not
    adequately fund important Army National Guard personnel
    accounts, including funding for military schools, special
    training, and initial entry training for our new recruits. Many
    schools and special training accounts for the Army Guard are
    funded at only 11 percent of what is required. As a result,
    soldiers in 12 of our enhanced brigades and our 8 Army National
    Guard divisions will be unable to attend military schools in
    fiscal year 1998, 25 percent of our recruits will be unable to
    attend basic training, and over 27,000 National Guard troops
    will be unable to attend annual training for fiscal year 1998.
        While the fiscal year 1998 budget request provides
    operations and maintenance funding for tiered readiness to
    support some early-deploying Army National Guard units, funding
    is not provided to maintain minimum readiness levels for later
    deploying units, many of which are being called upon to serve
    in Bosnia and other peacekeeping missions.
        Base operations, real property maintenance, and depot
    maintenance are also severely underfunded, thus adding to the
    future base operations and real property maintenance costs by
    delaying near-term maintenance requirements.
        Given the increase in operations tempo for many of these
    units, any reduction in readiness could have a long-term impact
    on the Guard's capability and accessibility. Operations tempo
    funding poses a significant problem for the Army National Guard
    in fiscal year 1998. For example, funding levels provide only
    11 miles for tanks in the National Guard versus 288 miles
    required to maintain a C3 readiness level.
        The fiscal year 1998 Defense budget request again proposes
    a reduction in the number of aircraft for several airlift units
    in the Air National Guard. The Congress reversed the proposed
    reductions from 12 to 10 primary aircraft in these units last
    year. The fiscal year 1998 funding level provides for only
    eight primary authorized aircraft in those same units. These
    reductions will place an increased burden on the Air National
    Guard in their support of the Air Force and the CINC's.
        A total of $17 million is required in the fiscal year 1998
    budget to maintain existing primary authorized aircraft levels,
    a relatively small price to retain the equivalent of two
    additional airlift units. A funding shortage of this severity
    will have a devastating effect on the National Guard and our
    ability to respond to our State and Federal missions will be
    severely degraded.
        We are convinced the Army and the Air National Guard
    represents the most cost effective and capable components of
    the U.S. military.

                    economic benefits of the National Guard

        Mr. Chairman, the chart to my immediate left reflects the
    Army National Guard provides 55 percent of the combat forces,
    46 percent of the combat service support forces, and 25 percent
    of the combat service support forces of the total Army, while
    accounting for only 9 percent of the total Army budget or, as
    depicted on the chart, 2 percent of the DOD budget.
        The Air Guard provides 30 percent of the fighter and attack
    forces, 43 percent of the air refueling forces, and 45 percent
    of the theater airlift forces, and a high percentage of the
    combat communications, engineering, and installations
    capabilities, with only a 6-percent share of the Air Force
    budget.
        At a time when reduction in different spending appears to
    be imminent and maintaining a robust national security posture
    seems increasingly difficult, the National Guard should not be
    viewed as a billpayer, but rather a solution. The economic
    benefits of the National Guard are both quantifiable and
    indispensable.

                               prepared statement

        Mr. Chairman and members of the committee, we appreciate
    the past support of this committee for the National Guard and
    thank you for the opportunity to express our views regarding
    our national security and the National Guard. I ask you to
    encourage the Department of Defense to provide the readiness
    funding necessary to maximize operational effectiveness of the
    National Guard force structure and to ensure that unique
    capabilities and affordability of the National Guard are fully
    leveraged in our national military strategy.
        Mr. Chairman, with your permission I will be followed by
    Major General Rees.
        [The statement follows:]

              Prepared Statement of Maj. Gen. Richard C. Alexander

        Good morning, Mr. Chairman, and members of the Senate
    Appropriations Subcommittee on Defense. On behalf of the
    members of the Ohio National Guard and the Governor of Ohio,
    the Honorable George V. Voinovich, I thank you for the
    opportunity to offer my views regarding the National Guard
    today and its prospects for the future. The committees support
    of the National Guard, over the past several years, has earned
    it the gratitude of every member of the National Guard. Your
    support is further evidenced by the fact we are here today at a
    hearing dedicated to issues related to the National Guard, and
    will become increasingly important as the Department of Defense
    attempts to define the requirements of our National Military
    Strategy, and alternative force structures to meet that
    strategy.
        With me today are three other Adjutant's General, Major
    General Raymond F. Rees, the Adjutant General of Oregon, Major
    General Jacob Lestenkof, the Adjutant General of Alaska, and
    Brigadier General Daniel James III, the Adjutant General of
    Texas. Mr. Chairman, I believe that hearing directly from these
    Adjutants General, on issues facing the National Guard will
    provide an invaluable insight to you and the members of the
    Committee. We are here to provide the committee with
    information regarding National Guard readiness, training, and
    accessibility for mobilization, and to discuss the impact of
    the fiscal year 1998 Department of Defense budget request for
    important National Guard personnel and readiness accounts.
        As you know, the National Guard is proud of its history,
    accomplishments and service to our nation, and to the states
    and territories in which we serve. We are anxious to continue
    to provide those services today, and hope to remain a
    cornerstone of our national defense for the years to come.
        As you have heard from Generals Baca, Navas, and Shepperd
    the contributions of the National Guard over the past year have
    been notable. I would like to highlight a few examples of the
    role the National Guard has played in this post cold war era.
    Over the past year, the Army National Guard has contributed
    over 892,000 man-days in support of various military operations
    around the world. Mobilizations and deployments of both Army
    and Air National Guard units in response to federal mission
    requirements have increased significantly since the end of the
    cold war. State mission requirements have also increased. The
    National Guard's response to recent state and local
    emergencies, related to flooding, and other natural disasters
    has been nothing short of heroic. In all, a total of 716,120 of
    man-days have been provided by the Army National Guard over the
    last year in support of our domestic and emergency response
    mission requirements. In my home state of Ohio, the National
    Guard contributed more than 15,000 of those man-days during one
    single incident, the southern Ohio floods of 1997.
        The level of National Guard participation and their success
    in recent peace-keeping operations, missions designed to
    support the war-fighting Commanders-in-Chief, and domestic and
    state related missions, is reason to give all of us a great
    sense of pride. It also reaffirms our belief that during
    periods of reduced threat, or economic constraint, the dual
    federal and domestic roles of a trained, ready, and accessible
    National Guard provide the nation with the highest return on
    defense personnel, readiness, and equipment modernization
    investment.
        I am very concerned, however, that funding levels requested
    for the National Guard for fiscal year 1998 are not adequate to
    maintain readiness, operations tempo, or modernization programs
    that are required to accomplish assigned federal and domestic
    missions. In short, we cannot sustain the capabilities of the
    National Guard as you know them today, within the fiscal year
    1998 budget request.
        Despite the considerable capabilities and leadership of the
    Chief of the National Guard Bureau, LTG Baca, and MG Navas the
    Director of the Army National Guard, to achieve and maintain
    high readiness levels in this environment of declining
    resources, the fiscal year 1998 DOD budget will not be
    sufficient to ensure minimum readiness levels in the Army
    National Guard. Over the past few years, LTG Baca, and his
    Directors have done an outstanding job managing the declining
    resources afforded the National Guard. In fact, General Baca
    and his staff have provided us the leadership to achieve
    unprecedented levels of readiness over the past few years.
    Under the leadership of the National Guard Bureau, the National
    Guard has ``done more with less''. Severe funding shortages in
    important National Guard readiness accounts, namely Pay and
    Allowances, and Operations and Maintenance now jeopardize the
    recent readiness improvements made by the National Guard.
    Despite efforts by the Congress to increase readiness funding
    throughout the armed forces, these accounts are still greatly
    under-funded. With the growing requirement for peacetime
    support of the active components and the need to provide combat
    ready forces for contingencies, these readiness accounts are
    becoming more critical.
        Readiness funding shortages are particularly acute in this
    years budget request for the Army National Guard. When compared
    to fiscal year 1995, the last year when resources provided for
    the Army National Guard were commensurate with assigned
    missions, the fiscal year 1998 falls $743 million short of
    meeting readiness funding requirements. This years Department
    of Defense (DOD) budget requests does not adequately fund
    important Army National Guard personnel accounts, including
    funding for military schools, special training requirements,
    and Initial Entry Training (Basic) for new recruits. Military
    schools and special training accounts for the ARNG are funded
    at only 11 percent of what is required. As a result, no
    soldiers in 12 of the 15 Enhanced Readiness Brigades, or the 8
    ARNG divisions will be able to attend a military school in
    fiscal year 1998, and 25 percent of new recruits (6,633
    soldiers) will be unable to attend basic training in fiscal
    year 1998. Over 27,000 National Guard troops will be unable to
    attend Annual Training in fiscal year 1998.
        While the fiscal year 1998 budget request provides
    operations and maintenance funding for tiered readiness to
    support some early deploying ARNG units, funding is not
    provided, to maintain minimum readiness levels for later
    deploying units, many of which are being called upon serve in
    Bosnia and other peace-keeping missions. Base Operations
    (BASOPS), Real Property Maintenance (RPOM), and Depot
    Maintenance are also severely under-funded thus, adding to
    future BASOPS and RPOM costs by delaying near-term maintenance
    requirements.
        Given the increase in operations tempo (OPTEMPO) for many
    of these units, any reduction in readiness could have a long
    term impact on National Guard capabilities and accessibility.
    Operations tempo funding poses a significant problem for the
    Army National Guard in fiscal year 1998. For example, funding
    levels provide only 11 miles of OPTEMPO for tanks in the
    National Guard Divisions, versus a 288 mile requirement to
    maintain C-3 readiness levels.
        The fiscal year 1998 defense budget request again proposes
    a reduction in the number of aircraft in several airlift units
    in the Air National Guard. The Congress reversed the proposed
    reduction from 12 to 10 Primary Aircraft Authorized (PAA) in
    those units last year. Fiscal year 1998 funding provides for
    only 8 PAA in those same units. These reductions will place an
    increased burden on the Air National Guard in their support of
    the Air Force and CINC's. A total of $17.063 million is
    required in fiscal year 1998 to maintain existing PAA levels, a
    relatively small price to retain the equivalent of two
    additional airlift units.
        Funding shortages of this severity will have a deleterious
    affect on the National Guard and our ability to respond to
    state and federal emergencies and a reduction in National Guard
    capabilities.
        One other area of concern for the National Guard is the
    ongoing Quadrennial Defense Review and National Defense Panel
    examination of alternative force structures. During the past
    six years, significant force structure changes in the National
    Guard have been proposed by the Department of Defense (DOD),
    and other agencies. These changes are in response to the
    rapidly changing global threat, and federal budget constraints
    stemming from growing public and political support for deficit
    reduction and balancing the federal budget. Potential cuts in
    defense spending have already become a factor in several
    reviews and independent analyses of force structure and
    readiness including the Quadrennial Defense Review (QDR), as
    the military services attempt to maintain force structure and
    stake out their positions in the debate over future roles and
    missions. Recent attacks on the Army National Guard's combat
    structure can be partially attributed to that debate, despite
    the obvious cost advantage these units provide the nation, at
    approximately one quarter of the cost of similar sized active
    units, and the fact that these units are operated annually at
    one-half of one percent of the DOD's budget.
        In addition to their cost effectiveness, National Guard
    units remain trained, ready and accessible. According to
    General Dennis Reimer, Chief of Staff of the Army, in testimony
    before the House National Security Committee, March 13, 1996,
    when asked about the ability of the National Guard Enhanced
    Brigades to mobilize in response to their wartime mission, ``I
    would say that I am comfortable that the Enhanced Brigades can
    be counted on given a post-mobilization training period of 90
    days.'' With regard to larger, divisional units, the Institute
    for Defense Analysis has concluded, in a recent study, that
    Army National Guard Divisions can be ready within 143 days of
    being mobilized, or about the same time that sea or airlift can
    be made available to move the a National Guard division to a
    theater of operations.
        In recent history, the Army National Guard deployed 398
    units from 51 states and territories to Operation Desert Storm,
    and thousands of soldiers to peacekeeping operations in
    Somalia, Haiti, the Sinai, and Bosnia.
        Despite its cost and operational effectiveness, defense-
    wide downsizing over the past several years has resulted in
    significant force structure reductions in the National Guard.
    During that period, the Army National Guard has been reduced in
    size by over 475,000 to 367,000 and the Air National Guard has
    made a series of force structure changes that realign units to
    match Air Force mission requirements. For example, the Air
    National Guard has been reduced from 18 to 24 Primary Aircraft
    Authorized (PAA) in general purpose fighter units to as low as
    15 PAA in these units.
        We remain convinced that the Army and Air National Guard
    represent the most cost-effective, and capable components of
    the U.S. military. The Army National Guard provides over 55
    percent of the combat forces, 46 percent of combat support
    forces, and 25 percent of the combat service support forces of
    the Total Army while accounting for only 9 percent of the total
    Army budget. The Air Guard provides 30 percent of the fighter
    and attack forces, 43 percent of the air refueling forces, 45
    percent of the theater airlift forces, and a high percentages
    of the combat communications, engineering, and installation
    capabilities with only a 6 percent share of the Air Force
    budget. At a time when reductions in defense spending appear to
    be eminent, and maintaining a robust national security posture
    seems increasingly difficult, the National Guard should not be
    viewed as a ``bill-payer'', rather, they represent a solution.
    The economic benefits of the Army National Guard are both
    quantifiable and indisputable.
        Mr. Chairman, members of the committee, we appreciate the
    past support of this committee for the National Guard, and
    thank you for the opportunity to express our views regarding
    our national security and the National Guard. I ask you to
    encourage the DOD to provide the readiness funding necessary to
    maximize the cost and operation effectiveness of the National
    Guard force structure and to ensure that the unique
    capabilities and affordability of the National Guard are fully
    leveraged in our National Military Strategy.

                             Oregon National Guard

    STATEMENT OF MAJ. GEN. RAYMOND F. REES, ADJUTANT
                GENERAL, STATE OF OREGON
        Senator Stevens. General Rees.
        General Rees. Good morning, Chairman Stevens. I too will
    abbreviate my comments that were submitted for the record. I am
    Major General Rees, the Adjutant General of Oregon, and I am
    speaking on behalf of the Honorable Gov. John A. Kitzhaber and
    the more than 9,000 members of the Oregon National Guard.
        I want to express my gratitude at having the opportunity to
    share the successes of the Oregon National Guard with you and
    your committee. Your continued support of the National Guard is
    a key factor in our success and we are very grateful for it.
        Oregon is fortunate in two respects. First, we have a large
    percentage of high priority units assigned to the State. In
    fact, 77 percent of our Army National Guard force structure is
    categorized as high priority. With that structure and those
    resources comes the responsibility to achieve the highest
    readiness levels.
        With the add-backs provided by Congress in 1996 and 1997,
    we have been able to manage these resources well enough to
    attain levels of readiness comparable to those seen in the Air
    National Guard. And as you are well aware, we consider the Air
    National Guard to be the best Reserve force in the world. As an
    example, we have achieved the premobilization goal set for the
    41st Enhanced Separate Infantry Brigade.
        The enhanced brigades were conceived by the Army to be a
    cost-effective solution to increasing missions and fewer
    resources. Through focused hard work, the 41st has been one of
    the first enhanced brigades to attain the mandated readiness
    criteria in personnel, equipment on hand, equipment readiness,
    and in training readiness.
        The second area where we are fortunate is in our force mix.
    We have the proper forces for warfighting and State
    requirements, to both administer and perform our everyday
    missions, as well as respond to State and Federal emergencies.
    At the heart of those operations are 41st Brigade combat units
    with their inherent command, control, and communications.
    During our State emergencies, embedded units of the 41st are
    further supplemented by force multipliers from echelon above
    division, Army National Guard, aviation engineers, and
    transportation units. This provides us with a truly balanced
    and effective force of combat, combat support, and combat
    service support units.
        In the past 18 months we have had more than ample
    opportunity to assist the citizens of Oregon in responding to a
    wide variety of natural disasters. During that period of time
    we have mobilized over 5,000 citizen soldiers. A windstorm in
    December 1995, the worst flooding in over 30 years in February
    1996, major fires in 1995 and 1996, and yet another major flood
    this past January--modern equipment and training provided by
    congressional directive has directly contributed to saving
    lives during these calamities.
        During the flood of 1996, helicopters with night vision
    devices and thermal imagers evacuated 68 persons from extremely
    hazardous circumstances. This is a stark contrast to similar
    flooding in 1964, in which over 70 lives were lost.
        Concurrently, proper funding has allowed the Oregon
    National Guard to mobilize and deploy units and individuals to
    support a wide variety of Federal military operations around
    the globe, from Desert Shield and Desert Storm to Operation
    Joint Endeavor and Joint Guard. Included in that is the first
    ever home station mobilization for Operation Joint Endeavor.

                                OPTEMPO funding

        We are proud of our accomplishments, but are very concerned
    that funding levels requested for fiscal year 1998 will have a
    crippling effect on our ability to accomplish our assigned
    missions. Even with our high priority status, we will have an
    overall shortfall of $4.5 million in pay and allowances and $20
    million in operations and maintenance. In the personnel
    readiness area, we will be unable to qualify approximately 425
    soldiers in their assigned military occupational specialties,
    and we will be unable to send approximately 15 newly
    commissioned officers to their basic branch schools.
        We will not have adequate funds to conduct training
    required for promotion of our enlisted soldiers, and all
    special training, such as air assault, Ranger, and battle staff
    refresher courses, will be curtailed or eliminated.
        Our OPTEMPO funding will not support required aviator
    readiness levels, equipment readiness, nor maintenance of
    existing facilities. The purchase of any modern equipment
    necessary to maintain the required compatibility for these high
    priority organizations with active forces will be virtually
    impossible.
        We have fought hard to be given the opportunity to deploy
    nearly two-thirds of our Oregon Army National Guard to either
    the Joint Readiness Training Center or the National Training
    Center in 1998. However, there will be a significant shortage
    of money necessary to prepare and execute those events. Our
    estimate is about a 23-percent shortfall in what we require.
        All of these issues strike to the heart of our success in
    achieving early deployment readiness levels for these high
    priority organizations. In order for Oregon and every other
    State and territory to keep our guardsmen at the level of
    training and professional development required, it is
    absolutely essential that restorations are made in the National
    Guard Bureau budget. Our soldiers and airmen deserve it and the
    citizens we serve expect it.
        In my State, the National Guard is the face of the defense
    community. There is no significant active component presence in
    Oregon and other Reserve component presence is minimal.
        The citizens of the United States pay a significant
    percentage of their taxes to provide for a common defense. At 2
    percent of the total different budget, the Army National
    Guard's dual domestic and Federal mission provides our citizens
    with the best return on their investment. Our enhanced brigades
    and early deploying units can meet or exceed the
    premobilization requirements for deployment. Moreover, as we
    have seen with the spate of recent natural disasters, the
    public values of the National Guard's presence more than ever.
    Whether it is fires or floods in Oregon or North Dakota,
    earthquakes in California, hurricanes in Hawaii, the Guard is
    saving lives and property.
        Your continued support is an investment that will directly
    affect thousands of citizens in the future. In my opinion, no
    other defense spending does this. I believe this is truly the
    best bargain in defense dollars for America.

                               prepared statement

        Mr. Chairman, I thank you for all of your support you have
    already given us and, respectfully, ask that the Congress
    provide necessary funding to maintain our readiness levels and
    continue our unique dual role of providing national defense and
    service to the citizens of this great Nation. I thank you, and
    I will be followed by General Lestenkof.
        [The statement follows:]

                Prepared Statement of Maj. Gen. Raymond F. Rees

        Good morning, Mr. Chairman, and members of the Senate
    Appropriations Subcommittee on Defense. As the Adjutant General
    of Oregon speaking on behalf of the more than 9,000 members of
    the Oregon National Guard, I want to express my gratitude at
    having the opportunity to share the successes of the Oregon
    National Guard. Your continued support of the National Guard is
    a key factor in our success and we are very grateful for it. We
    also thank you for your willingness to listen to our concerns
    during this period of redefining national defense requirements.
        Oregon is fortunate in two respects. First, we have a large
    percentage of high priority units assigned to the state. In
    fact, 77 percent of our Army National Guard Force Structure is
    categorized as high priority units. This provides us with
    relatively more resources than many other states. With that
    structure and those resources comes the responsibility to
    achieve the highest readiness levels. With the add backs
    graciously provided by Congress in 1996 and 1997, we have been
    able to manage these resources well enough to attain levels of
    readiness comparable to those seen in the Air National Guard--
    the best reserve force in the world.
        As an example, we have achieved the pre-mobilization goals
    set for the 41 Enhanced Separate Infantry Brigade. The Enhanced
    Brigades were conceived by the Army to be a cost effective
    solution to increasing missions and fewer resources. After the
    National Guard Bureau selected the 41 Separate Infantry Brigade
    for Enhanced status in 1994, we developed a detailed plan to
    achieve the much higher readiness levels required. Through
    focused hard work the 41st has been one of the first enhanced
    brigades to attain the Department of Defense mandated readiness
    criteria of P1 in personnel, S1 in equipment on hand, R1 in
    equipment readiness and T3 in training readiness.
        The second area we are fortunate in is our force mix. We
    have the proper forces to both administer and perform our daily
    missions and respond to state emergencies. At the heart of our
    operations are 41st and 116th Enhanced Brigade combat units
    with their inherent command, control and communications. During
    the floods, their Table of Organization and Equipment support
    units of engineer, medical and MP's were supplemented by force
    multipliers from echelon above division ARNG aviation,
    engineers and transportation units and ANG support units. This
    provides us with a truly balanced and effective force of
    combat, combat support and combat service support units. In the
    past 18 months we have had more than ample opportunity to
    assist the citizens of Oregon in responding to a wide variety
    of natural disasters. We mobilized over 5,000 citizen soldiers
    to assist Oregonians in a major wind storm in 1995, the worst
    flooding in over 30 years in February 1996, major fires in our
    valuable National Forests in 1995 and 1996 and yet another
    major flood this past January. Modern equipment provided by
    congressional directive has directly contributed to saving
    lives during these calamities. For example, during the flood of
    1996, helicopters with night vision devices and thermal imagers
    evacuated 68 persons from extremely hazardous circumstances.
    Unfortunately even with these heroic efforts, four people
    perished in this flood. However, that is a stark contrast to
    similar flooding in 1964 in which over 70 lives were lost. This
    is a clear example of what a well trained force equipped with
    modern equipment can do for our citizens in times of crisis.
        Proper funding has allowed the Oregon National Guard to
    enjoy a prominent role in several precedent setting areas in
    the past two years. We conducted the first Home Station
    Mobilization/Direct Deployment of an Army National Guard unit
    to overseas theater of operation in support of Operation Joint
    Endeavor. The initiative has met with wide spread acceptance by
    both the Active Component and National Guard and has the
    potential to provide considerable cost savings for future
    operations. Proper funding has allowed the ORNG to mobilize and
    deploy units and individuals to support a wide variety of
    military operations around the globe to include Desert Shield/
    Storm and Operation Joint Endeavor/Guard. Oregon provided the
    first Reserve Component combat arms force to conduct a
    bilateral exercise with the Japanese Ground Self Defense Force
    during Operation Northwind. This exercise has also led the way
    for an expansion of the National Guard's role in international
    exercises with Japan. Reserve Component participation in these
    international exercises helps reduce the Active Component
    OPTEMPO--a reduction the AC says it needs.
        We are proud of our accomplishments but are very concerned
    that funding levels requested for the National Guard for fiscal
    year 1998 will have a crippling effect on our ability to
    accomplish our assigned missions. Without some significant add
    backs to the current budget we will be unable to sustain the
    current high levels of readiness we have achieved. Even with
    Oregon's high priority status, we will have an overall
    shortfall of $4.5 million in pay and allowances and $20 million
    in operations and maintenance based on shortfall between what
    we were funded in fiscal year 1997 and we're scheduled to
    receive in fiscal year 1998.
        In the personnel readiness area we will be unable to
    qualify 423 soldiers in their assigned military occupational
    specialties. We will be unable to send 50 newly commissioned
    officers to their Basic Branch schools. We will not have
    adequate funds to conduct training required for promotion of
    our enlisted soldiers and all special training, such as air
    assault, ranger and battle staff refresher courses will be
    curtailed or eliminated.
        Our OPTEMPO funding will not support required aviator
    readiness levels and equipment readiness will surely suffer due
    to a lack of funds to purchase repair parts. We will not have
    adequate funds to maintain our existing facilities. Moreover,
    the purchase of any modern equipment, necessary to maintain the
    required Title XI compatibility with active forces, will be
    virtually impossible.
        Our high priority has given us the opportunity to deploy
    nearly two thirds of the ORARNG to either the Joint Readiness
    Training Center or the National Training Center in 1998.
    However, there will be a significant shortage of money
    necessary to move our soldiers and equipment to local and
    regional training areas for crew served weapons qualification
    and essential collective training events for CTC preparation.
    Annual Training funds necessary to send these soldiers to a CTC
    is inadequate. Present estimates indicate a 23.3 percent
    shortfall in what we require. This and all of the above
    mentioned factors are critical to our units success at upcoming
    Combat Training Center rotations. We have fought hard to
    receive excellent CTC opportunities but the lack of funding
    will reduce the quality of this rare training experience
    significantly.
        All of these issues strike to the heart of our success in
    achieving early deployment readiness levels. The demand for
    capable and trained soldiers to assist the active component in
    the ongoing commitments of the nation has never been greater.
    Additionally, as I mentioned earlier, we have been called into
    state active duty on more occasions, for longer periods of
    time, over the past two years than at any other time since
    World war II.
        In order for Oregon and every other state and territory to
    meet these requirements while simultaneously keeping our
    guardsmen at the level of training and professional development
    that the American people expect, it is absolutely essential
    that restorations are made in the National Guard Bureau budget.
    Our soldiers and airmen deserve it and the citizens we serve
    expect it. In my state, the National Guard is the face of the
    defense community. There is no significant Active Component
    presence and other Reserve Component presence is minimal.
        Let me leave you with one last thought. There is much talk
    and discussion taking place about the future of American
    defense policy. After all the smoke has been cleared away,
    there is only one bottom line. The citizens of the United
    States pay a significant percentage of tax money to provide for
    a common defense. The National Guard's dual domestic and
    federal mission provides our citizens with the best return on
    their investment. Our Enhanced Brigades and early-deploying
    units can meet or exceed the pre-mobilization requirements for
    deployment. Moreover, as we have seen with the spate of recent
    natural disasters, the public values the National Guard's
    presence more than ever. Whether it is a fire or flood in
    Oregon, snow and flood in North Dakota, earthquakes in
    California or hurricanes in Florida, the National Guard is
    saving lives and property. Your continued support is an
    investment that will directly affect thousands of citizens in
    the future. In my opinion, no other spending on U.S. defense
    does this.
        Mr. Chairman, members of the committee, I thank you for all
    the support you have already given us. Again, thank you for the
    opportunity to relate my views on the National Guard and
    America's future. I respectfully ask that Congress provide
    necessary funding to maintain our readiness levels and continue
    our unique dual role of providing national defense and service
    to the citizens of this great nation.

                             Alaska National Guard

    STATEMENT OF MAJ. GEN. JAKE LESTENKOF, ADJUTANT
                GENERAL, STATE OF ALASKA

                           Operational areas funding

        Senator Stevens. Jake, nice to see you here.
        General Lestenkof. Good morning, Mr. Chairman and members
    of the subcommittee. I am Jake Lestenkof. On behalf of the
    Governor of Alaska, Tony Knowles, I thank you for the
    opportunity to appear before you. I have submitted written
    testimony for the record. For the purpose of brevity, I would
    like to revise and extend my written comments here today.
        I appreciate that the administration and the Congress are
    working to balance the national budget and we in the National
    Guard must participate in that effort. For the past 2 fiscal
    years, we have experienced reductions in our Army Guard budget.
    But as TAG of Alaska, I feel that the proposed reductions for
    fiscal year 1998 are reaching a critical point that will surely
    impact our readiness and effectiveness.
        We have always considered our Army Guard units in Alaska as
    being unique. They certainly were during the cold war, when
    they acted as the eyes and ears on our northern frontier.
    Because of the remoteness of most of our Guard communities,
    where only 7 out of 74 are connected by roads, the Guard is a
    center of influence and a catalyst for transition for our own
    Native people who live in these many remote villages.
        In the short time I have before you, I wish to touch on
    three operational areas--flying hours, school funding, and
    RPOM--which will be seriously impacted by further reductions.
        First, our flying hour program will be reduced to a
    critical level. We may be unable to support Arctic Care, which
    is an OSD humanitarian training program that over the past 3
    years has served over 7,000 citizens with medical and dental
    care, all in our remote villages. Additionally, I anticipate I
    will have more aviators unable to meet Army minimums than the
    14 who were unable to meet the minimums in fiscal year 1997.
        Second, the continuing erosion of school funding is fast
    creating an Army National Guard force of filler soldiers rather
    than capable, cohesive military units. During the current and
    the previous fiscal year, for example, commanders have had to
    choose whether unit members would attend annual training or
    required military schooling. In each of the past 2 years, at
    least 25 percent of the soldiers went to school to satisfy an
    essential individual training requirement rather than training
    with their units at annual training.
        This also means a high percentage of our junior leaders
    cannot train with their units. Lacking key leaders, units are
    unable to conduct effective collective training.
        Third, in terms of real property operations and
    maintenance, I estimate the fiscal year 1998 funding level to
    represent an overall reduction of nearly 40 percent of fiscal
    year 1995 funding levels. Meanwhile, the requirement to assume
    operational control of Bryant Army Air Field at Fort Richardson
    due to the closure by the Army added over 130,000 square feet
    of additional facilities to our support base. This space is
    absolutely critical to support our aviation operations.

                               prepared statement

        In conclusion, I feel we have now reached a turning point
    where we in the Army Guard are not going to be able to do what
    is expected by the citizens of our State and our country.
        I thank you for this opportunity to speak to you and the
    committee today, and I will be followed by General James.
        [The statement follows:]

                 Prepared Statement of Maj. Gen. Jake Lestenkof

        Mr. Chairman and members of the Senate Appropriations
    Subcommittee, as you know, the Army National Guard portion of
    the Defense Appropriations Bill before Congress has a reported
    shortfall of $743 million. I certainly believe this issue
    represents a significant challenge to the national defense of
    our nation. Today, however, I would like to demonstrate the
    general impact on the National Guard by addressing the more
    specific impact on the Alaska Army National Guard and the State
    of Alaska.
        We know that the primary role of the National Guard in
    America is to support the National Military Strategy. The
    National Guard responds to governors and states when not in a
    federal status. In Alaska, I may add, the National Guard,
    particularly the Army National Guard, has executed a crucial
    role in support of nation building. The many remote villages
    throughout Alaska make our situation unique. The Army National
    Guard has been a catalyst for transition for our own native
    people living in remote areas. I am sure that each state and
    territory has its own story about the value of its National
    Guard. For Alaska, these proposed further funding reductions
    will have serious, long range social and economic impacts.
        This shortfall will be realized directly in the readiness
    level and training of Alaska units. Due to funding shortfalls
    experienced in the fiscal 1996 and fiscal 1997 programs, my
    commanders had to decide whether their soldiers attended
    required military schools or participated in unit annual
    training. In each of the past two years, approximately 25
    percent to 30 percent of Alaska Army National Guard soldiers
    performed duty to satisfy essential individual training
    requirements other than training with their units. This
    resulted in a high percentage of our junior leaders who cannot
    train with their units. Lacking key leaders, our units were not
    able to conduct effective collective training. This continued
    erosion of schools funding is creating an Army National Guard
    force of filler soldiers rather than capable, cohesive military
    units.
        Individual and collective training are both important if
    the Army National Guard is expected to be ready to answer the
    call of either the President or Governor. The projected fiscal
    1998 program reduces funding for both critical military
    schooling and annual training. Individual and unit readiness
    objectives will not be met.
        This shortfall is especially visible in Alaska's aviation
    units as they modernize and the units must send pilots and crew
    members to schools to meet transition requirements, in addition
    to attending required professional development courses, and
    annual training. Our aviation battalion has been identified to
    participate in Joint Task Force 6, a counter drug support
    program in fiscal 1998. Projected funding for the National
    Guard annual training account will preclude the unit from
    supporting the task force and prevent these soldiers from
    making a major contribution in the war against drugs. This
    program also provides a superb training opportunity that
    improves unit readiness and enhances retention.
        The fiscal 1998 funding shortfall will also impact on a
    vital area of special significance to Alaska, the Army National
    Guard Flying Hour Program. The State of Alaska is unique in
    that it has a very limited road network. We place a
    considerable reliance on air operations and support at a cost
    considerably higher than most other states. Funding reductions
    in recent years have been especially painful as we have
    continued to modernize our aircraft fleet. The safety and
    improvement in operational capability of modernization are not
    without a price in terms of flying hour cost.
        In the past two fiscal years, the Alaska Army National
    Guard participated in a Joint Innovative Readiness Training
    Program supported, in part, by the Office of Secretary of
    Defense. While OSD supported many of the operational costs
    associated with Operation ``ARCTIC CARE,'' it did not support
    the flying hour costs. Through the superb cooperation of many
    organizations, OSD, the Public Health Service, the Marine Corps
    Reserve, and the Alaska Army and Air National Guard, medical
    care was brought to nearly 7,000 Alaskans in remote and rural
    locations since 1995. This type of state and nation building
    training not only provides a valuable service to our citizens,
    but provides an exceptional training opportunity to the reserve
    components. Missions to support this exceptional humanitarian
    effort and valuable training experience utilized over ten
    percent of my limited flying hour program. The continued
    support of Operation ``ARCTIC CARE'' by the Alaska Army
    National Guard will be in serious jeopardy without restoration
    of funding for the flying hour program to previous year levels.
        Limited training funds in fiscal 1998 will prevent the
    Alaska Army National Guard from providing a 120 man OPFOR
    company at the Joint Readiness Training Center at Fort Polk,
    Louisiana, in fiscal 1998. The funding shortfall I project for
    Alaska next year will deny these soldiers a rare opportunity to
    participate in the ``Super Bowl'' of Army training exercises
    for light units. The Alaska Army National Guard must have
    adequate training funding to ensure that our soldiers maintain
    and enhance their warfighting and survival skills.
        The Alaska Army National Guard serves as a center of
    influence in 74 communities throughout the State. All but seven
    of my units are located in remote and rural locations not
    connected to the State road network. The facilities that
    provide the infrastructure to support these organizations have
    experienced reduced levels of support in recent years. In terms
    of real property operations and maintenance, I estimate the
    fiscal 1998 funding level to represent an overall reduction of
    nearly 40 percent of fiscal 1995 funding levels. Meanwhile, the
    requirement to assume operational control of Bryant Army
    Airfield due to pending closure by the active component has
    added over 130,000 square feet of additional facilities to our
    support base. This space is absolutely critical to support our
    aviation operations. I am facing difficult decisions regarding
    these continued reduced support levels affecting the quality of
    life for our membership as well as facility closures denying
    continued membership to the dedicated members of the Alaska
    Army National Guard.
        I thank this Committee for providing the opportunity to
    address the matter of continued funding reductions to the Army
    National Guard programs which I believe we all recognize with
    great concern as a significant issue. The continued readiness
    of the Army National Guard is not only important to our overall
    national defense but, as unfortunately too often demonstrated
    in recent years, by its response to natural and manmade
    disasters critical to the welfare of the citizens of our
    country. While many may view the National Guard as only a
    national defense insurance policy with a premium too expensive
    to afford, citizens throughout the State of Alaska see the
    Alaska National Guard as an organization of professionals who
    have time and time again been there in their time of need.
        In just the three most recent major disasters in the State
    of Alaska, the Alaska National Guard expended State funded
    mandays responding to the emergency needs of the citizens of
    our State. Rescuing lost children and injured individuals,
    supporting homeless veterans, fighting the war on drugs, and
    turning young people at risk into productive citizens is also
    what the National Guard is about. To accomplish this, it is
    imperative that National Guard readiness not be allowed to
    deteriorate. It would be an unwise business decision.
        The role the citizen soldier plays in the daily lives of
    the citizens of our State is one of the great things that makes
    this country different from other democracies and governments
    throughout the world. All of America must be truly represented
    in the military. The volunteer force, while it has proven
    itself to be effective, may not be representative of America.
    The Guard, as a community based force, is indeed representative
    and will remain so as long as it receives adequate funding.
        Thank you.

                              Texas National Guard

    STATEMENT OF BRIG. GEN. DANIEL C. JAMES III, ADJUTANT
                GENERAL, STATE OF TEXAS
        Senator Stevens. Thank you.
        General James, I am familiar with your father. It is nice
    to see you here following his great tradition.
        General James. Thank you, Mr. Chairman.
        I also would, in the interest of brevity, would like to
    revise and extend my prepared statement for the record that was
    previously introduced.
        I bring greetings from Gov. George W. Bush, the citizens of
    Texas, and the 24,000 soldiers and airmen of the Texas National
    Guard. And again, thank you for this opportunity to speak to
    you today about the National Guard and the impact of the fiscal
    year 1998 budget.
        Texas National Guardsmen have fought alongside their active
    counterparts in all of our World Wars, World War I and II, and
    other major conflicts in Korea, Vietnam, Desert Storm, in fact,
    in every deployment since World War II under the spectrum of
    war.
        But we have also participated in what we call the spectrum
    of peace. Most recently, our soldiers have been deployed in
    Haiti, in Bosnia, and our airmen were deployed in Panama,
    Honduras, Colombia, Venezuela, Saudi Arabia, Asia, Germany, and
    Bosnia also, Italy and Korea. This summer our soldiers will be
    involved in nation building in Central America. Last Saturday a
    task force from our divisional engineering battalion returned
    from spending 2 weeks of annual training supporting the
    Southwest border project initiative, intended to counter the
    flow of drugs into the United States. And only 7 weeks ago our
    soldiers hosted another contingent from the army of the Czech
    Republic, continuing with our proud participation in the
    Partnership for Peace Program.
        Across the spectrum, the National Guard has been very busy.
    Yet, Texas has gone from the largest State in the National
    Guard in population today to ranking third. Though we represent
    5 percent of the total National Guard force, Texas is 54th
    among 54 States and territories in resource base per capita.
        The 49th Armored Division comprises 84 percent of the Texas
    total personnel strength, one of the largest, if not the
    largest, in the Army's inventory, with 15,469 soldiers and 468
    South Carolina soldiers in the air defense artillery battalion.
        Mr. Chairman, my State will be devastated by the fiscal
    year 1998 budget. Once again, Texas will suffer a larger burden
    than any other State because of the divisional structure. Now,
    this is the same division which has recently documented its
    capability to train, mobilize, and completely deploy in theater
    within less than 140 days of the mobilization date. This is
    also the same division that is currently deploying some of its
    units in Bosnia for peacekeeping missions.
        The burden is best defined this way. My statewide
    operations and maintenance appropriations will decline from
    this year's barebones budget of $72.6 million to $49.6 million
    in fiscal year 1998. That is a 32-percent decline. The pay and
    allowances account will be reduced from $26 million actual
    costs in 1996 to just $20.5 million in fiscal year 1998.
        My units are still in high demand for missions throughout
    the world. At a time when the national military strategy
    demands joint operations and readiness to a single standard,
    the fiscal year 1998 budget inhibits the ability of some States
    to train to any standard at all.
        Unlike Oregon, my State has many lower priority units. In
    fact, 51 of my 66 units will not be trained to standard with
    this budget. Since 1986 the military establishment has informed
    us that our role within the force was integral to the national
    military strategy. Consequently, our soldiers and airmen have
    consistently trained and met the Army and Air Force standard.
        Through our historic roles in warfighting and peacekeeping,
    the Texas National Guard has proven that, with proper
    resourcing, we can train our soldiers to the same levels as the
    active component, we can deliver the same capability as the
    active component, not only as follow-on forces, but as a full-
    time partner fighting side by side. But to accomplish this we
    must have a level playing field. We require modernization, the
    same level as the active component. We require the same access
    to simulations and exercises with the active component. We
    require training in schools in the same classrooms as our
    active counterparts. The National Guard requires access that
    can only be granted by an equal opportunity to serve through
    proper resourcing.

                           Equal readiness standards

        There has been much discussion today about the impact of
    the ``Quadrennial Defense Review.'' I will not go into that at
    this point since the review is not yet complete. However, the
    fiscal year 1998 budget gives me and especially our divisional
    counterparts in the other States--California, Kansas,
    Minnesota, New York, Indiana, Pennsylvania, Virginia, and
    Maryland--little choice but to tell our story in a forum such
    as this.
        We have expanded, not reduced, our capability and remain
    committed to delivering trained and deployable units to perform
    our Federal mission while serving the warfighter commander in
    chief. We have maintained readiness standards equal to our
    active counterpart--one force, one standard.
        However, the fiscal year 1998 budget begins the erosion of
    that capability as never before. One has only to look at Texas
    and see the actual statewide reduction from $98 million plus to
    a $69 million level within a single operating year. That says
    it all.
        In summary, Mr. Chairman, I petition your active
    involvement and support in obtaining any relief in the fiscal
    year 1998 budget to allow the States to continue to operate at
    least at the 1997 levels, especially in view of the additional
    missions and capabilities that we have sought and demonstrated
    successfully.

                               prepared statement

        Again, I thank you for the opportunity to provide this
    input, this hearing, and this process at this critical time in
    the evolution of our National Guard as a military force as our
    Nation returns to a militia Nation.
        [The statement follows:]
              Prepared Statement of Brig. Gen. Daniel C. James III
        Mr. Chairman, committee members, thank you for the opportunity to
    speak to you today.
        As the Adjutant General of Texas, I deal in the day-to-day
    realities of manning, training, retraining, providing facilities and
    modern equipment to soldiers and airmen who sincerely intend to use
    them in support of their state and nation.
        I represent 5 percent of the total National Guard force within this
    nation, yet have the lowest resource level per capita within the 54
    state and territory system. My state contains the 49th Armored
    Division, the largest division within the army's inventory, and the
    only single state division in the National Guard. We want the best for
    the men and women in our force and the global commanders that we serve
    but are faced with certain challenges.
        The 49th Armored Division in 1997 was funded at only 25 percent of
    its OPTEMPO requirement. Since 1992, we have accumulated a shortfall of
    $2.8 million in ground maintenance repair parts. Our repair parts
    requirements to begin 1998 are for $6 million. Yet the 1998 budget
    further reduces the 49th Armored Division OPTEMPO from the 1997 25
    percent level to only 8 percent. Let me take a moment to explain what
    we have done in what we call class IX (repair parts) since 1992 to
    maintain readiness during budget shortfalls and what this implies. If I
    may, I think this maintenance example best explains the transition in
    the way we are required to do business to meet combat readiness
    requirements.
        In 1992, my systems had a $26 million combat load in repair parts
    minus full-up power packs. This means that to meet mission capability,
    I was required to warehouse or stockpile an inventory of $26 million in
    repair parts. That requirement has not changed drastically since 1992;
    yet I have consumed almost all of my inventory of repair parts, and
    will zero my inventory [prescribed load list (PLL)] prior to fiscal
    year 1998. This procedure saves money today, during a time of peace;
    and postpones it to mobilization. We have reduced our order to ship
    time from 77 days to 17 days, and will continue to demand further
    improvements.
        How have we met our deployment obligations in Bosnia? First, we
    haven't sought missions that required heavy combat loads in repair
    parts and supplies. This means Texas units, in large part, have
    deployed in support of other National Guard States. We mobilized and
    deployed our units at U.S. Army mission capable standards (100 percent
    fill of equipment and combat load) by aggressive management of the
    supply system. Today, my staff is being informed that as of the first
    of October, we will not maintain an inventory of repair parts; but will
    order parts on demand (whenever the equipment breaks). As of now, Texas
    units will require both the added time and money to build a combat
    repair parts inventory prior to deployment. Senator Domenici, Senator
    Hollings, and Senator Bond, you all are painfully aware of the ``pay me
    now or pay me later'' implications this approach creates.
        If we are required to mobilize any unit, regardless of size; we are
    totally at the mercy of a private supply sector that may not be capable
    of reacting within combat timelines to fill our required needs. Does
    the Active Component intend to employ our full partnership through
    mobilization? We feel they must, since the reserve component makes up
    52 percent of the Total Army Force. If so, what are the total deferred
    costs which will be charged to mobilization? Have we priced ourselves
    out of the ``seamless'' force? Have we reduced the total force pool;
    while restricting the flexibility of WarFighter Commanders? Is the
    Military Industrial Complex involved in planning for a ``surge''
    requirement of all repair parts and supplies, in case of War? We feel
    this issue is the ``Achilles heel'' of Joint Vision 2010. Without
    casting blame at any partner within the Total Force, The National
    Military Strategy and General Shalikashvili's Joint Vision 2010 are
    perilously placed in jeopardy, due to the disconnect between policy and
    resources.
        My soldiers and staff have sustained readiness standards as
    prescribed by regulation by prioritizing repair parts to the primary
    systems (Abrams tanks, Bradley fighting vehicles) which measure
    readiness on the Unit Status Reports. I should note that these
    indicators only measure 12 percent of the total systems that we must
    maintain.
        Prior to ``Joint Vision 2010,'' this indicated readiness. But the
    demand of the WarFighter Commander-in-Chief today in peacekeeping and
    WarFighting missions cannot be addressed with such simplicity. By
    definition, my units today meet the standards of readiness, without
    being capable of performing sustained peacekeeping and WarFighting
    missions. In order to follow regulations, we have deferred maintenance
    on lower priority or non-reporting systems for readiness, and for
    repairs on equipment that do not reflect on readiness standards;
    yielding a readiness report stronger than the enhanced brigades. That
    report says that we have met standards, but as we strive to meet our
    mission requirements, it becomes obvious that the fiscal year 1998
    budget does not fund air and ground operations tempo at required levels
    to maintain minimum readiness and poor sustainability for later
    deploying units such as the 49th Armored Division.
        We have been required to follow a similar approach of ``cross-
    leveling'' personnel resources within the State in order to continue to
    provide required full-time staff assistance for administration,
    maintenance, and training.
        Budget shortfalls that will not allow us to train our soldiers and
    airmen, that will not allow us to maintain our equipment at minimal
    standards, create a hollow force reminiscent of the post-Vietnam era.
        How hollow is the force? In 1997, readiness as indicated by primary
    systems was at standards within all Texas units except my Army combat
    aviation units. In 1998, my aviation assets, most in demand to the
    peacekeeping efforts like Bosnia, will be less mission capable due to
    an escalating shortfall of dollars and availability of repair parts and
    flying hours. It will be impossible to sustain required readiness
    standards within other non-Major Theater War (MTW) units without
    borrowing from system-to-system (cross-leveling); and then some units
    will be required to be used as billpayers. Beyond the implications of
    deferred combat loads which decrease the flexibility and increase both
    the response time and cost of conducting military operations when
    called. The projected 1998 DOD budget no longer implies turbulent
    change--it forces triage among units where we must decide which units
    live and which die.
        This creates turbulence in the ranks and destroys stability among
    the force. Unit commanders spend less time developing innovative plans
    for more beneficial training. Soldiers lose their intended focus,
    knowing that their future is uncertain. Community support of the Guard
    erodes as we are forced to move and/or eliminate community-based units,
    primarily in rural areas; and in rural areas, National Guard armories
    are also community centers. Facility maintenance deteriorates through a
    series of postponements of maintenance and repair (Again, Senator
    Domenici, Senator Hollings, and Senator Ford ``pay me now or pay me
    later''). Turnover rates of personnel within units rise, forcing us to
    spend even more money to replace or retrain rather than train our
    people.
        Over the past year my staff and I have invested in developing one
    of the more in-depth strategic analysis within the military structure;
    one that is being duplicated throughout the National Guard. Throughout
    this ongoing process, we have focused on an ``end state'' of General
    Shalikashvili's Full Spectrum Dominance as delineated in his ``Joint
    Vison 2010'' and projected throughout General Reimer's ``Army Vision
    2010.'' We have focused on moving the Texas National Guard's focus from
    training to doing.
        However, if we are to be a full partner as compared to a limited
    partner within the defense strategy, we must be funded accordingly. We
    are moving rapidly to support the Texas National Guard's role as that
    full partner within the National Military Strategy. But our basic
    commitment of support to federal WarFighting and peacekeeping missions,
    and to state and community service, is not funded sufficiently in 1998
    nor beyond, for us to perform these missions and survive as a viable
    force.
        Since 1990, the Army has deployed on 25 major overseas missions: 19
    of these 25 missions were within the spectrum of peace. In comparison,
    in the previous 40 years the Army deployed only ten times, six of which
    were within the spectrum of peace. The National Guard is taking an
    increasingly important role in both WarFighter and Peacekeeper
    operations, yet the units that are most in demand for peacekeeper
    missions are precisely the ones that receive the lowest priority of
    funding.
        The terms ``joint'' and ``seamless'' direct the theoretical policy
    we currently know as the National Military Strategy. But the resourcing
    policy of the Policy, Planning and Budget System (PPBS) process does
    not reflect that same ``joint'' and ``seamless'' approach. Directing a
    solution to the $743 million shortfall will address the 1998 needs of
    Texas and the National Guard for only a year. But have we fixed the
    problem?
        I think not. We cannot fix the problem until the roles and missions
    are more closely linked to requirements and funded to train and deliver
    the services required. We must get out of the business of playing the
    annual ``shell game'' and visit to Congress about ``plus ups'' on
    resources.
        Texas is a full partner; not a limited partner. What I require as a
    full partner is the ability to deliver services concurrently to my
    customers--the WarFighter Commander, my Governor and the people of
    Texas. This means the ability to train my soldiers with the same
    generation of equipment and to the same standard as my active
    counterpart. We know we can't always complete force-on-force training;
    we don't expect that. But retracting from force-on-force training
    requires individual and collective simulations exercises in order for
    us to deliver our competency within the WarFighter mission, our
    capability as a peacekeeper, and our delivery of this combined and
    trained capability to our state's citizenry.
        We don't do business the way we did even five years ago. Over the
    past year, for example, I mentioned that we have begun practicing a
    principle that has streamlined the private sector. It is called * * *
    ``just in time'' delivery. We are moving toward this approach as an
    imperative to survival--yet we are saving time and money, at least for
    today. I am proud to share our success in improving our order to ship
    time from 77 days to 17 days; and we are aggressively seeking further
    improvement in this and other processes. Let me assure you ladies and
    gentlemen, we in the Texas National Guard and the National Guard
    Community as a whole are not sitting idly waiting for appropriations to
    solve our every problem.
        General Reimer's envisioned ``knowledge-based'' Army of 2010 will
    require thinking ``out of the box'': placing increments of both the
    active and reserve components within natural service roles, such as the
    National Guard within the Command and Control (C\2\) protect mission.
    Within this role we must examine new threats of terrorism and
    previously unconsidered scenarios which could impact our critical
    infrastructure, including information systems. Whether our role is as a
    WarFighter, a peacekeeper, or in disaster or community assistance--the
    most natural fit and core competency of the National Guard is as the
    Infrastructure provider to the total force.
        Last summer while I had C-130's flying daily missions in support of
    training and deployments, while my F-16's were conducting their daily
    (7 day per week, 365 day per year) air defense missions along the Gulf
    Coast and Southern Border, while I had units deployed to Bosnia in
    support of ``Operation Joint Guard'', while I had units in Central
    America in Nation Building, while I had units along the Southwest
    Border supporting the national counterdrug effort, I also had soldiers
    and equipment flying support missions to stop range fires that ravaged
    our State. To us at the State level, this is business as usual.
    Naturally, with 19 of the 25 deployments since 1990 for peacekeeping
    (three of which were in support of the Guard in JTF-LA (LA Riots, May
    1992)), Hurricane Andrew (FL/LA, Sept. 1992), Firefighting (Western
    U.S., Aug. 1994), we can easily examine the demand focus for the Total
    Force of the Future. Yet the resource model has not reflected that use,
    and the funds required to continue to provide units to standards and
    missions required, have not followed the requirements.
        My Guardsmen are serious about their commitment to serve. They know
    and relish the increasing roles and missions; but they must know and
    feel your support. The commitment is the same as felt at the Alamo 161
    years ago; the same as demonstrated throughout the campaigns of World
    War One and Two, the Korean Conflict, Vietnam, Desert Storm and every
    deployment under the spectrum of War. In every deployment we have
    fought and died alongside our active counterpart.
        Just as important to the Total Force, however, my soldiers have
    demonstrated their commitment alongside our active counterparts in
    deployments under the spectrum of peace. We have continued since the
    inception of the militia concept to export the community-base of the
    trained structure in peacekeeper missions throughout the globe as well
    as facing the ravages of hurricanes, floods, blizzards, fires, and
    civil disturbances. When the true need for peace and a return to order
    within our communities was the requirement, the National Guard was
    called.
        Within the 1998 DOD budget, the community base will become more
    urban because of required consolidation of armories and facilities into
    higher population areas. The National Guard will compound readiness
    deficits through deferred maintenance and training requirements to
    dangerous levels; which will weaken the ``joint'' and ``seamless''
    force of ``Joint Vision 2010.''
        We suggest that it may be time to address the systemic causes of
    these annual shortfalls by linking resourcing to a combination of
    missioning toward both the spectrums of War and Peace and the delivery
    or deployment of that capability. Let's put the money behind those who
    do the job every day yet provide for those who potentially provide
    capability in times of War. We are encouraged by Army Vice Chief of
    Staff General Ronald Griffith's committee to explore active and reserve
    component integration and mission sharing responsibilities. But the
    systemic solution will not be found until we synchronize resources to
    policy. I petition your support for solving this year's $743 million
    shortfall while bringing all of us to the table to answer the systemic
    defaults.
                                     ______

             Biographical Sketch of Brig. Gen. Daniel C. James III
        Brigadier General Daniel James III is the Adjutant General of the
    State of Texas. He assumed that position on November 16, 1995. He is
    presently stationed at Camp Mabry, Austin, Texas.
        Prior to his appointment as the Adjutant General, he was the Vice
    Commander and the Operations Group Commander of the 149th Fighter Wing,
    Texas Air National Guard, Kelly Air Force Base, Texas. He is a command
    pilot with more than 5,000 hours in fighter and trainer aircraft. He is
    a combat veteran with over 300 missions in Vietnam. His most recent
    aircraft flown was the F-16 Fighting Falcon.
        General James was born on September 7, 1945 in Tuskegee, Alabama.
    He is one of three children born to General and Mrs. Daniel ``Chappie''
    James, Jr. General ``Chappie'' James was the nation's first African-
    American to attain four-star rank. As a member of a military family,
    General James lived in a variety of states and countries. He graduated
    from the American High School in Lakenheath, England in 1963. Following
    his graduation, he enlisted in the U.S. Air Force Reserves and spent a
    year on extended active duty before continuing his education. He was
    awarded a bachelor of arts degree from the University of Arizona in
    1968 with a major in psychology. He was a distinguished graduate of the
    Air Force Reserve Officer Training Corps program and received his
    regular commission as a second lieutenant.
        General James immediately entered undergraduate pilot training,
    completing the course a year later. The first of two active duty tours
    in Southeast Asia followed, during which he served as a Forward Air
    Controller and F-4 Phantom Aircraft Commander. Other assignments
    included instructor pilot in the T-38; Air Staff Action Officer,
    Headquarters USAF; and enemy weapons and tactics instructor pilot at
    the prestigious aggressor squadrons at Nellis AFB.
        In 1978, General James separated from active duty to pursue a
    career as a commercial airline pilot. That year he joined the 182nd
    Fighter Squadron. He has served in a number of positions within the
    squadron and group before his assignment as the Vice Commander of the
    149th Fighter Wing.
        General James' awards and decorations include the Distinguished
    Flying Cross with one oak leaf cluster; Meritorious Service Medal; the
    Air Medal with six oak leaf clusters; the Air Force Commendation Medal;
    Air Force Achievement Medal; the Vietnamese Gallantry Cross with Silver
    Star Device; the Vietnam Service Medal; Lone Star Distinguished Service
    Medal; the Texas Outstanding Service Medal; and the Texas Medal of
    Merit.
        He is married to the former Dana Marie Williams of San Diego,
    California.

        Senator Stevens. Thank you very much.
        I think part of the problem that the regular forces have is
    that they are paying the price for overdeployment. I remember
    some conversations I had overseas with some of the people who
    had been deployed away from home for more than 9 months for 2
    years in a row. That does not seem to have impacted you yet,
    though. Have you felt the impact of overdeployment? It does not
    seem to be hitting you in terms of recruiting capability or
    retention capability.

                        high retention in Deployed units

        General Alexander. Mr. Chairman, I would like to field that
    question if I may. A survey of the units in the Army National
    Guard that have deployed in support of our overseas operations
    will show that their retention is high. We have several units
    in the Army National Guard who have been deployed more than
    once, an array of military police units and other combat
    service support units that we have.
        The very fact that the Army National Guard has the
    privilege of being involved is the means by which we attract
    and retain young men and women who want to make a contribution
    to this Nation's defense.
        Senator Stevens. It has to be harder, though, because your
    citizen soldiers have jobs that they must leave, and if they
    are away too long it is very difficult, even under the Soldiers
    and Sailors Relief Act, to save their jobs for them. I have a
    feeling that there is a delayed hit coming at all of you here
    because of the deployments that I have seen overseas. We saw
    them in Bosnia, Italy, Kuwait. I have seen them all over the
    world deployed with regular forces.
        Now, the regular forces have been hit both in retention and
    in recruitment.
        General Alexander. If one would sample the pulse of the
    employer support for the Guard and Reserve officials, I would
    suggest that you would find a spectrum of complaints that would
    exist. However, based upon the number of men and women that
    have been deployed and the number of complaints that we are now
    receiving--I am speaking for Ohio now--those are quite minimal.
        It is gratifying to know that employers do, in fact,
    support the Guard in their efforts. They know for a fact that
    having people in the Guard and in their workplace is a bonus
    for them, and I think our employers need to be praised for the
    way they are treating the men and women of the Guard.
        Senator Stevens. Am I correct that we really have not seen
    any real impact of overdeployment on either your recruitment or
    your retention?
        General Alexander. Last year the Army National Guard had
    its highest rate of retention, as General Baca mentioned
    earlier. It also had its highest rate of worldwide deployments,
    and that has spawned the ability to recruit to the level that
    we are recruiting now.
        Senator Stevens. Is the duration of your deployment,
    General James, shorter than the regular forces? When your
    forces go over and deploy in--I do not care whether it is
    Italy. I saw them in Italy. How long will they stay in Italy?
        General James. Generally, the deployment on the Army side
    is for the 270-day statute limit that they are allowed to bring
    our soldiers on active duty. The Air National Guard utilizes a
    different approach to that. They will get three units involved
    and deploy their airmen and technicians for 90 days, as opposed
    to the full 270 days, thus lessening that impact, as you
    pointed out, on the airman when he returns to his job, time
    away from family. And it actually has, as General Alexander
    pointed out, a positive effect on morale and retention.
        My soldiers in the Texas Army National Guard have been
    involved in deployments, generally at the company size or less,
    often 17, 30 soldiers, around that ballpark figure, and,
    therefore, the impact on the retention rates has not been
    statistically seen and evaluated. However, you are correct when
    you say that there has to be a point--I think the active forces
    are realizing that--when, in fact, it has a negative effect on
    retention. And that is where the Guard can be very helpful.
        That is how the Air National Guard got invited to
    participate in these worldwide deployments in the very
    beginning, because we started out as spelling or relieving some
    of the contingency requirements for the active duty. They found
    that we could perform the mission as well as they could and
    they invited us to get involved more and more. As General
    Shepperd pointed out, we have some 6,400 people around the
    world right now deployed.
        But yes, there will become a time, if the OPTEMPO is high
    enough and the deployments are long enough, that it will
    eventually have a negative impact on retention. Where that
    point will come in the future we really cannot predict right
    now.

                          ability to manage Reductions

        Senator Stevens. You know, I understand what you are
    saying, you are all saying, about the level of the funding
    request, and we will do our best and I think we will be able to
    restore some of that. But it will be a reduction, I think, by
    necessity, depending on the budget that Senator Domenici is
    negotiating.
        But do you find that we have set too many priorities for
    you? Do you have enough flexibility to determine where you
    apply those cuts, or are they overlay mandated in terms of
    where you will place them?
        Jake, what do you think about it? You told us about how you
    are going to get cut 34 percent.
        General Lestenkof. Yes, sir, Mr. Chairman. We do have
    limited flexibility within our States in how we manage these
    reductions. But as I have mentioned in our statement, I feel
    that we have reached the critical point in 1998 with those
    reductions where our flexibility is pretty much removed.
        Senator Stevens. Your readiness to handle disasters is one
    of your mandates, and yet that is not the same type of
    readiness that you would have for deployment, some of the
    things we have seen like Kuwait or Aviano in Italy or on Haiti.
    It does seem that there is an inflexibility there as far as
    your priorities, particularly in a period of shortage of funds.
        Did you start to say something, General James? No.
        General James. I was just going to comment that force
    structure--as you point out, the readiness to handle our
    national mission demands a certain amount of readiness and
    force structure and, therefore, resourcing. The interesting
    part is, the more force structure you have for that capability,
    it also enhances your ability to handle those types of
    contingencies at home in your State in terms of emergency
    missions.
        The problem I see from a divisional State point of view is
    the difference in the level of resourcing. Unlike Oregon, I do
    not have an enhanced brigade, and some of the other States. I
    have a division and it is resourced at a much lower level. My
    OPTEMPO, however, when you look at those units that are brought
    into theater for the warfighter CINC, often they are not the
    higher priority resource units. They are not your SFP1 and 2
    units. They are, in fact, the lower priority resource units
    that the warfighter CINC's are using.
        Right now I am being resourced at a rate of approximately 8
    percent of the OPTEMPO, so I am having to prioritize my
    resources very carefully to be able to keep the readiness
    level, which is C3 for my units in the Army National Guard,
    provide the warfighter CINC with what he needs when he has a
    shopping list that is unfilled in terms of some of the units
    that he needs, and support the State mission.
        Senator Stevens. You started to say something, Jake, and I
    cut you off.
        General Lestenkof. No; I think you pretty much covered it.

                              Partnership program

        Senator Stevens. We just took the committee over to the
    Russian far east and we found that the regulars there were 90
    days behind in pay. We found that they had lost almost all of
    their modernization funding. Surprisingly, their recruitment
    was still staying up. It is an interesting sidelight.
        You are working with some of those people there now, are
    you not? As a matter of fact, I think this concept that General
    Baca was talking about started in Alaska when we used that
    search and rescue crowd to join in on the operations with the
    people from Providenya, what, 5, 6 years ago. You have an
    increased tempo with that now with Russia, do you not, Jake?
        General Lestenkof. We do, Mr. Chairman. The rescue
    operation, we had a joint operation in the Soviet Union--or in
    Russia, this past year, and that will continue to work. We are
    also working with the border units, the national border units,
    and the Coast Guard and the Guard. We just had a recent visit
    with a delegation from the border guard.
        Senator Stevens. It is probably cheaper for us, but you all
    have relationships with other countries. How do you handle that
    financing?
        General Alexander. It is a matter of----
        Senator Stevens. Where is yours, General Alexander?
        General Alexander. We have a partnership with the Nation of
    Hungary, who, hopefully, will be competitive in NATO entry. We
    have had that relationship for the last 3 years.
        In funding that, it is a factor of moving dollars from one
    account to another. And as General Lestenkof mentioned, the
    ability to continue that with the budget as proposed is going
    to cause some severe restraints on how aggressive we are in
    that Partnership for Peace Program.
        Senator Stevens. We visited with them, too. They are a very
    proud force, Hungary, and are ready to become part of NATO if
    that decision is made.
        How long do you stay over there?
        General Alexander. We stay, depending upon the type of cell
    that goes over, no longer than 1 week.
        Senator Stevens. Do you finance their coming to our
    country?
        General Alexander. They pay for that. That comes out of the
    EUCOM budget, I am sorry. It does not come out of my account.

                         innovative uses of Simulators

        Senator Stevens. You heard this comment about the
    innovations as far as the use of simulators. I think that is
    very commendable. Do any of you have any other examples about
    how you are trying to do the same job with less money? General
    Rees.
        General Rees. Yes, Senator Stevens. I have been fortunate
    to observe the Scimitar project that has been used with the
    116th Brigade and the 48th Brigade. Oregon has a battalion that
    is part of Idaho's 116th Brigade, and I have truly seen some
    marvelous things transpire in the last 3 years at the
    battalions and brigade staff level using JANUS exercises. They
    are light-years ahead of where we were 10 and 15 years ago in
    their capabilities.
        In fact, this battalion from Oregon using the JANUS
    exercises frequently then flew to Fort Knox and got into what
    is known there as a VTP or Virtual Training Program, and
    essentially all the battalion leadership was put into
    simulators there and did an outstanding job.
        We are seeing that at battalion and brigade staff levels.
    We are seeing simulators in conduct of fire trainers and mobile
    conduct of fire trainers that are being proliferated throughout
    the Guard, and that is getting tremendous results. We are
    seeing it, for example, in tank gunnery. Where it used to be
    that you would go to annual training and maybe by the end of
    annual training have your tank crews qualify, the tank crews
    are either qualified before they arrive at annual training or
    are able to complete it in short order and move on to higher
    levels of training.
        It is a real delight to be able to see the effect of the
    investments here.

                          National Guard modernization

        Senator Stevens. That is good.
        What about modernization? We tried for several years to
    allocate a portion of the modernization budget to the Guard and
    Reserve.
        I have two last questions. One is, what is your backlog in
    maintenance in each of your States? We find a tremendous
    backlog throughout the Government as a whole. Do you really
    keep track of that? Can you tell me what your backlog is?
        And second, what about your modernization requirements?
    What percentage of those have really been funded? General
    James. Why do you not start from that end this time.
        General James. In terms of modernization, we are involved
    in the Bradley NET program, modernization new equipment
    training for our Bradleys. I believe we are on line for that,
    but it took some readjustment in funding, and we got some
    cooperation from the National Guard Bureau for this past year.
        We are approximately $1.6 million, I believe, behind in
    funding for next year. We are going to need about $1.6 million
    in Bradley NET, new equipment training, for next year.
        In terms of maintenance backlog, that number is probably
    the very worst in terms of our class 9 parts for my Apache
    attack helicopters.
        The two primary assets that it seems that the warfighter
    CINC is going to want to use are our aviation and our artillery
    resources and assets, and yet, being a divisional State, we
    have a very low priority in resourcing on those. My mission
    ready status on my attack helicopters is in the 30's, 31 to 36
    percent, as opposed to--and this is because of parts as much as
    personnel to put the parts on--as opposed to what I am able to
    maintain with my tanks, which is 80 to 86 percent fully mission
    ready capability.
        So what I have had to do is reprioritize who gets what
    money for parts and maintenance, so that I can bring the level
    of those aviation and artillery assets up so they will be ready
    if called on by the commanders in chief. And I may have to
    accept a lower mission ready capability in my armor and my
    Bradley. I do not want to touch my Bradley situation because of
    the new equipment training. I want all of that to be completed
    before I can consider lowering that priority to help raise the
    priority on the other two assets.
        But right now those are the figures that we are looking at
    in Texas in terms of a backlog and in terms of a mission
    capability.
        Senator Stevens. Jake, what is your situation?
        General Lestenkof. On the modernization, as you know,
    aviation is very important to us up in Alaska. So we have been
    concentrating on modernizing our air fleet with our air units
    with the UH-60 aircraft. We are receiving three this year and I
    think we are slated for five more to finish up in our rotary
    companies, the new aviation unit.
        Fielding of the C-23's will be completed, hopefully, by the
    end of this fiscal year. So we are very happy with how we are
    moving forward with the modernization of our air assets.
        As far as backlog in maintenance, since we do not have a
    great amount of ground equipment up in Alaska, we have managed
    pretty well on our maintenance backlog.
        Senator Stevens. General Rees.
        General Rees. Yes, sir; in base operations and real
    property maintenance, we have a requirement in 1998 for about
    $13 million. The budget that we are expecting is going to be
    about $2 million, so that is around an $11 million shortfall.
    That is a pretty dramatic shortfall.
        In the area of modernization, in stock funded secondary
    items the budget request was for $12 million. We are going to
    get about $6 million because of this high priority situation in
    Oregon. Now, we have gotten a lot of dedicated procurement
    items and items that have been cascaded down, major end items,
    to help us achieve the higher readiness levels. But on the
    other hand, there are compatibility issues where you have to
    buy them through the stock funded secondary items, and
    literally that is going to stop. We are not going to be able to
    continue to move forward and achieve the goals that we are
    required to have by 1999.

                      Real property and logistical support

        Senator Stevens. General Alexander.
        General Alexander. Mr. Chairman, in the area of base
    support and real property maintenance, we were funded at $4.1
    million in fiscal year 1995, $5.8 million in fiscal year 1996,
    down to $2.3 million in fiscal year 1997, and the proposal for
    fiscal year 1998 is $2.5 million, roughly one-half of what we
    had experienced in fiscal year 1995.
        In logistical support, we have gone from $9.1 million in
    fiscal year 1995 down to $6.7 million in fiscal year 1998. We
    also continue to take major reductions in these accounts. Our
    training sites, logistical support activities, our OMS shops,
    unit training equipment sites, and aviation flight facilities
    in some cases fail to even meet the electrical and safety code
    standards due to insufficient funds to support these
    facilities.
        Continued cutbacks in this area could impair the quality of
    life for our full-time technician work force employed at these
    facilities.
        I would also like to say that Ohio, as I may have said
    earlier, is a State that does not have a large number of tier
    one high priority units. But those that we do have, if a truck
    breaks in a tier one unit, it has to be fixed by a tier three
    unit. It has to go to maintenance shops that are funded at less
    than 50 percent of the manning that it takes to repair the
    equipment that goes in and out of there.
        We have gone to the point now of attempting to take
    maintenance units and on the weekends program in there to
    repair equipment that is there to be maintained by a technician
    force that is severely undermanned. That has been the history
    of the Guard in terms of its maintenance function, and this
    fiscal year 1998 budget will further exacerbate those
    conditions.
        Senator Stevens. Gentlemen, it is not an easy story to deal
    with that you all tell.
        We appreciate your coming. We are going to start this
    process of listening to members of your group each year in
    connection with these matters. I hope that, as I said, that we
    can find a way to solve some of this. But unless you have got a
    magic wand or a printing press in your basement, I cannot
    guarantee you we will get it done. But we will do our very
    best.

                         Additional committee question

        And we are very proud of what you are doing. I am serious
    when I tell you, our committee does travel a great deal to look
    and see what is going on in terms of these deployments. I have
    some question about the tempo of deployment when they are
    overseas and I have discussed that to the Chairman and the
    Joint Chiefs and to some of your people, too. But I do think
    that the procedure we are following now in utilizing more and
    more of your people in our deployments is cost effective and we
    have got to do our best to see that you have the capability to
    continue to carry out the missions when you get those calls.
        So thank you very much for coming.
        [The following question was not asked at the hearing, but
    was submitted to the Adjutant General for response subsequent
    to the hearing:]

                Question Submitted to Maj. Gen. Raymond F. Rees

                   Question Submitted by Senator Thad Cochran

        Question. I understand that the recently concluded Army
    Warfighter Experiment at the National Training Center was
    successful in demonstrating the value of digital information
    distribution systems and that the Active Army leadership is
    very enthusiastic about pressing forward with digitization of
    its forces. This raises the question of the interoperability of
    National Guard units (especially the highly mobile Heavy Armor,
    Mechanized and Cavalry units) with the active units they might
    be called upon to fight with. What is your opinion of these
    digital systems and how do we fix the interoperability problem?
        Answer. The Brigade Task Force Advanced Warfighter
    Experiment conducted in March 1997 had some implications on
    digitizing the Army National Guard. However, the Division
    Advanced Warfighter Experiment, to be completed in November
    1997, will help determine the minimum digitization requirements
    to achieve command, control and communications connectivity
    between digital units (mostly Active Component) and analog
    units (including Reserve Component units). Four Army National
    Guard units are participating in this experiment to help the
    Army determine these interoperability requirements.
        One of the major objectives of the Task Force Advanced
    Warfighter Experiment was to assess Force XXI digitized
    operations at the Brigade level. The emphasis was to assess two
    of the three components of the Force XXI digitized force--Force
    XXI battle command brigade and below applique (on the vehicles)
    and the tactical internet.
        The Division Advanced Warfighter Experiment will emphasize
    the third component of the digital system--the Army Tactical
    Command and Control System by looking at digitized Tactical
    Operations Centers and how they operate from the Brigade to
    Corps level. Army National Guard units will interact with
    digital Headquarters.
        Using various Army Tactical Command and Control System
    devices, digitized Tactical Operations Centers are supposed to
    achieve functional integration across the battlefield operating
    systems.
        The devices performed at varying levels of success during
    the Task Force Exercise. Reportedly the most successful device
    was the air defense system. All the other devices had some
    problems but showed potential and will get a closer look during
    the Division Exercise.
        Army National Guard units are on current fielding schedules
    for some of the digital devices and fielding has already begun
    for some units. This includes important major systems such as
    the M-1A2 as well as Applique Products.
        Cost estimates to digitize a Division range from $45 to $80
    million, so the Army is acknowledging that it probably will not
    be able to afford to digitize the entire force, including the
    Reserve Components. Therefore, it must prioritize when and what
    elements (what tactical level) will be digitized.
        The National Guard Bureau Force XXI Task Force is in the
    early stages of developing a digitization strategy that should
    support the Army's program, maintain the relevancy of Army
    National Guard combat units, and be the most cost effective.

                              subcommittee recess

        Senator Stevens. We are going to stand in recess until next
    Wednesday, when we will have the defense business operating
    fund and the depot operations people before us.
        Thank you very much.
        General Alexander. Mr. Chairman, on behalf of us all, we
    thank you very much for giving us the opportunity to have this
    hearing with you.
        Senator Stevens. Thank you very much.
        [Whereupon, at 12:32 p.m., Wednesday, April 30, the
    subcommittee was recessed, to reconvene at 10 a.m., Wednesday,
    May 7.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                             WEDNESDAY, MAY 7, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:44 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Daniel K. Inouye presiding.
        Present: Senators Domenici, Hutchison, Bennett, and Inouye.

                           GENERAL ACCOUNTING OFFICE

              National Security and International Affairs Division

    STATEMENT OF HENRY L. HINTON, JR., ASSISTANT
                COMPTROLLER GENERAL
    ACCOMPANIED BY:
            JACK L. BROCK, JR., DIRECTOR, DEFENSE INFORMATION MANAGEMENT
                SYSTEMS
            JULIA DENMAN, ASSISTANT DIRECTOR, DEFENSE MANAGEMENT ISSUES,
                NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIVISION

                   OPENING STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. On behalf of Chairman Stevens, who as you
    know is managing the supplemental appropriations bill, I would
    like to welcome all of you here this morning to discuss DOD's
    depot maintenance programs and its progress on reforming its
    financial management. As some of you are aware, this program
    began during the tenure of former Comptroller Sean O'Keefe, who
    was also our chairman's former chief of staff. Mr. O'Keefe
    recognized that the depot maintenance system in DOD needed
    reform and restructuring. It was he who initiated the defense
    business operations fund and set us on this course to clean up
    our maintenance system.
        Following on this lead, the current Comptroller, Dr. John
    Hamre, has continued the crusade to correct the many weaknesses
    in our DOD financial management system, trying to lead our
    public depots to a more cost-effective and efficient
    performance. Under DOD's current plan it is now up to the
    services to put all these reforms into practice. The GAO has
    worked on overseeing this effort, and has been instrumental in
    helping Congress understand the progress and the many areas
    where additional work is needed.
        This morning the subcommittee will hear from two panels
    regarding the services' working capital funds and depot
    operations. The first panel includes Mr. Henry Hinton, GAO's
    Assistant Comptroller General for the National Security and
    International Affairs Division. Mr. Hinton is accompanied by
    Mr. Jack Brock and Ms. Julia Denman, who will discuss GAO's
    recommendations in detail.
        Mr. Hinton, we appreciate you and your staff being with us
    this morning to update the committee on the progress being made
    and to identify the areas where GAO believes additional work is
    required. Your full statements have been included in the
    record, and you may proceed as you wish, sir.

                     prepared statement of senator bennett

        Before I do, I would like to apologize to all of you for my
    strange sounding voice, but every year at about this time, when
    the pollens fall, my voice disappears.
        I have a statement from Senator Bennett that I would like
    to put in the record at this point.
        [The statement follows:]

                Prepared Statement of Senator Robert F. Bennett

        I want to thank Chairman Stevens and Senator Inouye for
    holding this hearing on depot maintenance. I believe it is an
    area in need of Congressional attention, especially in light of
    the costs involved as outlined by the GAO. I am concerned
    specifically with the failure of the Air Force to respond to
    BRAC directives to reduce excess capacity. In addition, it
    appears that they are pursuing a haphazard policy without a
    solid vision of where they are going, or concern about the
    consequences. Unfortunately, we are short on detail today from
    the Air Force.
        Mr. Chairman, I believe it is reasonable to expect the
    Department of Defense to outline a detailed, coherent depot
    maintenance policy. I expect the Air Force to do so. As a
    member of the full committee, I will find it difficult to
    support a funding request that is not based on a clear policy,
    complete with cost analysis. I would hope the Air Force will be
    cooperative in providing this information to the committee.

                               summary statement

        Senator Inouye. Please proceed, sir.
        Mr. Hinton. Thank you, Senator. We are pleased to be here
    today to discuss financial management and logistics management
    issues relating to the effectiveness and efficiency of DOD's
    operations. As you mentioned, Mr. Brock and Ms. Denman are
    accompanying me today. Mr. Brock has directed all of our work
    in the working capital fund area, and Ms. Denman has managed
    all the work that we have done on depot maintenance operations.
        Today we will focus specifically on the operations of DOD's
    working capital funds, which collect and disburse over $65
    billion annually, and on DOD's management of its $13 billion
    depot maintenance program. DOD has consistently experienced
    losses in the operations of various working capital funds,
    including the depot maintenance activity group. This issue has
    been an area of concern to the committee. Let me give you a
    brief overview of the conditions we see, and then I will turn
    it over to Mr. Brock and Ms. Denman for more details.
        First, concerning the working capital fund's cash
    management and operations, there are four points I would like
    to make. One, the working capital funds have not yet
    accomplished the goal of operating on a break-even basis. DOD
    estimates the funds will have an accumulated operating loss of
    about $1.7 billion at the end of fiscal year 1997.
    Notwithstanding this loss, however, we believe that the funds
    have achieved a measure of success because the services are
    doing a better job of identifying the cost of doing business
    and including those costs in the prices charged its customers.
        Second, we agree with DOD's decision to place
    responsibility for managing the working capital funds cash at
    the military service and the DOD component level. We believe
    this approach places accountability at the right level, that is
    the military services. Also, each service now has an incentive
    to more accurately price the goods and services that its
    working capital fund charges customers, since inaccurate prices
    could lead to not having enough cash to cover the day-to-day
    operational costs.
        Third, since 1993 the working capital funds have advance
    billed customers to cover cash shortages. As of January 1997,
    the outstanding advance billing balance was $1.6 billion.
        Last, our analysis of the fiscal year 1998 prices for five
    business areas indicates that they are probably too low to
    recover the expected fiscal year 1998 operating costs and/or
    recover the prior year losses by over $300 million.
        Now, let me turn to the various factors that we see that
    contribute to inefficiencies in DOD's management of its depot
    maintenance activities. Excess capacity is the No. 1 problem.
    It stands at about 40 percent today, and significantly
    contributes to the losses in that area. The Navy has made the
    greatest progress in dealing with excess capacity, however the
    Army and the Air Force have been less successful. Both services
    are incurring rising prices because they have too much depot
    infrastructure for the available workload. Further, DOD's
    privatization-in-place of selected depots has contributed to
    the excess capacity problem and ultimately will continue to
    drive up maintenance costs.
        Additionally, the Air Force plans to compete workloads at
    two closing depots may be more costly than redistributing
    workloads to other depots. The Air Force believes that the
    competition will demonstrate if outsourcing these workloads
    will result in the best value. DOD has made overly optimistic
    assumptions about cost savings that can be achieved from
    outsourcing depot maintenance activities. When outsourcing
    results in increasing, rather than decreasing, cost, expected
    savings will not be realized. To the extent projected savings
    are not built into the billing rates, losses will occur.
        In addition, other factors also impact the efficiency and
    cost of depot maintenance operations. These include, one, high
    material cost, two, lengthy depot repair cycles, and three,
    ineffective information systems.
        In closing, it is important to emphasize that the
    conditions I have discussed are masking inefficiencies in DOD's
    working capital activities. This means, and I will use the
    depots as an example, that the Congress, one, does not have
    accurate data on the actual cost of depot maintenance
    activities because the rates charged customers do not always
    reflect the costs, and two, even in those cases where the rates
    do reflect the costs, they are likely higher than necessary due
    to factors such as costly excess capacity.
        In the final analysis, DOD will ultimately have to request
    funds to offset its losses through either direct appropriation
    or by increases to the rates charged military customers, and
    this will result in higher O&M appropriations requests. That is
    why we have recommended that DOD develop an overall plan for
    dealing with the inefficiencies in its infrastructure
    activities such as depot maintenance.

                               prepared statement

        Senator, this completes my summary of the issues that are
    contained in my written statement. Mr. Brock will now provide
    more details on the working capital fund operations, and Ms.
    Denman will follow to provide a more in depth look into the
    inefficiencies in the depot system.
        [The statement follows:]

                   Prepared Statement of Henry L. Hinton, Jr.

        Mr. Chairman and Members of the Subcommittee: We are pleased to be
    here today to discuss financial management and logistics management
    issues relating to the effectiveness and efficiency of the Department
    of Defense's (DOD) operations. Specifically, we will focus on the
    operations of DOD's working capital funds, which collects and disburse
    over $65 billion annually, and on DOD's management of the $13 billion
    depot maintenance program. It is important to note that these areas
    fall within defense financial management and infrastructure activities,
    2 of the 24 areas we identified as high-risk areas within the federal
    government.\1\
    ---------------------------------------------------------------------------
        \1\ ``Defense Financial Management'' (GAO/HR-97-3, Feb. 1997) and
    ``Defense Infrastructure Management'' (GAO/HR-97-7, Feb. 1997). In
    1990, GAO began a special effort to report on the federal program areas
    its work identified as high risk because of vulnerabilities to waste,
    fraud, abuse, and mismanagement.
    ---------------------------------------------------------------------------
        These issues have significant impact on the efficiency and
    effectiveness of how DOD spends its operations and maintenance funds.
    DOD has consistently experienced losses in the operations of various
    working capital funds, including the depot maintenance activity group,
    and has had to request additional funding to support their operations.
    This issue has been an area of concern to this subcommittee and other
    congressional committees. Before we get into specifics, I will briefly
    summarize our key points.
          working capital funds' cash management and operations issues
        Our work on working capital funds cash management and operations
    shows the following:
      --To date, the working capital funds have not yet accomplished the
            goal of operating on a break-even basis, and DOD estimates the
            fund will have an accumulated operating loss of about $1.7
            billion at the end of fiscal year 1997. However, we believe
            that the funds have achieved a measure of success because the
            services are doing a better job of identifying the costs of
            doing business and including those costs in the prices charged
            customers. Setting prices to recover more of the costs of
            providing goods and services to customers gives managers a
            window into the costs of DOD support operations--including
            costs for direct labor, material, overhead, and contracts. With
            a more complete cost picture, managers can account for past
            activities, manage current operations, and assess progress
            toward planned objectives. Further, more accurate
            identification of costs enables those responsible for providing
            oversight to make more informed policy decisions by
            highlighting the cost associated with those decisions.
      --When the Defense Business Operations Fund was established in 1991,
            DOD consolidated the cash balances of the nine industrial and
            stock funds into a single account that was managed centrally by
            the Office of the Secretary of Defense (Comptroller). In
            February 1995, DOD devolved the responsibility for cash
            management to the military services and DOD components. We
            agree with DOD's decision to place the responsibility for
            managing the working capital funds' cash at the military
            service and DOD component level because it makes each
            individual DOD component directly accountable for its
            respective cash balance as well as their decisions that impact
            cash. Each DOD component now has an incentive to more
            accurately price the goods and services that its working
            capital fund charges customers since inaccurate prices could
            lead to not having enough cash to cover day-to-day operating
            expenses.
      --Since 1993, the working capital funds have had a cash shortage. To
            ensure that the cash balances remained positive, the funds have
            advance billed their customers. While the three services have
            liquidated $3.6 billion of outstanding advance billings from
            February 1995 to January 1997, the outstanding advance billing
            balance is still $1.6 billion. Further, the Navy and Air Force
            advance billed their customers about $2.9 billion during
            calendar year 1996 to ensure that their cash balances remained
            positive.
      --Our analysis of the fiscal year 1998 prices for five business areas
            indicates that they are probably too low to recover expected
            fiscal year 1998 operating costs and/or recover prior year
            losses by over $300 million.
      challenges facing dod in improving the cost-effectiveness of depot
                             maintenance operations
        Various factors contribute to inefficiencies in DOD's management of
    depot maintenance activities.
      --Excess capacity--which is currently about 40 percent in DOD's depot
            maintenance system--is a significant contributor toward the
            inefficiency and high cost of DOD's depot maintenance program
            and is generating significant losses in the depot maintenance
            activity group of the service's working capital fund. The Navy
            has made the greatest progress in dealing with excess capacity
            through its implementation of base realignment and closure
            (BRAC) recommendations. Through consolidations, interservicing
            actions, and outsourcing some noncore workloads the Navy
            expects to reduce its operating rate by about $10 per hour.
            Based on a forecast of 13 million direct labor hours for fiscal
            year 1999, the Navy expects to produce a savings of about $130
            million. However, Army and Air Force's plans for implementing
            BRAC recommendations will do little to reduce excess capacity
            and will likely result in increased depot maintenance prices.
      --DOD has made overly optimistic assumptions about cost savings that
            can be achieved from outsourcing depot maintenance activities.
            When outsourcing results in increasing, rather than decreasing
            costs, expected depot maintenance savings will not be realized.
            To the extent projected savings were budgeted, losses will
            occur. For example, privatization in-place of the Aerospace
            Guidance and Metrology Center was justified based on achieving
            savings. However, the Air Force projects that for 1997, costs
            in the privatized facility will be $9 million to $32 million
            more than the cost of the same work before privatization.
            Similarly, the Air Force is also projecting savings from
            planned competitions of workloads at two closing Air Logistics
            Centers. If the savings from these competitions are not
            achieved, a similar situation will occur.
      --Material cost increases are generating losses for the depot
            maintenance capital fund. Material costs represent about 40
            percent of the Air Force depot maintenance costs and during the
            first half of fiscal year 1997, material costs for Air Force
            depots have been about $32.7 million, or 5.4 percent higher
            than planned. Our work also shows that weaknesses in DOD's
            inventory management system such as inadequate visibility over
            items and purchasing of unneeded stocks have contributed to
            rising material costs. In addition, inadequate control of
            government-furnished material to contractors has also led to
            losses in contract depot maintenance. For example, in April
            1996, the Air Force Audit Agency found problems at Warner
            Robins Air Logistics Center with government-furnished property
            financial statement balances misstated by up to $2.3 billion.
        In conclusion, the inefficient operation of depot maintenance
    activities results in a reduction of the military services' purchasing
    power through their operations and maintenance funds. Stated another
    way, more operations and maintenance funds will be required to perform
    the same level of maintenance. Depot maintenance privatization should
    be approached carefully, allowing for evaluation of economic,
    readiness, and statutory requirements that surround individual
    workloads. If not effectively managed, privatizing depot maintenance
    activities, including the downsizing of the remaining DOD depot
    infrastructure, could exacerbate existing capacity problems and the
    inefficiencies inherent in underutilization of depot maintenance
    capacity.
        In addition, other factors also impact the cost-effectiveness of
    depot maintenance operations. These include such things as inventory
    management practices, repair processes, and readiness requirements. We
    have encouraged DOD to aggressively seek new management practices to
    meet these challenges. To their credit, each of the military services
    have programs underway to improve depot maintenance and other logistics
    activities. While it is too early to assess the results of these
    programs, we believe they are addressing several key problems, such as
    the reduction of repair cycle time.
        In closing, it is important to note that reducing depot maintenance
    cost and improving depot maintenance efficiency are complex and
    challenging tasks that are compounded by force structure downsizing. We
    have presented some of the key factors that must be addressed and
    continue to believe the DOD should develop an overall plan for
    improving depot maintenance efficiency and effectiveness that clearly
    defines how it will deal with this set of complex issues.
        Mr. Chairman, this completes the summary of issues contained in my
    statement. Mr. Brock and Ms. Denman, as requested, will now provide
    more details on these issues.
                                     ______

       Appendix I.--Working Capital Cash and Operations Management Issues

        The Department of Defense (DOD) established the Defense Business
    Operating Fund (DBOF) in 1991 in an attempt to fundamentally alter the
    way DOD managed its resources by fostering a more business-like culture
    within selected Defense operations, which include depot maintenance,
    transportation, supply management, and finance and accounting. DBOF
    consolidated the nine existing industrial and stock funds operated by
    the military services and DOD, as well as the Defense Finance and
    Accounting Service, the Defense Industrial Plant Equipment Service, the
    Defense Commissary Agency, the Defense Reutilization and Marketing
    Service, and the Defense Technical Information Service into a single
    financial structure. The military services and DOD components continued
    to be responsible for managing and operating business activities within
    the financial structure.
        On December 11, 1996, the Under Secretary of Defense (Comptroller)
    reorganized DBOF and created four working capital funds: Army, Navy,
    Air Force, and Defense-wide. This was done in order to clearly
    establish the military services and DOD components responsibilities for
    managing the functional and financial aspects of their respective
    business areas. The recently established working capital funds continue
    to operate the same way they did under DBOF.
        The primary goal of DBOF and the recently established working
    capital funds is to focus the attention of all levels of management on
    the total costs of carrying out certain critical DOD business
    operations and the management of those costs in order to encourage
    support organizations, such as depot maintenance facilities, to provide
    quality goods and services at the lowest costs. Focusing attention on
    costs is important, given the size of the working capital funds. For
    fiscal year 1998, the four funds are expected to generate about $69
    billion in revenue and employ about 220,000 civilians and 24,000
    military personnel.
        The working capital funds are supposed to generate sufficient
    revenues to recover expenses incurred in their operations and are
    expected to operate on a break-even basis over time. However, setting
    prices to ensure that the funds do break even is a complex and
    difficult task. DOD policy requires working capital fund business areas
    to establish prices prior to the start of each fiscal year and to apply
    these predetermined (stabilized or standard) prices to most orders and
    requisitions received during the year. The process that the business
    areas use to develop their stabilized prices begins as early as 2 years
    before the prices go into effect, with each business area developing
    workload projections for the budget year. After a business area
    estimates its workload based on customer input, it (1) uses
    productivity projections to estimate how many people it will need to
    accomplish its work, (2) prepares a budget that identifies the labor,
    material, and other expected costs, and (3) develops prices, that when
    applied to the projected workload, should allow it to recover operating
    costs from its customers. Because sales prices are based on expected
    rather than actual costs and workloads, higher-than-expected costs or
    lower-than-expected customer demand for goods and services can cause
    the business areas to incur losses. Conversely, lower-than-expected
    costs or higher-than expected workloads can result in profits.
        To date, the working capital funds have not yet accomplished their
    goal of operating on a break-even basis and DOD estimates that they
    will have an accumulated operating loss of $1.7 billion at the end of
    fiscal year 1997. However, we believe that the funds have achieved a
    measure of success because they are doing a better job of identifying
    the costs of doing business and including those costs in the prices
    charged customers. This provides managers and decisionmakers two
    important benefits. First, setting prices to recover more of the costs
    of providing goods and services to customers gives DOD managers a
    window into the costs of Defense support operations--including costs
    for direct labor, material, overhead, and contracts. With a more
    complete cost picture, managers can account for past activities, manage
    current operations, and assess progress toward planned objectives.
    Second, more accurate identification of costs enables those responsible
    for providing oversight to make more informed policy decisions by
    highlighting the cost associated with those decisions.
        Over the last several years, various congressional Defense
    oversight and appropriations committees have expressed concern with the
    management and operations of the funds. To address these concerns,
    Defense was required to conduct a study of its working capital funds as
    directed in the National Defense Authorization Act for fiscal year
    1997. Not later than September 30, 1997, the Secretary of Defense is
    required to submit to the Congress a plan to improve the management and
    performance of the industrial, commercial, and support type activities
    that are currently managed in the working capital funds. We are hopeful
    that DOD will use this plan as a mechanism to continue to strengthen
    its commitment to improving the management and operations of the
    working capital funds as well as identifying the total costs of
    providing goods and services to customers and including those costs in
    the prices charged customers.
                      working capital fund cash management
        Since 1993, the working capital funds have had a cash shortage. To
    address this problem DOD has taken two actions. First, in February
    1995, DOD devolved the responsibility for cash management to the
    military services and the DOD components to better align accountability
    and responsibility for management. Second, to ensure that the cash
    balance remains positive, the working capital funds have advance billed
    their customers since 1993.
    The importance of cash for working capital funds
        Cash plays an extremely important role for DOD's working capital
    funds since they collect and disburse over $65 billion annually. Cash
    generated from the sale of goods and services is the primary means by
    which the working capital funds maintain an adequate level of cash to
    pay bills. Where the cash balances start each year depends on the
    outcome of many decisions made during the budget process with regard to
    (1) projecting workload, (2) estimating costs, and (3) setting prices
    to recover the estimated full cost of the goods and services. During
    the execution of the budget, they operate much like a checking account:
    collections increase the funds' account balances and disbursements
    (such as salaries and purchases of inventory) reduce the account
    balances. To the extent that the decisions made during the budget
    process are reasonably accurate, the funds' cash balances should fall
    between the minimum and maximum amount required by DOD. However, if the
    decisions are not accurate, the funds could have too much or not enough
    cash.
        DOD's policy requires the funds to maintain cash levels to cover 7
    to 10 days of operational costs and 4 to 6 months of capital asset
    disbursements which is about $2.3 billion to $3.4 billion for the four
    funds. If the level of cash becomes low and there is a possibility of
    incurring an Antideficiency Act \2\ violation, immediate actions will
    be taken to resolve the cash shortages by advance billing customers.
    ---------------------------------------------------------------------------
        \2\ The Antideficiency Act, 31 U.S.C. 1341(a)(1), 1517, provides
    that no officer or employee of the government shall make or authorize
    an expenditure or obligation exceeding the amount of an appropriation
    of funds available for the expenditure or obligation.
    ---------------------------------------------------------------------------
        Before DBOF was established, each industrial and stock fund had a
    separate cash balance and managers were responsible for ensuring
    sufficient cash was available to cover fluctuations in collections and
    disbursements that occurred from one month to another. When DBOF was
    implemented, DOD consolidated the cash balances of the nine industrial
    and stock funds into a single account that was managed centrally by the
    Office of the Secretary of Defense (Comptroller). The Office of the
    Secretary of Defense (OSD) centrally managed DBOF's cash for about 3
    years. In February of 1995, DOD devolved responsibility for cash
    management as well as Antideficiency Act responsibilities to the
    military services and the DOD components.
    GAO's views on DOD's decision to devolve the cash management
            responsibility
        We agree with DOD's decision to place the responsibility for
    managing the working capital funds' cash at the military service and
    defense agency level and to likewise devolve the Antideficiency Act
    responsibility. In our view, decentralized cash management should
    result in better cash management and more responsible business
    decisions.
        According to DOD officials, the cash management responsibility was
    devolved to the Army, Navy, Air Force, and defense agencies to better
    align accountability and responsibility for managing cash. DOD pointed
    out that the operational control of actions taken by each fund
    activity, which results in cash disbursements and collections, always
    has resided and continues to reside with the individual DOD components.
        We believe that there are a number of benefits associated with the
    decentralization of cash management responsibilities. The
    decentralization makes each individual DOD component directly
    accountable for its respective cash balance as well as their decisions
    that impact cash, including any violation of the Antideficiency Act.
    One DOD component cannot spend money generated by another DOD
    component. When cash management was centralized, DOD did not have
    reports that showed the cash balances for the individual DOD
    components--the reports only provided information on (1) DBOF's overall
    cash balance and (2) collection and disbursement data for each of the
    DOD components. With the decentralization of cash management, the
    Department of Treasury provides DOD with a cash balance for each of the
    five DOD components.
        There are still other advantages associated with the
    decentralization of cash management:
      --Each DOD component now has an incentive to more accurately price
            the goods and services that its working capital fund charges
            customers since inaccurate prices could lead to not having
            enough cash to cover day-to-day operating expenses.
      --The management of cash is closer to where cash decisions are made--
            the business area and the activity level.
      --OSD and the DOD components have started working more as a team to
            resolve cash problems. Under the centralization of cash, there
            was less incentive for the DOD components to respond to cash
            problems since OSD was responsible for cash and there was only
            one cash balance. When the DOD components became responsible
            for their individual cash balances, they raised more questions
            on the accuracy and timeliness of the information on
            collections and disbursements. Such increased attention should
            help improve the accuracy of collection and disbursement data
            reported in the working capital funds' financial statements,
            which are prepared under the Chief Financial Officers Act of
            1990.
    DOD has advance billed customers to alleviate cash shortage
        Since 1993--with the transfer of $5.5 billion from DBOF as required
    by the National Defense Authorization Act for Fiscal Year 1993--the
    funds have been advance billing customers because they have not been
    able to generate enough cash to pay their bills. In July 1994, the
    Comptroller of Defense stopped the advance billing at all activities
    except for the Naval shipyards and research and development activities.
    Although these activities had been tentatively scheduled to stop
    advance billing in January 1995, this did not occur.
        DOD officials informed us that when the responsibility for cash
    management was returned to the DOD components in February 1995, the
    amount of cash returned to the services was not sufficient to cover
    outstanding DBOF liabilities. DBOF's financial reports indicate that
    this was the case, with each service facing cash shortages. Therefore,
    according to DOD, it was necessary for the military services to
    continue to advance bill customers so that their cash portion of DBOF
    would not go negative.
        Since 1995, the military services have made some progress in
    liquidating (working off) their outstanding advance billing balances.
    However, the Navy and Air Force had to advance bill customers again
    during calendar year 1996 to ensure that their cash balances remained
    positive. Specifically, the Navy advance billed customers about $1.7
    billion and the Air Force advance billed customers $1.2 billion during
    calendar 1996. Further, the Navy has advance billed their customers
    $100 million in February 1997. The following figures show the reported
    (1) cash balances for the Army, Navy, Air Force, OSD, and Defense
    agencies portion of the funds and the (2) cash balances for these
    components if they did not advance bill their customers from February
    1995--when DOD returned the responsibility for cash to these five DOD
    components--through January 1997.

        As the above figures show, the Army, Navy and Air Force would have
    had negative cash balances when they received the responsibility for
    cash in February 1995 had they not advance billed customers. The
    figures also show that:
      --the three services have liquidated $3.6 billion of outstanding
            advance billings from February 1995 through January 1997;
      --as of January 1997, the outstanding advance billing balance was
            $1.6 billion;
      --the Army has liquidated almost all of its outstanding advance
            billing balance;
      --the Navy's cash balance would have been negative for most of the
            time period from February 1995 through January 1997 if it had
            not advance billed customers; and
      --the Air Force liquidated most of its outstanding advance billing
            balance until it needed to advance bill customers over a
            billion dollars in December 1996 to ensure that its cash
            balance would remain positive.
        According to Army and Air Force officials, they plan to liquidate
    all their outstanding advance billing balances by the end of fiscal
    year 1998. Navy officials informed us that they now plan to liquidate
    the Navy's outstanding advance billing balance by the end of fiscal
    year 1999.
    Cash Outlook for fiscal years 1997 and 1998
        DOD's cash plans, dated January/February 1997, show that the
    working capital funds will disburse about $2.3 billion more than they
    collect during fiscal year 1997. To offset most of the cash drain that
    DOD expects to occur during fiscal year 1997, DOD plans to increase
    fiscal year 1998 prices to recoup losses and generate cash. DOD plans
    also show that it expects to collect about $2.2 billion more than it
    disburses during fiscal year 1998. This information is summarized
    below.

     TABLE I.2.--DOD'S WORKING CAPITAL FUND ANNUAL CASH PLANS DATED JANUARY/
                                  FEBRUARY 1997
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                                 Estimated       Estimated
                                                fiscal year     fiscal year
                                                   1997            1998
                    Component                   collections     collections
                                                   less            less
                                               disbursements   disbursements
    ------------------------------------------------------------------------
    Army....................................         (173.4)            27.2
    Navy....................................       (1,427.7)           984.5
    Air Force \1\...........................         (154.5)           493.4
    Defense Agencies........................         (511.0)           669.4
                                             -------------------------------
          Total.............................       (2,266.6)         2,174.5
    ------------------------------------------------------------------------
    \1\ Air Force fiscal year 1998 figure includes United States
      Transportation Command's net collections of $102.6 million.

        Based on our analysis of DOD's cash plan and past trends, we
    believe that the Navy may have to advance bill customers during the
    remainder of fiscal year 1997 in order to ensure that its cash balance
    remains positive. Based on our review of the cash and outstanding
    advance billing balances for the period October 1996 through March
    1997, it is too close to tell if the Army and the Air Force will have
    to advance bill their customers during the remainder of fiscal year
    1997.
                        working capital fund operations
        The four DOD working capital funds have added surcharges to their
    fiscal year 1998 sales prices in order to recoup the $1.7 billion
    accumulated operating loss that they expect to have at the end of
    fiscal year 1997. As a result of this accumulated operating loss, the
    customers will need $1.7 billion in appropriated fiscal year 1998 funds
    so that they can reimburse the working capital funds for prior year
    losses rather than buy goods and services.
        Our limited review of five business areas and the assumptions used
    to develop their fiscal year 1998 prices (which could change as fiscal
    year 1998 approaches) indicates that the price increases may not be
    enough to eliminate the $1.7 billion accumulated operating loss. Based
    on the requirements in the National Defense Authorization Act for
    Fiscal Year 1997, we reviewed the fiscal year 1998 prices for Army
    depot maintenance, Air Force depot maintenance, Navy shipyards, Navy
    ordnance, and Navy research and development. In performing our work, we
    reviewed DOD's assumptions--which were finalized about 9 months before
    the beginning of fiscal year 1998--on the fiscal year 1998 estimated
    revenue, costs, operating results, and workload (direct labor hours) to
    determine if the prices are likely to (1) recover fiscal year 1998
    operating costs and (2) achieve a zero accumulated operating result at
    the end of fiscal year 1998.
        Our analysis indicates that the fiscal year 1998 prices for four of
    the five business areas reviewed are probably too low to recover
    expected fiscal year 1998 operating costs and/or recoup prior year
    losses by over $300 million. The results of our work is summarized
    below.

        .--Estimated impact of fiscal year 1998 pricing assumptions on end-of-year accumulated operating results

                                                                      Estimated end-of-year accumulated operating
                            Business area                                             result

    Army depot maintenance.................................  Greater than $100 million loss.
    Air Force depot maintenance............................  Greater than $100 million loss.
    Navy shipyards.........................................  Between $25 million and $100 million loss.
    Navy ordnance..........................................  Between $25 million and $100 million loss.
    Navy research and development \1\......................  On target for zero accumulated operating result.

    \1\ Naval surface warfare center and Naval undersea warfare center divisions only.

        Our previous reports \3\ have identified some of the primary causes
    of business area losses. For example, several reports have identified
    such long-standing and well-documented causes as (1) overly optimistic
    productivity assumptions, (2) unrealistic cost reduction goals, and (3)
    lower-than-expected workloads. As illustrated below, we believe that
    the funds will incur losses in fiscal year 1998 for the same reasons:
    ---------------------------------------------------------------------------
        \3\ ``Air Force Depot Maintenance: Improved Pricing and Financial
    Management Practices Needed'' (GAO/AFMD-93-5, Nov. 17, 1992);
    ``Financial Management: Navy Industrial Fund Has Not Recovered Costs''
    (GAO/AFMD-93-18, Mar. 23, 1993); ``Defense Business Operations Fund:
    Improved Pricing Practices and Financial Reports Are Needed to Set
    Accurate Prices'' (GAO/AIMD-94-132, June 22, 1994); ``Financial
    Management: Army Industrial Funds Did Not Recover Costs'' (GAO/AIMD-94-
    16, Nov. 26, 1993); and ``Navy Ordnance: Analysis of Business Area
    Price Increases and Financial Losses'' (GAO/AIMD/NSIAD-97-74, Mar. 14,
    1997).
    ---------------------------------------------------------------------------
      --The Army depot maintenance business area is likely to end fiscal
            year 1998 with an accumulated operating loss of more than $100
            million. The expected loss is due, in large part, to
            significant changes made to the depot-level budget, resulting
            in cost reduction goals that we believe will not be fully
            realized. Specifically, the Army's Industrial Operations
            Command proposed a composite fiscal year 1998 sales price of
            $107.03 per direct labor hour, which would have been a 19
            percent increase over the fiscal year 1997 price. However, this
            price was reduced by $10.18 per hour by the Army Materiel
            Command in an effort to hold down prices and reduce the cost of
            depot operations. The fiscal year 1998 price reduction has
            created a situation where expected revenues for fiscal year
            1998 will be significantly less than originally expected by the
            depots. In order to offset this revenue reduction, the depots
            need to reduce operational costs by about $68 million in fiscal
            year 1998. The Army was aware of the potential for significant
            losses and is attempting to identify areas where it can reduce
            its costs.
      --The Air Force depot maintenance business area is likely to have an
            accumulated operating loss of more than $100 million at the end
            of fiscal year 1998 primarily because disruptions related to
            on-going actions to close two Air Logistics Centers will
            probably prevent its work force from achieving productivity
            goals that were incorporated into budget estimates for fiscal
            years 1997 and 1998. In fact, our review of other closure
            actions and the business area's actual productivity for the
            first 5 months of fiscal year 1997 indicates that the work
            force's actual productivity is much more likely to decline
            significantly than to improve. For example, when the Air Force
            Aerospace Guidance and Metrology Center was closed in September
            1996, its work force's productivity had declined about 26
            percent during the preceding 2 years. Similarly, the
            productivity of the Air Force depot maintenance business area's
            work force for the first 5 months of fiscal year 1997 is about
            6.5 percent below budgeted levels for fiscal year 1996 and 8.5
            percent below the budgeted levels for fiscal year 1997.
      --It is likely that the Naval shipyard business area will have an
            accumulated operating loss between $25 million and $100 million
            at the end of fiscal year 1998. This is due, in part, to
            workload delays and cancellations--two problems that have
            adversely affected the shipyards' operations in the past \4\
            and are likely to affect their operations in fiscal years 1997
            and 1998. For example, the Navy's February 1997 budget
            submission was based partly on the assumption that repairs and
            alterations for one ship would require about 491,000 direct
            labor hours (DLH's). However, in April 1997, about 4 months
            before work was scheduled to start, a major portion of this
            work was deferred. As a result, the workload estimate for the
            ship has been reduced by about 71 percent to about 144,000
            DLH's. A Naval Sea Systems (NAVSEA) Command official stated
            that the shipyard cannot reduce its direct personnel and
            overhead costs in sufficient time to offset the lost revenue,
            which we estimate at about $20 million for direct labor,
            overhead, and surcharges.
    ---------------------------------------------------------------------------
        \4\ ``Defense Business Operations Fund: Improved Pricing Practices
    and Financial Reports Are Needed to Set Accurate Prices'' (GAO/AIMD-94-
    132, June 22, 1994).
    ---------------------------------------------------------------------------
          In another instance, our analysis of budget documents identified
            a change in workload estimates for a ship scheduled to begin
            repairs in May 1998. Budget documents indicated that Navy
            customers planned to spend about $16 million for ship repairs,
            while the shipyard planned to receive about $36 million in
            revenue for working on the ship. A NAVSEA official stated that
            workload was reduced about 68 percent from 400,000 DLH's to
            128,000 DLH's, but the change was not reflected in the workload
            estimates used to set fiscal year 1998 prices. In this case,
            the shipyard has 1 year to reduce its costs, renegotiate the
            workload reduction, or find additional revenue sources.
            Otherwise, a significant reduction in workload can result in
            significant losses.
      --It is likely that the Navy ordnance business area will have an
            accumulated operating loss between $25 million and $100 million
            at the end of fiscal year 1998. As part of an initiative to
            restructure its ordnance business area and reduce costs, the
            Navy plans to drastically reduce the scope of operations at
            selected ordnance weapons stations. Accordingly, when it
            developed the prices that the business area will charge
            customers in fiscal year 1998, the Navy reduced weapons
            stations' cost estimates for overhead contract costs (for such
            things as utility bills and real property maintenance) from
            $126 million to $87 million, a reduction of $39 million, or 31
            percent. However, the Navy has historically underbudgeted
            overhead contract costs for the weapons stations. For example,
            the reported actual overhead contract costs exceeded budgeted
            costs for fiscal years 1994, 1995, and 1996 by $33 million, $81
            million, and $43 million, respectively. Furthermore, the Navy
            has not yet developed a detailed plan to achieve the budgeted
            cost reductions. Consequently, we believe it is very likely
            that the Navy ordnance weapons stations' actual overhead
            contract costs will exceed budgeted costs.
        Because the budget process used to develop business areas'
    stabilized prices begins as long as 2 years before the prices go into
    effect, some variance between budgeted and actual operating results is
    inevitable. However, in some business areas, sales prices have yielded
    revenues that have been lower than actual costs for several years in a
    row. This indicates that there may be systemic problems with either the
    operation of the business areas or the methodology and assumptions used
    to estimate future costs and workloads. Until these problems are
    corrected, some business areas will continue to incur losses from their
    day-to-day operations and will need to increase future prices to
    recover these losses.
                                     ______

       Appendix II.--Key Factors Impacting the Cost-Effectiveness of the
                       Defense Depot Maintenance Program

        DOD's depot maintenance program, which costs more than $13 billion
    annually and involves an extensive public and private sector industrial
    base. Depot maintenance is one of the areas where DOD plans to achieve
    savings that can be used to fund shortfalls in modernization accounts.
    However, DOD is not achieving expected cost reductions in its depot
    maintenance program. In some instances, depot maintenance costs, in
    general, and unit repair costs, in particular, have actually increased
    and are expected to go higher. The waste and inefficiency in DOD's
    logistics system, including its depot maintenance program, is one of
    the key reasons we identified DOD's infrastructure activities as 1 of
    24 high-risk areas within the federal government.\5\
    ---------------------------------------------------------------------------
        \5\ ``Defense Infrastructure'' (GAO/HR-97-7, Feb. 1997). In 1990,
    GAO began a special effort to review and report on the federal program
    areas its work identified as high risk because of vulnerabilities to
    waste, fraud, abuse, and mismanagement.
    ---------------------------------------------------------------------------
        A number of factors are preventing DOD from achieving expected
    savings in its depot maintenance costs. First, excess capacity in the
    industrial repair and overhaul capability of the public and private
    sectors contributes significantly to inefficiencies and higher costs in
    both sectors. Second, DOD is not achieving expected savings from
    outsourcing. Third, inefficiencies in DOD's supply system, along with
    other factors, increase the cost of material, yet, because needed parts
    are often not available, cause disruptions in depot maintenance
    operations. Also, other factors such as inadequate information systems
    and readiness requirements can influence depot inefficiencies and
    increase costs. To the military services' credit, each has programs
    underway to improve the effectiveness and efficiency of its depot
    maintenance activities.
                                   background
        Depot maintenance is a key part of the total DOD logistics system
    that supports millions of equipment items, over 52,000 combat vehicles,
    351 ships, and over 17,000 aircraft. Depot maintenance is a vast
    undertaking that requires extensive shop facilities, specialized
    equipment, and highly skilled technical and engineering personnel to
    perform major overhauls of weapon systems and equipment; completely
    rebuild parts and end items; to modify systems and equipment by
    applying new or improved components; manufacture parts unavailable from
    the private sector; and program the software that is an integral part
    of today's complex weapon systems. This work is done in both military
    depots and the private sector. DOD facilities and equipment are valued
    at over $50 billion. A large but unknown amount of government-owned
    depot plant equipment is used by private contractors--many of them are
    original equipment manufacturers of weapons or major systems and
    components. DOD spends about $13 billion--5 percent of its $250 billion
    fiscal year 1997 budget--on depot maintenance activities. Over $1
    billion of this amount is procurement funding rather than operation and
    maintenance funding for contractor logistics support, interim
    contractor support, and some software maintenance.
    Workload and personnel have been reduced since the cold war ended
        DOD's depot maintenance workload has declined significantly in
    recent years, in large part because of the downsizing of the military
    force structure and reductions in spending for new weapon systems and
    equipment that followed the end of the Cold War. Other factors that
    have contributed to this decline, and which must be shared among all
    potential sources of repair--both public and private, include efforts
    by some services to do more repairs in field-level maintenance
    activities and the increased reliability, maintainability, and
    durability of some systems and equipment.
        The defense depot system employs about 76,000 DOD civilian
    personnel, including laborers, highly trained technicians, engineers,
    and top-level managers. As shown in figure II.1, the number of depot
    maintenance personnel has been reduced by about 71,000 personnel--a 48-
    percent reduction since 1990. Over the same period, the organic depot
    maintenance workload had a similar decline of about 43 percent, while
    the total depot maintenance budget declined by a margin of only 12
    percent.

    Excess capacity exists in the public and private sectors
        DOD has extensive excess capacity in the form of large numbers of
    underutilized buildings and equipment. While DOD has substantially
    reduced depot maintenance requirements and the number of depot
    maintenance personnel has been similarly reduced, the DOD has not
    completed complementary reductions in its depot maintenance
    infrastructure--despite four rounds of base closures. Also, private
    sector production workload for new systems and equipment has generated
    significant excess production capacity--which the private sector
    estimates to be about 57 percent for military work and 56 percent for
    commercial work.
        We identified excess capacity by determining maintenance
    facilities' potential for doing more work than they are programmed to
    accomplish. This approach, which assumes that additional trained
    personnel would be available to accomplish the added workloads, is the
    same approach that was used during the Base Realignment and Closure
    (BRAC) process to identify opportunities to consolidate similar
    workloads and to thereby, improve capacity utilization and reduce
    redundancies. However, DOD normally uses an approach that constrains a
    facilities' capacity based on (1) the availability of trained personnel
    and the organization of work stations and (2) the facility will only be
    operated on one 8-hour shift each day, for a 5-day workweek. The
    private sector usually considers a maximum potential capacity
    utilization between 75 and 85 percent to be an efficient operating
    level. Using maximum potential capacity estimates, DOD is predicted to
    have excess capacity in fiscal year 1999 of about 50 percent. Figure
    II.2 shows excess capacity using both the maximum potential capacity
    and DOD's available-capacity approach.

        Table II.1 provides projections of each military depot's workload
    and excess capacity for fiscal year 1999 using maximum potential
    capacity and available capacity for 1999.

                  TABLE II.1.--CAPACITY AND WORKLOAD FORECASTS FOR DEFENSE DEPOTS FOR FISCAL YEAR 1999
                                            [Direct labor hours in thousands]
    ----------------------------------------------------------------------------------------------------------------
                                                                                              Percentage  Percentage
                                       Maximum   Available              Maximum    Available   excess of   excess of
            Maintenance depot         potential   capacity   Workload   capacity   capacity     maximum    available
                                       capacity                          excess     excess     capacity    capacity
    ----------------------------------------------------------------------------------------------------------------
    Naval aviation:
        Cherry Point................      5,735      3,797      3,620      2,115        177           37           5
        Jacksonville................      7,158      5,572      5,355      1,803        217           25           4
        North Island................      7,772      4,318      4,027      3,745        291           48           7
                                     -------------------------------------------------------------------------------
          Subtotal..................     20,665     13,687     13,002      7,663        685           37           5
                                     ===============================================================================
    Naval shipyard:
        Norfolk.....................     15,851     12,000      8,723      7,128      3,277           45          27
        Pearl Harbor................      8,032      5,320      3,739      4,293      1,581           53          30
        Portsmouth..................      7,996      7,028      3,209      4,787      3,819           60          54
        Puget Sound.................     14,919     14,000     11,717      3,202      2,283           21          16
                                     -------------------------------------------------------------------------------
          Subtotal..................     46,798     38,348     27,388     19,410     10,960           41          29
                                     ===============================================================================
    Other Navy:
        Albany......................      1,883      1,215      1,089        794        126           42          10
        Barstow.....................      1,563      1,037        928        635        109           41          11
        Crane.......................      2,451        974        583      1,868        391           76          40
        Keyport NUWC................      1,141        672        555        586        117           51          17
                                     -------------------------------------------------------------------------------
          Subtotal..................      7,038      3,898      3,155      3,883        743           55          19
                                     ===============================================================================
    Air Force:
        Oklahoma City...............     12,863      7,881      7,624      5,239        257           41           3
        Ogden.......................      9,005      8,371      4,596      4,409      3,775           49          45
        San Antonio.................     15,220      1,575      1,606     13,614        (31)          89          -2
        Sacramento..................     10,291      1,724        989      9,302        735           90          43
        Warner Robins...............      9,913      7,605      5,508      4,405      2,097           44          28
                                     -------------------------------------------------------------------------------
          Subtotal..................     57,291     27,156     20,323     36,968      6,833           65          25
                                     ===============================================================================
    Army:
        Anniston....................      4,512      3,192      2,614      1,898        578           42          18
        Corpus Christi..............      4,714      4,009      3,338      1,376        671           29          17
        Letterkenny.................      3,707        213        164      3,543         49           96          23
        Red River...................      4,684      1,534        898      3,786        636           81          41
        Tobyhanna...................      7,606      5,091      2,736      4,870      2,355           64          46
                                     -------------------------------------------------------------------------------
          Subtotal..................     25,223     14,040      9,750     15,473      4,290           61          31
                                     ===============================================================================
          Total.....................    157,016     97,129     73,618     83,398     23,511           53          24
    ----------------------------------------------------------------------------------------------------------------

      workload consolidation provides significant opportunities to reduce
                             costly excess capacity
        There are essentially two options for reducing a maintenance
    depot's excess capacity: downsizing-in-place or increasing the volume
    of workload. Downsizing-in-place by mothballing or tearing down
    buildings and disposing of equipment may reduce the cost of maintaining
    some facilities and equipment, but it does not eliminate the costly
    infrastructure that supports the operations of a military installation.
    Also, it does not promote the efficiencies that can be achieved through
    consolidation. During the BRAC process it was generally the case that
    the most cost-effective way to reduce maintenance costs was to close
    some depots and to consolidate their workloads at the remaining depots
    or in existing private sector capacity. This approach allowed the
    remaining facilities to achieve production efficiencies and to spread
    their fixed overhead over an increased volume of work.
        The defense depot system currently has about 40-percent excess
    capacity. With the exception of the Navy's privatization-in-place
    efforts, our work shows that the Navy has been the most successful at
    addressing the issue of closing excess industrial capacity and
    consolidating it to achieve economies of operation. On the other hand,
    the Army and the Air Force have not succeeded in making significant
    reductions in their excess capacity. Both services are incurring rising
    prices because they have too much depot infrastructure for the
    available workload. Further, DOD's privatization of selected depots has
    contributed to the excess capacity problem and ultimately will continue
    to drive up maintenance costs. Additionally, the Air Force plans to
    compete workloads at two closing depots may be more costly than
    redistributing the workload to other depots. Such cost increases mean
    that military service customers can buy less depot maintenance with
    available operation and maintenance dollars.
    Navy is saving by expeditiously closing aviation depots and shipyards,
            but is missing savings opportunities by privatizing workload
        The Navy has closed three of its six aviation depots and has
    consolidated most of their workloads at the three remaining depots to
    improve capacity utilization and reduce excess capacity. These actions,
    while costly and difficult, will significantly increase utilization and
    reduce excess capacity in the remaining three naval aviation depots.
    Specifically, following the 1993 BRAC Commission's approval of a
    recommendation to close aviation depots at Pensacola, Florida; Alameda,
    California; and Norfolk, Virginia, the Navy completed the closures in
    about 3 years versus the 6-year period allowed under the BRAC
    legislation. The Navy estimates that these closures and workload
    redistribution actions, along with interservicing actions and
    outsourcing some noncore workloads, will reduce its projected operating
    rate by about $10 per hour. Based on a forecast of 13 million direct
    labor hours for fiscal year 1999, this forecast is expected to produce
    a savings of about $130 million.
        Our work shows that based on maximum potential capacity and fiscal
    year 1999 workload forecasts, the three remaining naval aviation depots
    will have an average excess capacity of 37 percent, substantially lower
    than the other services. Further, because the Navy reallocated most of
    the closing depots' workloads and specialties to its remaining aviation
    depots, and reengineered work spaces in the process, Navy officials
    state that given the availability of depot maintenance personnel,
    capacity utilization will be about 95 percent. This represents an
    increase of 36 percent after the workload transition is completed.
        The Navy has closed four of its eight naval shipyards,
    significantly reducing excess capacity in the public sector. However,
    excess capacity remains, particularly in nuclear capability. The amount
    of that excess capacity depends on how much depot level ship repair
    work the Navy assigns public shipyards.
                The Navy's privatization-in-place of the Louisville depot
                        was less cost-effective than redistributing the
                        workload
        The Navy's privatization of its Louisville depot was not the most
    cost-effective choice--it could have saved more through consolidation
    of workloads and improved use of capacity in remaining industrial
    activities.\6\ The Louisville, Kentucky, Detachment of the Naval
    Surface Warfare Center, Crane Division, a depot recommended for closure
    by the 1995 BRAC Commission, supported the overhaul and remanufacture
    for naval surface ship gun and missile systems. In analyzing the cost
    of privatizing the Louisville workload in place versus transferring it
    to another depot, the Navy estimated that the contract alternative
    would cost more on an annual recurring basis and the one-time cost of
    transferring the workload to another depot would be prohibitive.
    However, we found the Navy's analyses understated the annual savings of
    transferring the workloads to other underused facilities and overstated
    the one-time transfer costs.
    ---------------------------------------------------------------------------
        \6\ ``Navy Depot Maintenance: Cost and Savings Issues Related to
    Privatizing-in-Place at the Louisville, Kentucky, Depot'' (GAO/NSIAD-
    96-202, Sept. 18, 1996).
    ---------------------------------------------------------------------------
        Our analysis shows a one-time cost of $243 million and an annual
    savings of $59 million by transferring the workload. The annual savings
    would offset the one-time cost in about 4 years. The Navy's annual
    savings estimate recognized that transferring the workloads to
    underused facilities would reduce the overhead cost for those
    production units being considered for transfer. However, the per unit
    savings were applied only to the workloads transferred and not to
    existing workloads at receiving locations. So while privatizing the
    workload in place avoided short-term cost for transitioning the
    workload, it is likely to be more costly for the Navy over the long
    run.
                Operating with costly excess capacity is resulting in
                        increased prices for Army depots
        Based on the actions taken thus far, the Army has not effectively
    downsized its depot maintenance infrastructure to significantly reduce
    costly excess capacity.\7\ We reported in September 1996 \8\ that
    tentative plans for implementing the 1995 BRAC decisions by allocating
    some workloads from realigned depots to remaining depots will likely
    achieve some reduction in excess capacity and savings at two remaining
    depots. However, the Army's failure to follow through with the closure
    of the Letterkenny Depot, the consolidation of repair workloads at
    other Army depots, and the retention of the Red River Depot as directed
    by the BRAC Commission is expected to increase costly excess capacity
    in the Army depots, from 42 to 46 percent over the next 3 years.
    ---------------------------------------------------------------------------
        \7\ Although the Army closed the Lexington-Blue Grass, Sacramento,
    and Tooele Army depots, excess capacity was still 42 percent in 1995.
        \8\ ``Army Depot Maintenance: Privatization Without Further
    Downsizing Increases Costly Excess Capacity'' (GAO/NSIAD-96-201, Sept.
    18, 1996).
    ---------------------------------------------------------------------------
        This increase is caused by several factors including: (1) a
    forecasted decrease in future year depot-level workload; (2) the Army's
    preliminary plan to retain most depot operations for missiles at
    Letterkenny, while privatizing or transferring to Tobyhanna Army Depot
    only about 14 percent of the workload; and (3) the delay in the
    transfer of the ground communications-electronics workload from the
    Sacramento depot to the Tobyhanna depot. In our September 1996 report,
    we recommended that DOD reassess this delay, which is costing the Army
    about $24 million annually. Subsequently, on March 13, 1997, the
    Defense Depot Maintenance Council approved the Air Force's proposal for
    a 3-year workload transfer beginning in 1998 with the transfer of 20
    percent of the workload in the first year, and 40 percent each in the
    second and third years with full-operational capability at the
    Tobyhanna Depot in 2001.
    Delay in implementing depot closure is increasing Air Force depots
            maintenance costs
        The Air Force has the most serious excess capacity problem. Delays
    in closing two depots identified for closure during the 1995 BRAC
    extends the period that the Air Force will operate five depots. During
    this period, each depot will operate with declining workloads, excess
    facilities, and personnel. This situation will increase the cost of Air
    Force depot maintenance operations and result in projected losses of
    about $90 million in its depot operations during fiscal year 1997.
    Three of the six Air Force depots that existed in 1992 were recommended
    for closure during the 1993 and 1995 BRAC processes. The Air Force has
    opted to privatize-in-place one of these depots and is in the process
    of using public-private competitions to decide where the workloads from
    the other two closing depots will be performed.
                BRAC decisions and how DOD is approaching implementation
        Despite major force structure reductions and significant excess
    capacity in the Air Force depot maintenance system, none of the Air
    Force's five large, multicommodity logistics centers or their
    maintenance depots were recommended by DOD for closure during the first
    four BRAC rounds. These five depots have about 57 million direct labor
    hours of capacity to accomplish about 32 million direct labor hours of
    work, leaving about 26 million hours of excess capacity--or about 45
    percent. Also, the Air Force maintenance depots' workloads are
    projected to decline to about 20 million direct labor hours of work in
    1999. At this workload level, the Air Force depots would have about 65
    percent unused capacity. Although the commission identified depots at
    the Sacramento and San Antonio centers for closure during the 1995 BRAC
    process, the executive branch, citing readiness, up-front costs, and
    potential effects on the local community, indicated that these
    workloads should be privatized-in-place or in the local communities.
    Subsequently, DOD announced that it will use public-private
    competitions as a means for determining who will perform the workload
    from the closing depots.
        In December 1996, we reported that if the remaining depots do not
    receive additional workloads, they are likely to continue to operate
    with significant excess capacity and to become more inefficient and
    expensive as workloads continue to dwindle due to downsizing and
    outsourcing initiatives.\9\ Our analysis indicates that redistributing
    8.2 million direct labor hours of work from the two closing Air Force
    depots to the three remaining depots would (1) reduce the projected
    excess capacity in 1999 from about 65 percent to about 27 percent, (2)
    lower the hourly rates by an average of $6 at receiving locations by
    spreading fixed cost over a larger workload, and (3) save as much as
    $182 million annually as a result of economies of scale and other
    efficiencies. This estimate was based on a workload redistribution plan
    that would relocate only 78 percent of the available hours to Air Force
    depots. About one-half of the remaining 22 percent was captured in
    savings the Army projected would be achieved through consolidating
    ground communications and electronics workload at Tobyhanna Army depot.
    Table II.2 shows an overview of the projected savings achievable
    through consolidation and increased use of capacity in the remaining
    three Air Force depots.
    ---------------------------------------------------------------------------
        \9\ ``Air Force Depot Maintenance: Privatization-in-Place Plans Are
    Costly While Excess Capacity Exists'' (GAO/NSIAD-97-13, Dec. 31, 1996).

                            TABLE II.2.--POTENTIAL SAVINGS FROM AIR FORCE DEPOT CONSOLIDATION
    ----------------------------------------------------------------------------------------------------------------
                                                                                          Labor/
                              Depot location                             Direct labor    overhead         Cost
                                                                             hours        rates
    ----------------------------------------------------------------------------------------------------------------
    Before consolidation:
        Oklahoma City.................................................       7,122,421     $59.11       $421,006,305
        Ogden.........................................................       4,939,623      65.47        323,397,118
        Warner Robins.................................................       6,763,218      59.55        402,749,632
        Sacramento....................................................       3,222,409      63.81        205,621,918
        San Antonio...................................................       5,000,190      58.24        291,211,066
                                                                       ---------------------------------------------
          Total cost..................................................  ..............  .........      1,643,986,039
                                                                       =============================================
    After consolidation:
        Oklahoma City.................................................      12,214,902      50.22        613,432,378
        Ogden.........................................................       6,626,348      59.68        395,460,449
        Warner Robins.................................................       8,206,611      55.17        452,758,729
                                                                       ---------------------------------------------
          Total cost..................................................  ..............  .........      1,461,651,556
                                                                       =============================================
          Total potential savings.....................................  ..............  .........        182,334,483
    ----------------------------------------------------------------------------------------------------------------

        According to management officials at the three remaining centers,
    it would cost about $475 million to absorb all of the Sacramento and
    San Antonio workload. Using our estimate of $182 million in projected
    annual consolidation savings, net savings could occur within 2.6 years
    of the consolidation.\10\ The Air Force believes that the competition
    process will demonstrate if outsourcing or workload redistribution is
    the best value.
    ---------------------------------------------------------------------------
        \10\ In addition, the Army estimates that the BRAC Commission
    mandated transfer of about 1.2 million hours of ground communications
    workload from the Sacramento depot to the Tobyhanna Army Depot will
    save an additional $24 million annually.
    ---------------------------------------------------------------------------
    material cost increases are generating losses for the depot maintenance
                                 activity group
        While material costs vary for different commodities and depot
    maintenance actions, the cost of repairable and consumable parts is a
    significant portion of the cost of depot maintenance activities and of
    the composite rates charged depot maintenance customers. For this
    reason, inefficiencies in the DOD supply system and inaccurate
    information about the quantity and price of spare and repair parts
    required in the repair processes may lead to increased costs and losses
    in the depot maintenance capital fund. For example, about 40 percent of
    Air Force depot maintenance costs are material costs. During fiscal
    year 1997, Air Force depots are experiencing a 9-percent loss due to
    increased cost of material. The total effect of awaiting parts on the
    depot repair cycle process is not known because its measurement is said
    to be incomplete and inconsistent. However, one study reported that
    partial data indicates that it is a pervasive and serious problem--in
    one case as much as 12 percent of an annual negotiated program was not
    completed because parts were not available.\11\
    ---------------------------------------------------------------------------
        \11\ ``The Depot Repair Cycle Process: Opportunities for Business
    Practice Improvement,'' LG406MR1, May 1996, The Logistics Management
    Institute.
    ---------------------------------------------------------------------------
    Inventory management inefficiencies to contribute to high-maintenance
            costs
        Since 1992, we have reported that DOD had wasted billions of
    dollars on excess supplies, including spare and repair parts used in
    the depot maintenance repair process. We reported that the problem
    resulted because inherent in DOD's culture was the belief that it was
    better to overbuy items than to manage with just the amount of stock
    needed. Had DOD used effective inventory management and control
    techniques and modern commercial inventory management practices, DOD
    would have had lower inventory levels and would have avoided the burden
    and expense of storing excess inventory. In a 1995 report, we stated
    that managing DOD's inventory presented challenges that partially
    stemmed from the downsizing of the military forces.\12\ We reported
    that DOD needed to move aggressively to identify and implement viable
    commercial practices and to provide managers with modern, automated
    accounting and management systems to better control and monitor its
    inventories.
    ---------------------------------------------------------------------------
        \12\ ``High Risk Series: Defense Inventory Management'' (GAO/HR-95-
    5, Feb. 1995).
    ---------------------------------------------------------------------------
        More recently, we reported that while DOD has clearly had some
    success in addressing its inventory management problems, much remains
    to be done.\13\ DOD has made little progress in developing the
    management tools needed to help solve its long-term inventory
    management problems. It has not achieved the economies and efficiencies
    hoped for from the Defense Business Operations Fund and the Corporate
    Information Management initiatives. As a result of the lack of progress
    with some of the key initiatives, it has become increasingly difficult
    for inventory managers to manage DOD's $69 billion spare and repair
    parts inventory efficiently and effectively, including determination of
    budget requirements. Large amounts of unneeded inventory, inadequate
    inventory oversight, overstated requirements, and slowness to implement
    modern commercial practices are evidence of the lack of progress. For
    example:
    ---------------------------------------------------------------------------
        \13\ ``High Risk Series: Defense Inventory Management'' (GAO/HR-97-
    5, Feb. 1997).
    ---------------------------------------------------------------------------
      --In our 1995 report, we stated that DOD's 1994 strategic plans for
            logistics called for improving asset visibility in such areas
            as in-transit assets, retail-level stocks, and automated
            systems. Although the asset visibility plans were to be
            completely implemented by 1996, DOD currently does not project
            to complete the total asset visibility initiative until 2001.
            Further, the lack of adequate visibility over operating
            materials and supplies substantially increases the risk that
            millions of dollars will be spent unnecessarily.
      --In 1992 and 1995, we reported that DOD had problems in accurately
            determining how much inventory it needs to buy. Our recent work
            shows that this continues to be the case. For example, we
            reported that DOD had made limited progress in reducing
            acquisition lead times and that DOD could reduce its lead time
            by 25 percent over a 4-year period and save about $1
            billion.\14\
    ---------------------------------------------------------------------------
        \14\ ``Defense Supply: Acquisition Leadtime Requirements Can Be
    Significantly Reduced'' (GAO/NSIAD-95-2, Dec. 1994).
    ---------------------------------------------------------------------------
        --We have found that despite DOD's huge investment in spare and
    repair parts, depots often do not have the spare and repair parts to
    perform required maintenance. For example, we recently reported that
    inadequate consumable parts that are used in large quantities to repair
    aircraft components were the primary cause for repair delays at the
    Corpus Christi Army depot.\15\ Also, we found that not having required
    parts has delayed the installation of the night vision modification for
    the F-16 aircraft because required parts had not been procured--
    resulting in a production loss of 31,000 hours. According to Air Force
    officials, if this work had been contracted out, the contractor would
    file a claim to be reimbursed for lost production time where
    nonavailability of parts impacted contractor performance. As a result
    of this and other production changes, Ogden officials stated the depot
    is currently 126,000 below planned 1997 production levels, causing a
    net loss of about $5 million.
    ---------------------------------------------------------------------------
        \15\ ``Inventory Management: The Army Could Reduce Logistics Costs
    for Aviation Parts by Adopting Best Practices'' (GAO/NSIAD-97-82, Apr.
    15, 1997).
    ---------------------------------------------------------------------------
    Inadequate control of government-furnished stocks can contribute to
            losses in contract depot maintenance
        Long-standing problems in managing government-furnished property,
    government-furnished equipment, and government-furnished material are
    adding millions of dollars to DOD's depot-level maintenance contracting
    costs and resulting in losses in the Air Force's contract maintenance
    portion of the working capital fund.
        DOD buying commands can choose to provide contractors property,
    equipment, and materials for use in repairing items. Contractors are to
    report annually to the services the amount of property and equipment
    they have on hand that was furnished by the commands, and the commands
    are to reconcile these reports with their records. Material for use in
    the repair of items is to be furnished timely and monitored for proper
    use. Failure to provide government-furnished material in a timely
    manner can result in a claim for compensation from the contractor.
    Further, since the Air Force, unlike the other military services
    includes contract depot maintenance in its working capital fund,
    increased costs over what is budgeted will lead to losses in the
    working capital fund.
                Management and accountability has not always been effective
        DOD's problems in managing and accounting for government-furnished
    stocks have been long-standing. For example, in 1993, the former
    Secretary of the Army requested the Army Audit Agency to examine
    controls over government-furnished property because we identified this
    as a weakness during our audit of the Army's fiscal year 1991 financial
    statements. The Army Audit Agency found many problems Army-wide,
    including the inability to determine the accuracy of contractors'
    reports. For instance, at the Missile Command, contractors reported
    having about $1.3 billion in government-furnished property for which
    the command's annual summary report of property in the custody of
    contractors did not identify. In April 1996, the Air Force Audit Agency
    found similar problems at Warner Robins Air Logistics Center with
    government-furnished property financial statement balances that could
    have been misstated by up to $2.3 billion. The following are three
    cases we found where inadequate control over government-furnished
    equipment resulted in increased depot maintenance costs:
      --The Warner Robins Air Logistics Center experienced a $113-million
            cost overrun on F-15 maintenance work. Since the early 1980's,
            the Center has contracted with Korean Airlines and Israel Air
            Industries for maintenance on this aircraft overseas. In 1989,
            the Center began experiencing cost overruns, which it
            determined were directly related to government-furnished
            material. Our review shows that the F-15 programmed depot
            maintenance managers had sufficient information about the
            government furnished material issue from reports that were
            periodically generated from the Center's automated systems.
            However, no actions were taken to resolve the government-
            furnished material problem until the contract was being
            administratively closed out in 1996. The Center maintains that
            some of the problems have been corrected but that others have
            not. We observed the government-furnished material status on
            the current F-15 contract and found that a similar pattern of
            cost overrun is occurring.
      --In another case, the Air Force paid $24.9 million to settle claims
            related, in part, to its failure to provide the contractor,
            PEMCO, timely government-furnished material. PEMCO had filed
            claims for compensation between November 1994 and June 1996 for
            alleged problems related to programmed depot maintenance for
            the KC-135 aircraft and had planned to file additional claims.
            In September 1996, the Air Force and PEMCO reached a ``global
            settlement'' of $24.9 million where the Air Force conceded
            fault in several areas, including the failure to provide
            material on time.
      --According to program office officials, increased costs resulting
            from the contractor's use of government-furnished material is
            one of several factors leading to losses resulting from the
            privatization of the Aerospace Guidance and Metrology Center
            (AGMC) in Newark, Ohio.
     overly optimistic assumptions of cost savings from outsourcing could
                        lead to further price increases
        Unanticipated losses in outsourced workloads are another factor
    influencing cost growth in the depot maintenance program and losses in
    the working capital fund. Reported projections of 20-to 40-percent
    savings from outsourcing depot maintenance and other logistics
    operations have influenced DOD assumptions that outsourcing will lead
    to significant savings. Because assumptions about outsourcing savings
    were overly optimistic, expected savings are not being achieved.
    AGMC outsourcing illustrates how overly optimistic saving assumptions
            lead to losses
        The Air Force reported to the Congress that the privatization of
    the AGMC would result in savings, and it did not budget for increased
    costs for post-privatization operations. Customers of the privatized
    facility--the Boeing Guidance Repair Center--are not paying enough to
    recoup the costs of ongoing repair work and the Air Force Working
    Capital Fund is therefore expected to incur losses during fiscal year
    1997. The Air Force has recognized that costs will be higher during
    fiscal year 1998 and is increasing its prices by $19 million.
    Nonetheless, a just released Air Force Materiel Command study, which
    was undertaken at our request, states that privatized repair operations
    for missile and aircraft inertial navigation systems could range
    between about $9 million and $32 million--a 12- to 47-percent
    increase--with a most likely increase of $17.1 million.
    Assumptions regarding outsourcing savings are based on competition, but
            many current depot maintenance contracts are sole source
        Facing large shortfalls in its modernization accounts, DOD plans to
    reduce costs and generate savings for modernization through the
    outsourcing of support activities, including depot maintenance. DOD's
    projected savings level is based largely on estimates made through
    studies by the Commission on Roles and Missions (CORM) and Defense
    Science Board that outsourcing depot maintenance and other activities
    will save 20 to 40 percent. Our review shows that savings of this
    magnitude are questionable for several reasons. For example, (1)
    projections were based on the Office of Management and Budget Circular
    A-76 competitions between the public and private sector, with the
    public sector winning about half of the competitions; (2) the
    activities being competed were simple, commercial activities like
    mowing grass, maintaining buildings, and operating motor pools where
    requirements could readily be identified and for which there were many
    private sector offerors who could compete for the work; and (3) savings
    estimates were estimated, not actual, and where audited, savings
    estimates were not achieved. While we believe savings may be achieved
    from outsourcing some depot maintenance workloads, our analysis
    indicates that little or no savings would result from outsourcing depot
    maintenance in the absence of competition.
        However, our April 1996 testimony and July 1996 CORM report noted
    that much of the depot work contracted to the private sector was
    awarded sole source and that obtaining competition for remaining
    noncore workloads may be difficult and costly.\16\ For example, to test
    for the extent of competition, we sampled 240 contracts, totaling $4.3
    billion, that 12 DOD buying commands had open during 1995. Of these 240
    contracts, 182, about 76 percent, were awarded on a sole-source basis--
    about 45 percent of the total dollar value.
    ---------------------------------------------------------------------------
        \16\ ``Defense Depot Maintenance: Privatization and the Debate Over
    the Public-Private Mix'' (GAO/T-NSIAD-96-148, Apr. 17, 1996) and
    ``Defense Depot Maintenance: Commission on Roles and Mission's
    Privatization Assumptions Are Questionable'' (GAO/NSIAD-96-161, July
    15, 1996).
    ---------------------------------------------------------------------------
        Recently, we asked the DOD buying commands to classify as
    competitive or sole source all the new contracts awarded from the
    beginning of fiscal year 1996 to date. As shown in table II.3, of the
    15,346 contracts totaling $2.2 billion, 13,930--about 91 percent--were
    awarded sole source. The sole-source contracts totaled about $1.5
    billion, or about 68 percent of the total dollars awarded.

                   TABLE II.3.--DOD DEPOT MAINTENANCE CONTRACTS AWARDED FROM FISCAL YEAR 1996 TO DATE
                                                  [Dollars in millions]
    ----------------------------------------------------------------------------------------------------------------
                                                              Competitive         Sole source            Total
                           Command                       -----------------------------------------------------------
                                                           Number     Value    Number     Value    Number     Value
    ----------------------------------------------------------------------------------------------------------------
    Army................................................         2        $1        40      $540        42      $541
    Air Force...........................................     1,263       443     1,268       336     2,531       779
    Navy................................................       151       253    12,622       638    12,773       891
                                                         -----------------------------------------------------------
          Total.........................................     1,416       697    13,930     1,514    15,346     2,211
    ----------------------------------------------------------------------------------------------------------------

        Table II.4 compares the services' use of competition for contracts
    we sampled in 1995 with that used in contracts awarded since the
    beginning of fiscal year 1996. The Air Force had the greatest percent
    of competitive contracts in 1995 and 1996. The Army's use of
    competition decreased, and the Navy's use was low for both periods.

        TABLE II.4.--DOD'S USE OF COMPETITION FOR DEPOT MAINTENANCE WORK
                              [Numbers in percent]
    ------------------------------------------------------------------------
                                       Competitive           Competitive
                                    contracts open in     contracts awarded
                                          1995            from fiscal year
               Service           ----------------------     1996 to date
                                                       ---------------------
                                    Total      Total      Total      Total
                                    number     value      number     value
    ------------------------------------------------------------------------
    Army........................         23         53          5        0.2
    Air Force...................         39         62         50       57.0
    Navy........................          8         39          1       28.0
    ------------------------------------------------------------------------

    Competition cited as reason for sole-source awards
        Our review also showed that, for existing weapon systems, obtaining
    a competitive market may be costly for DOD because it has not acquired
    the technical data rights for many of its weapon systems. In examining
    the reasons for sole-source contracting, we observed that the
    justification most often cited was that competition was not possible
    because DOD did not own the technical data rights for the items to be
    repaired. Officials from the DOD buying commands told us that DOD would
    have to make costly investments to promote full and open competition
    for many of its weapon systems. Also, we found that savings through
    competition may be adversely affected by private businesses that choose
    not to compete for maintenance workloads that have (1) small volumes,
    (2) obsolete technology, (3) irregular requirements, and (4) unstable
    funding. DOD may be able to encourage more competition through bundling
    common work and offering contracts with terms and conditions such as
    multiple options and multiyear performance periods.
             other factors effecting depot inefficiencies and costs
        In addition to the factors we have already discussed, there are a
    number of others that impact the efficiency and cost of depot
    maintenance operations. In particular our work shows that: (1) lengthy
    depot repair cycles are costly; (2) DOD has been unsuccessful in
    implementing effective information systems to adequately support its
    depot maintenance; and (3) defense depots must support inefficient
    workloads and changing budgets and requirements of their customers. It
    is important to note that each of the services has initiated programs
    to improve their depot maintenance operations. However, while these
    programs are concentrating on key problems, it is too soon to assess
    effectiveness of these initiatives.
    Reducing repair cycle days can reduce costs
        Reducing the length of the depot repair cycle process is of vital
    importance in reducing costs. Reducing repair cycle time reduces the
    number of items that must be purchased to support weapon systems and
    equipment. One study estimated that for depot level reparables, the
    dollar-weighted organic/contractor depot repair cycle time is 86.8
    days, with a resultant repair cycle level investment requirement of
    $4.4 billion. That requirement would be decreased an average of $51
    million for each day the repair cycle time is reduced.\17\
    ---------------------------------------------------------------------------
        \17\ ``The Depot Repair Cycle Process: Opportunities for Business
    Practice Improvement,'' LG406MR1, May 1996, Logistics Management
    Institute.
    ---------------------------------------------------------------------------
        In our April 1997 report, we stated that the Army's efforts to
    improve its logistics pipeline for aviation parts and reduce logistics
    costs could be enhanced by incorporating best practices we have
    identified in the private sector. The Army's current repair pipeline,
    characterized by a $2.6 billion investment in aviation parts, is slow
    and inefficient. For example, in one case we examined, it took the Army
    4 times longer than a commercial airline to ship a broken part to the
    depot and complete repairs. Also, for 24 different types of items
    examined, we calculated it took the Army an average of 525 days to
    repair and ship the parts to field units. The Army estimates only 18
    days (3 percent) should have been needed to repair the items. The
    remaining 507 days (97 percent) were used to transport or store the
    parts or were the result of unplanned repair delays. Because of this
    lengthy pipeline time, the Army buys, stores, and repairs more parts
    than would be necessary with a more efficient system. We reported that
    implementing industry best practices can be used to achieve significant
    improvements and cost reduction. These practices are the prompt repair
    of items, the reorganization of the repair process, the establishments
    of partnerships with key suppliers, and the use of third-party
    logistics services. Our work in the Navy and Air Force depot activities
    found similar opportunities for improvement exist.\18\
    ---------------------------------------------------------------------------
        \18\ ``Inventory Management: Adopting Best Practices Could Enhance
    Navy Efforts to Achieve Efficiencies and Savings'' (GAO/NSIAD-96-156,
    July 12, 1996) and ``Best Management Practices: Reengineering the Air
    Force's Logistics System Can Yield Substantial Savings'' (GAO/NSIAD-96-
    5, Feb. 21, 1996).
    ---------------------------------------------------------------------------
    Timely and accurate information systems are essential to improve depot
            operations and costs
        Current information systems used to manage the depot repair process
    do not provide timely and accurate information essential for improving
    depot operations and reducing costs. In 1989, DOD established the
    Corporate Information Management Initiative to dramatically improve the
    way DOD conducts business, primarily by adopting best business
    practices used in the public and private sectors and building the
    automated information systems to support those improved practices. In
    November 1992, DOD adopted a plan for identifying the best operational
    logistics information systems and deploying them among all the services
    and defense agencies. This strategy failed to produce the dramatic
    gains in efficiency and effectiveness that DOD anticipated.
        Our review of depot maintenance systems envisioned under this plan
    found that even if the migration effort was successfully implemented as
    envisioned, the planned depot maintenance standard system would not
    dramatically improve depot maintenance operation in DOD.\19\ DOD
    planned to invest more than $1 billion to develop a depot maintenance
    standard system that would achieve less than 2.3 percent in reduced
    operational costs over a 10-year period. Such incremental improvement
    is significantly less than the order of magnitude improvements DOD has
    said could be achieved through reengineering business processes--
    efforts that were being postponed until after the development of the
    standard systems.
    ---------------------------------------------------------------------------
        \19\ ``Defense IRM: Strategy Needed for Logistics Information
    Technology Improvement Efforts'' (GAO/AIMD-97-6, Nov. 14, 1996).
    ---------------------------------------------------------------------------
        DOD subsequently terminated the Depot Maintenance Information
    System and the depots had to write off their investment in this effort.
    Air Force depots wrote off about $34 million of their investment in
    this program in 1996, adding to their depot activity group losses that
    year.
    Organic depots' mission is to support military customers' programs,
            which contain some inherent inefficiencies
        While the organic depots can and must implement improvements to
    reduce the cost of their depot maintenance operations, they have some
    mission requirements that are inherently inefficient. However,
    performing these missions is necessary to meet the readiness and
    support needs of their customers. For example:
      --Many of the depot level reparable components that organic depots
            must be prepared to repair have uncertain and infrequent repair
            requirements. For example, a contingency response or special
            training exercises may require expedited and/or increased
            repair needs to support key weapon systems and equipment.
            Likewise, depots are required to maintain repair capabilities
            to support end items and components that may be obsolete, are
            maintained in low quantities and/or have infrequent, sporadic
            requirements. Neither of these situations are conducive to
            supporting low-cost operations, but are necessary to meet the
            readiness needs of the customer.
      --Changing operational requirements and changing budget requirements
            frequently result in changes to the production schedules.
            Production changes would result in losses when the volume of
            work declines or the mix of resulting work generates less
            revenue than planned. As previously discussed, budgets are
            developed 2 years in advance. Depot officials stated that
            changes in the production schedule that impact projected versus
            actual revenues are significant.
    All services have initiatives to improve depot operations
        Each of the military services have individual programs designed to
    address some depot maintenance inefficiencies. We have recommended such
    actions and are encouraged by these efforts. While it is too early to
    assess the specific results, our initial impression is that the
    programs are focusing on key problem areas, such as reducing repair
    cycle time. Some examples of the services improvement initiatives over
    the past few years include:
      --The concept of regional maintenance in the Navy focuses on properly
            sizing the shore maintenance infrastructure to support a
            smaller naval force while maintaining the Fleet in a high state
            of readiness.
      --The Air Force's Lean Logistics Program is designed to maximize
            operational capability by using high velocity transportation
            and just-in-time stockage principles to shorten cycle times,
            reduce inventories and cost, and shrink the mobility footprint,
            and providing flexibility to manage mission and logistics
            uncertainties.
      --The Integrated Sustainment Maintenance Program in the Army
            regionalizes the repair of components to achieve efficiencies
            and cost savings.
      --The Marine Corps' Precision Logistics Program is a change in
            culture and a pursuit of smart business practices regarding the
            speed and accuracy of information, speed and fluidity of
            distribution, and reduction in support cycle times.
        Mr. Chairman, this concludes our statement. We would be pleased to
    answer any questions you or the Subcommittee may have at this time.

                        summary statement of Jack Brock

        Senator Inouye. Thank you very much, Mr. Hinton. Mr. Brock.
        Mr. Brock. Thank you very much. You will have to excuse me,
    Senator, if occasionally I lapse into defense business
    operations fund [DBOF] rather than working capital fund. DBOF
    rolls off the tongue, working capital fund is a little harder
    to say.
        A few months ago the Department changed the name of the
    defense business operations fund to the working capital fund.
    At this point it really did not change the way the operations
    work, but it is a name change. DBOF, and I am now correctly
    talking about DBOF, was established in 1991 by consolidating
    nine existing stock and industrial funds. The concept behind
    DBOF was very simple. We want to break even. We want our
    revenue minus the expenses to equal zero.
        The thought was, by establishing the fund and having this
    concept of breaking even, it would put pressure on the
    individual functional components within DBOF to operate more
    efficiently and try to drive prices down or to stabilize
    prices. As a result of doing so, by making the functional areas
    more efficient, it would then free up funding for the
    warfighter, for activities that directly support the
    warfighter. This is a very good concept. GAO has consistently
    supported the concept, and we think that DBOF and now the
    working capital fund is very effective as a messenger to
    Congress and to managers within DOD. Sometimes the message is
    not very pleasant to hear, but as a messenger it has worked.
        As I mentioned, the working capital fund was established in
    December 1996. It is essentially a rename, but it was done to
    clarify and to clearly establish that the services and
    components were responsible for managing the functional and
    financial aspects of their respective business areas. As we
    have discussed today and I am going to go into a little bit
    further later, that part of the original DBOF concept has been
    successful. The fund itself and the numbers that go behind it
    have opened windows into the operations of the various working
    capital fund activities that allow, again, both DOD managers,
    and people in oversight positions such as yourself, to really
    take a look at what is going on.
        Quite simply, when you look at the fund, there is a simple
    financial formula you need to keep in mind, that revenue minus
    expenses equals zero. And that is zero over time. When you
    break this apart, revenue is a factor of the price of
    individual units of work times the work in inventory units
    being serviced or sold. So, if you want to increase revenue you
    either have to raise the price or you have to get more work.
    The expenses are a function of direct labor costs for direct
    labor, material, overhead, and functions like that. So on that
    side of the formula, if you want to reduce costs you have to
    lower those factors. So price is always the plug figure. If you
    have higher expenses, you raise the price. If you have more
    revenue than expected you can lower the price. It is that
    simple. It is sometimes difficult to implement, but the concept
    itself is very expensive.
        When you do not break even, when you lose money, you incur
    a loss, which is supposed to be made up in the ongoing years.
    If you get a surplus, if you make money, then you distribute
    that in the out-years. So, over time DBOF, and now the working
    capital fund, is expected to work as a break even concept. Now,
    on top of that they have to maintain a certain level of cash.
    Typically this is between 7 and 10 days of working cash, and
    this is just to be able to pay the bills on a day-to-day basis.
        So, with that as background, I would like to spend just a
    few minutes talking about the results. By the end of this
    fiscal year DOD estimates that the funds will have an
    accumulated operating loss of about $1.7 billion, and this is
    since 1991. They have not achieved their goal of breaking even
    over time. By service and component, the three major
    components, the Army has lost $3 million, Navy $381 million,
    and the Air Force $317 million, and DOD-wide, $976 million. I
    would like to put a little caveat on the Navy $381 million.
    This includes about $1.5 billion in congressional assistance.
    In 1997 they got a $512 million transfer, which was, in effect,
    a subsidy to DBOF, and in 1996 they got a $595 million direct
    appropriations to help compensate for the costs of closing some
    of the shipyards and aviation depots.
        The working capital funds have also had quite a problem
    with cash management. Until 1995, cash was managed centrally.
    That is DBOF managed cash as an entity. In February of that
    year, cash management was devolved to the individual
    components, largely to promote increased accountability and to
    put responsibility for cash management closer to the point
    where decisions were being made that would, in turn, affect
    cash balances.
        Collectively the funds require between $2.3 and $3.4
    billion in cash to operate. That is their safety net. As of
    March this year, the working capital fund had $2.5 billion in
    cash, just slightly above the minimum. However, the Army and
    Navy working capital funds are below the minimum, and without
    advanced billing both the Navy and Air Force would have
    negative cash balances and would be in violation of the Anti-
    Deficiency Act. Advance billing has, in effect, been a stopgap
    measure for the funds. At the time of the cash management
    devolvement in February 1995, cash advances were at $5.2
    billion collectively. Since then, the working capital funds
    have worked off about $3.6 billion, but still have a balance of
    $1.6 billion outstanding. That was in January 1997. I think the
    balance now is a little closer to $1.3 billion. The Navy and
    Air Force had to advance collectively $2.9 billion last year,
    and the Navy had another advance billing of $100 million
    earlier this year.
        Right now, just to recap that, in March 1997 the Army has
    $47 million in advance billing outstanding, the Navy has $715
    million outstanding, and the Air Force has $534 million
    outstanding. Both the Army and the Air Force plan to liquidate
    their advance billing balances by the end of fiscal year 1998.
    The Navy has plans to liquidate its balance by the end of
    fiscal year 1999. To do this, the working capital funds plan on
    raising prices next fiscal year fairly substantially, to not
    only recover prior year losses but also to increase the cash
    balances for Air Force by $141 million and for the Navy by $500
    million. So current plans show that next year they intend to
    collect $2.2 billion more than they plan to disburse.
        Based on our review of the current account balances and
    projections of expenses and revenue, we think the Navy will
    have to continue to advance bill this year, and we are on the
    fence, it could go either way, for the Army and the Air Force.
        When we look ahead to next fiscal year, we did a very
    limited review as part of our response to a provision in last
    year's Defense Authorization Act. We looked at how the five
    business areas determine their fiscal year 1998 prices. We
    looked at Army depot maintenance, Air Force depot maintenance,
    Navy shipyards, Navy ordinance, and Navy R&D. The goal for all
    five of these areas was to end fiscal year 1998 at a zero
    balance, that is, their accumulated operating results over time
    would be zero. We do not think this is going to occur. In fact,
    we think that these five entities will likely have an
    accumulated loss of around $300 million at the end of fiscal
    year 1998.
        We believe that the Navy R&D facilities that we looked at
    are going to be close. We think they will come close to a zero
    balance. We think that the Army depot maintenance will likely
    have over $100 million accumulated loss at the end of fiscal
    year 1998. And we think that the Air Force depot maintenance
    will also have a loss in that same neighborhood. The Navy
    shipyards and the Navy ordinances we believe will have
    accumulated operating losses of between $25 and $100 million.
    So collectively this is about $300 million. Now, what this
    means is, by not correctly determining what the prices will be,
    there will be additional increase on prices in the out-years
    and it will further increase the possibility of advance billing
    in those out-years.
        Just to conclude my remarks, again I want to emphasize that
    we think first DBOF and now the working capital funds are
    really very effective at giving you information that you need
    to manage. Without this kind of information you cannot tell how
    you are operating, you cannot look at how you set prices, you
    cannot really take a look at what your overhead is or what your
    direct labor hours are, you cannot do as good a job of
    estimating what your potential workload will be. The problem
    has been that they have not worked to achieve their objective
    of having a zero balance.
        At this point, sir, I would like to turn it over to Ms.
    Denman who will go into our work on depots.
        Senator Inouye. Thank you. Mrs. Denman.

                       summary statement of Julia Denman

        Ms. Denman. I appreciate the opportunity to be with you
    today to speak about factors influencing the cost effectiveness
    of DOD's depot maintenance programs. The factors that I will
    focus on in my oral statement include one, excess capacity and
    its impact on the cost of the program, two, inefficiencies
    within the depots themselves, and three, outsourcing without
    assuring that the private sector is the most cost-effective
    source of repair.
        The growing impact of excess capacity is a key factor
    affecting depot maintenance efficiency as well as its cost. The
    key condition contributing to this situation is the 58 percent
    decline in depot maintenance workload since 1987, when the 38
    depots in operation at that time had about a 200 million direct
    labor hour program. Declining depot maintenance work and
    increasing excess capacity in the depot system have translated
    into increased unit repair cost, as fixed costs must be spread
    over fewer units of production.
        Improved capacity utilization can only be achieved by
    adding work. Since DOD is now in a downsizing mode, there are
    very limited ways in which to accomplish this facility
    utilization improvement. Closing some facilities and
    consolidating the workload in the remaining facilities appears
    to be the optimal solution in that it allows you to achieve
    economies of scale and reduce the overhead burden that must be
    allocated to each individual unit of work. This option
    represents the kind of decisionmaking that has resulted in
    plant closures throughout this country, both in the military
    and commercial private sector market, where companies have had
    to adapt to the realities of balance sheets and profit and loss
    statements. This same rationale has been forced on the DOD
    community as it has begun to adopt a more business-like mode of
    operation.
        The Navy aviation community has been the most effective in
    using the base realignment and closure process to reduce its
    excess capacity, improve its capacity utilization, and get its
    remaining depots in a position to operate more efficiently in
    the future. While closure in 3 years has not been without
    problems, it has accomplished what it was intended to
    accomplish. However, the Air Force and the Army are now
    struggling with their depot maintenance balance sheets, and
    their customers are struggling with their pocketbooks. While
    prior BRAC recommendations in these services could have been
    implemented in such a way as to reduce this excess capacity in
    each of the service's depot systems, this has not occurred.
        The Air Force depot system has the most serious excess
    capacity problem. Three of the six Air Force depots that
    existed in 1992 were recommended for closure during the 1993
    and 1995 BRAC processes. However, the Air Force privatized one
    depot in place, and is now involved in a closure strategy that
    may result in privatization-in-place of the workloads at the
    other two depots. The Air Force now has about 57 million direct
    labor hours of capacity to accomplish about 32 million direct
    labor hours of work, leaving about 26 million hours of excess
    capacity, which is a level of about 45 percent. This is
    expected to increase to about 65 percent by 1999.
        Our analysis indicates that by reallocating about 8.2
    million direct labor hours of work from two closing Air Force
    depots to the remaining depots would reduce this projected
    excess capacity from about 65 percent to about 27 percent. It
    would lower the hourly rates by an average of $6 at receiving
    locations by spreading fixed costs over a larger number of
    units, and it would reduce the cost of operations at the
    receiving locations by as much as $182 million annually.
        A similar situation exists in the Army as a result of its
    excess capacity and the way BRAC decisions have been
    implemented. These conditions are expected to increase costly
    excess capacity in the Army from 42 to 46 percent over the next
    3 years.
        Certainly excess capacity is not the only problem that the
    DOD depot system has. For example, we have reported problems in
    DOD's management of inventories, noting that these problems
    have led to excessive inventories while required parts are not
    on the shelves to support depot maintenance operations. Since
    material costs comprise about 40 percent of depot maintenance
    costs, efficiencies and cost reductions in the Department's
    management of the supply system will certainly reduce the cost
    of the depot maintenance program. Further, by improving the
    depot maintenance repair process itself through reengineering
    and other cost saving initiatives, the cost of the depot
    maintenance program can be further reduced.
        Essential to the achievement of improved efficiency and
    cost effectiveness, however, is the existence of a reliable and
    accurate management information system. The Department has not
    been successful in achieving such a system over the last few
    years, and, in fact, has recently terminated its most recent
    investment of about $270 million. In fact, Air Force depots
    last year had to write off almost $35 million that they
    invested in this program, which added to their losses during
    1996.
        In recognition of the need to improve the efficiency of
    their depot maintenance systems, each of the military services
    has implemented various improvement programs. While we have not
    evaluated these programs, we are encouraged that they are being
    implemented.
        Finally, outsourcing without insuring that the private
    sector can accomplish workloads more cost effectively is
    another factor which can contribute to increased depot
    maintenance cost and to unanticipated losses in the services
    working capital funds. Reported projections of 20 to 40 percent
    savings are not likely to be realized. We have found that
    because these assumptions were overly optimistic, expected
    savings will not be achieved. For example, the Air Force
    reported to Congress that the privatization-in-place of its
    maintenance depot at the Newark, OH, facility would result in
    savings. The Air Force did not budget for increased cost, and,
    in fact, this year will incur losses as a result of cost
    increases of up to $30 million. This, in fact, represents about
    a 12- to 47-percent increase in the cost of operations prior to
    the privatization of the Newark facility.
        Based on expectations of achieving significant savings from
    the privatization of depot maintenance, DOD plans to
    significantly increase its outsourcing of depot maintenance
    activities. We have found that the assumptions about savings
    are largely based on estimates made by the Commission on Roles
    and Missions and the Defense Science Board that savings of 20
    to 40 percent would be realized. Savings of this magnitude are
    not likely, particularly because of the lack of competitiveness
    of the depot maintenance market. Our work shows that of depot
    maintenance contracts that have been let since 1996, about 91
    percent of them were awarded on a sole source basis.
        In closing, the depot maintenance business area is highly
    complex and intermingled with other logistics functions.
    Although DOD says it needs to generate savings from its depot
    maintenance programs in order to support DOD's modernization,
    this will be a difficult challenge. While there are many
    opportunities, meaningful cost reductions cannot be achieved
    over night and are more likely to take years.
        We are now prepared to entertain your questions.
        Senator Inouye. Thank you very much. Pursuant to the policy
    established by Chairman Stevens for the conduct of hearings,
    the Chair will recognize members according to their time of
    attendance. Additionally, there will be a time limit of 10
    minutes per round established by the clock. With that in mind,
    I would like to proceed.

               viability of Support structure to sustain conflict

        Today, whenever one discusses the uniformed services of the
    United States, the one word that comes up most often is
    readiness. Are the men and women in uniform physically and
    mentally ready to stand in harms way? Are they ready to place
    themselves in jeopardy, and if necessary, make the supreme
    sacrifice for their country? Is the support structure or
    infrastructure of our Nation sufficient to assist and sustain a
    long-term conflict if such is necessary? Without a doubt,
    readiness applies to the whole system of our military.
        As we all know, during World War II we had over 13 million
    men and women in uniform in active service and in the Reserves,
    and on the civilian sector in the shipyards there were over
    140,000 men and women working--it was 380,000 during the height
    of the war. Today we have less than 22,000 in the civilian
    sector, and our Armed Forces consist of only 1 million men and
    women in active duty and about 1 million in reserve.
        The question that I ask very likely cannot be quantified in
    numbers, but, Mr. Hinton, at what point do you believe that we
    should begin to worry whether we have the ability to respond to
    a crisis or a conflict? Have we reached that point where we
    should begin worrying that we have cut out all the muscle in
    our military and we are down to our bare bones, or do you
    believe that we can further cut our military without damaging
    our readiness capabilities?
        Mr. Hinton. Senator, I think this is an area that we as an
    agency are as concerned about as you are, as we watch the
    drawdown that has occurred over the years. One of the areas
    that we have been really concerned with is the whole area of
    infrastructure and what it would take to support the troops
    that we have, the warfighters that are out there. We are
    concerned that we have not seen a clearly articulated policy
    that is going to lead us into the decisions that the Department
    needs to come up with, such as how much core capability is
    needed in the depots. It is the war time requirement that you
    are going to need to support your military force.
        In the absence of that, what our concern is is that we have
    a lot of important decisions that are quickly approaching us as
    to how to make decisions around source of repair on a lot of
    our systems for which we do not have a clear picture of the
    path that we are going to go down. That is a concern that we
    have had, that is a concern that I think we will continue to
    have until we see what that policy is.
        On the readiness side, in all of our work we have watched
    that. We followed the readiness indicators as they have come
    about from the reporting system over at DOD. We have seen
    pockets of some readiness concerns in the system. We have not
    seen them in a systemic way, but we have seen some pockets of
    readiness concern out among the active forces. So I do share
    your concern. It is something that we watch through all the
    work that we do at GAO.
        One of the areas that we think that we need to concentrate
    on right now is the area of infrastructure. I think that it is
    an area that offers a lot of inefficiency, and if we can
    achieve that efficiency the dollars will go further. The $1
    spent of O&M money in an inefficient way is one less dollar
    that we could have had to work in a more productive way in
    supporting the military fighter.

                              Depot inefficiencies

        Senator Inouye. Your presentation this morning would
    suggest that there is rather widespread inefficiency in our
    system which results in shortages and costs that cannot be
    covered. Are you in essence recommending that we close
    shipyards and depots?
        Mr. Hinton. I am not at a point that I would say that at
    this point, Senator. Our concern here right now--and I think
    one of the things I want to do is applaud DOD in moving to get
    on top of its cost, because once you have your information on
    all your costs you are in a much better position as a
    decisionmaker to make the right decisions. We are not there
    right now, and I think as DOD moves forward and gets a handle
    more around the cost around infrastructure it may allow us to
    see where you need to put your dollars as opposed to bringing
    down more of the infrastructure. I think there is a lot of
    infrastructure that is out there that DOD needs to take a hard
    look at. It is beyond shipyards, I think. It is beyond depots.
    It is the entire infrastructure that we need to focus on.
        There has been, as you know, from the Base Closure
    Commission, including Senator Dixon, indications that there
    would need to be, at some point down the road, another base
    closure commission. The question is the timing of it. I think
    that that is where I would sit. At some point I think we are
    going to have to visit that and make a decision, but that is
    going to be a call that is going to be a policy decision that
    is going to be up here.
        Senator Inouye. In other words, notwithstanding your report
    of inefficiencies, you believe that DOD is making much
    progress?
        Mr. Hinton. I think DOD is making progress in identifying
    the cost of its operations. Once it gets its cost, I think that
    they are going to have to make some tougher decisions about the
    infrastructure. And to the extent that those decisions do not
    get made, that may lead you down the path for the need for
    another base closure commission.
        Senator Inouye. According to your report, the workload in
    Navy shipyards has dropped by 50 percent, but employment levels
    have fallen by 63 percent. How would I interpret the
    discrepancy between those numbers? Are the shipyards getting
    more efficient?
        Ms. Denman. Within the shipyards there are two distinct
    factors that have to be recognized. One is the excess capacity
    in the nonnuclear area, and the other is the excess capacity in
    the nuclear area. Within the nonnuclear area, excess capacity
    has been brought down considerably. However, in the nuclear
    area there is still extensive excess capacity, and that, in
    fact, could grow if certain requirements are not generated over
    the next few years.
        With regard to personnel, we do indeed say that the
    personnel have been drawing down faster than the infrastructure
    itself, and the services have attempted to adjust their
    personnel assignments based upon the downsizing of the
    workload.
        Senator Inouye. How do we determine excess capacity in the
    nuclear area when the determination of nuclear proliferation
    and nuclear power throughout this world is still to be
    resolved?
        Ms. Denman. In assigning the excess capacity, certain
    assumptions have to be made based upon where we are currently
    within that policy and based upon what the requirements are for
    nuclear ships. What the workload requirement is should generate
    the capacity requirement within the shipyards. As long as there
    is some question about what will be generated, I would assume
    they would not take down this nuclear capability because you
    really cannot afford to build it back up again. It requires
    years and years to accomplish such a rebuild.
        Senator Inouye. I have many other questions to ask, but I
    notice that my light is on. If I may, I would like to call upon
    the distinguished Senator from Texas, Mrs. Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman. If you wanted
    to finish a line of questioning, I am here for the duration.
        Senator Inouye. We can come back to me later.

               potential impact on readiness from closing Depots

        Senator Hutchison. I want to explore a couple of areas.
    First I want to ask you, in your mission to look at these
    numbers, if you looked at the effect on readiness of trained
    workers not moving? Have you looked at the studies, Mr. Hinton,
    that show how many workers move when a depot or--I would not
    say a base is closed because that would not be exactly the same
    effect on readiness. But did you take into consideration those
    factors, and do you have a measurement that would?
        Mr. Hinton. Senator, we are aware of people movements in
    all the closures and I am aware that this is one of the areas
    that you have asked us to take a look at. We have not gotten
    into that study, but it is an important area that we want to
    delve into. I would ask Julia to comment on what she has done
    in terms of looking at some of this, but it is an area that you
    have asked us to look into that we owe you a report back on
    that.
        Senator Hutchison. Would you say then that in your studies
    that you are quoting that you did not look at the readiness
    issue of trained work force, that that was not in your mission?
        Ms. Denman. Within our review of workloads that have been
    transitioned as a result of prior base realignment and closure
    decisions, we did look at what happened as a result of those
    consolidations in a general sense. Depending on where the
    closing depot was and what the receiving depot was, there were
    different percentages of people who moved. We saw some general
    areas where the transition went more smoothly than others. In
    particular, we saw that when workload was transferred to
    locations that were subsequently identified for base closures,
    it was very difficult for the workers to get their feet on the
    ground.
        Another difficulty in making this assessment is that in
    some situations, particularly for Navy workloads, there is a
    terrific supply problem right now and this drives readiness
    indicators that might seem like they reflect untrained
    personnel but indeed the problem is a supply problem.
        So I guess, in answer to your question, we looked at
    readiness indicators. We did not see significant problems. We
    spoke to the services about the results of their transitions to
    see to what extent they identified them, and we expect to do a
    more detailed analysis of the trained personnel as a part of
    our review from your request.
        Senator Hutchison. I would just say that I do not think
    that what you looked at would be determinative of readiness,
    particularly if you are looking to the military to make that
    decision. It does not seem that you have enough information,
    from what you have said, to really know what the readiness
    would be, especially of technical depot maintenance such as
    aircraft and equipment that goes into an aircraft would be. So
    I just want to ask you if you do not feel that there is more
    input necessary to really make the determination of readiness,
    if you do not know anymore about who would move and what kind
    of experience you would lose.
        Ms. Denman. The difference----
        Senator Hutchison. Mr. Hinton.
        Mr. Hinton. I will let her, then I will add to it.
        Ms. Denman. The number of trained personnel that are needed
    in a transition depends a great deal upon the similarity of the
    workload that is being transferred. So it would be very
    difficult to make an overall assessment for every individual
    workload. What we would intend to do with regard to responding
    to your request is identify those particular areas where you
    have concern and do a more detailed analysis. With respect to
    engines, and I know you have particular concern about engines--
    --
        Senator Hutchison. If I could just, before you finish that
    point, say that I would like to make sure that it is clear in
    the record that you will be looking at this in more detail and
    that what you have done is not dispositive of the readiness
    issue.
        Mr. Hinton. The point that I was going to add, Senator, is
    that throughout all of our work I think if we had heard a lot
    of noise about major readiness problems on any of the
    redistribution of work or that problem, we would have delved
    into that. We have not heard that right now, but I think we
    need to take a more detailed look into the issues you have
    raised for us to look at. But we would hear that as part of our
    work, and I do not think we would let that go unnoticed because
    I am concerned about if we do have readiness problems in this
    area that they do not get put off to the side.
        I cannot sit here conclusively to you and say that there
    are not any, just that we have not heard a certain noise level
    out there that would indicate that there are some major ones
    that are happening. It might be, as Ms. Denman has said, as we
    go through some of the various commodities and compare those,
    maybe we would find some pockets of that, but I am not seeing
    overall through the system a major readiness problem that has
    been raised.
        Senator Hutchison. Well, I would hope that you would look
    at it before you make a determination because if you have not
    heard it, I have.
        Mr. Hinton. I understand your point.
        Senator Hutchison. I certainly hope that--I am not sure
    that the GAO is really qualified to make the determination
    anyway. I mean, just that it is not in your mission and that it
    really should be in the military function, which is no
    reflection on you, just that it seems that readiness should be
    a question for the military.
        Mr. Hinton. There is a military judgment associated with
    that, no question about that. We come across that in our work
    all the time, and I do respect the professional opinions of the
    military. We factor those into our work, as well as the
    analysis that we do in these areas. We also go out to a lot of
    folks who have experience in these areas in collecting views of
    folks as we do our analysis so that we can be as complete and
    thorough and provide to you and the other Members of the
    Congress the more accurate information around these issues. We
    will do the job. I do not want you to think that we are not
    going to do that. We are going to do it. I think it is an issue
    that we need to focus in on.
        But based on all the readiness work that we have done over
    the last several years as part of the drawdown in total and
    looking at the readiness indicators through DOD's reporting
    system has not revealed major readiness problems related to the
    depots as we have brought the forces down. Now, there may be
    some there, and we will get to that, and I commit to get back
    to you on that.
        Senator Hutchison. Well, I certainly hope you are going to
    be even handed and also consult with the military. And if you
    are not able to cover a question of readiness, I hope you will
    just say so rather than making a determination that you----
        Mr. Hinton. We will. We will do a fair, objective job on
    this.

                               60/40 workload mix

        Senator Hutchison. Another question I would have is that we
    have this artificial 60/40 limitation that does inhibit or will
    inhibit the ability to have options. I will just ask you, what
    is wrong with options? What is wrong with a public-private
    sector competition? What is wrong with putting it out for bids
    and taking the lowest bids? You are making points about the
    other depots not having workload, but have you looked into
    other uses of the three depots, the Air Force depots I am
    talking about that are still there, and perhaps letting them
    have the ability to compete and also have other private sector
    work come in that would increase their efficiencies and their
    capabilities to do work on a competitive basis either with the
    depots that are to close and be privatized or in the free
    market?
        Mr. Hinton. Senator, the 60/40 is grounded in legislation
    that is out there, along with other legislation that requires
    competition when you go to move workloads of over $3 million.
    We are not opposed to competition. In fact, GAO has always
    pushed competition, both in the public side and the private
    side. It would drive prices down. But what we need to see as we
    go through in this whole area is that the most cost-effective
    decisions are being made, and we are capable and have available
    to us the data for us to go in and look at these analyses and
    see if we are making the right decisions. I think that as we
    watch the debate here----
        Senator Hutchison. Let me just interrupt you because my
    time is up. Have you looked at efficiencies that could be
    obtained by making the pie bigger and letting the depots that
    are at 50 and 60 percent capacity now take in private workload
    just like the others are to help make them more efficient?
        Mr. Hinton. I do not think in exactly the way you are
    describing, largely because of the legislative impediment that
    is there right now. That has been part of DOD's efforts, trying
    to work with the Congress to see if there is potential to
    repeal that legislation, but we have not done that analysis
    that would look at that completely.
        Senator Hutchison. I would just hope we would open our
    vistas and try to come up with something that maintains
    readiness, that is more creative in making the depots that are
    still in place more efficient, and yet keep the ability of the
    military to privatize the two depots that the BRAC said could
    be privatized, and keep faith with everyone and do what is best
    for our military as well as our taxpayers. I would like to ask
    you all maybe to open your sights a little more and see what we
    could do.
        Mr. Hinton. I understand your point. The difficulty that
    the Department faces is that it has an excess capacity problem.
    It is the No. 1 problem that is driving up its rates right now,
    and we have got to find ways to deal with that in order to make
    the rational decisions that you need as you manage the depot
    area.
        Senator Hutchison. That is just what I am saying. We are
    saying the same thing. We need to find ways.
        Ms. Denman. If I might add, the difficulty is also that the
    private sector has excess capacity. Indeed, a survey that the
    Department of Defense did late last year revealed that the
    private sector has about 56 percent excess capacity with regard
    to their military capability, and a similar number for their
    commercial work.
        Senator Hutchison. You mean military capability in
    commercial work?
        Ms. Denman. Defense contractors who do military work
    reported excess capacity in the neighborhood of 56 percent, and
    in so doing expressed lukewarm interest in some of the
    partnering arrangements that DOD was trying to implement. We
    are, in fact, however, trying to identify all of the partnering
    arrangements that each of the military services has attempted,
    and, as a part of various requests, will be looking at them
    over the next few months.
        My point in mentioning the excess capacity in the private
    sector is that in various studies, such as the Defense Science
    Board, the private sector contractors indicated that their
    concern was with the privatization of excess capacity. It does
    not solve the overall industrial excess capacity that currently
    exists when you add together both.
        Senator Hutchison. My time is up. I will be back.
        Senator Inouye. Senator Domenici.
        Senator Domenici. Thank you very much, Senator Inouye. Let
    me again for the record indicate what a pleasure it was to
    travel to eastern Russia and North Korea and South Korea and
    your home State just a few weeks ago. I think for those who
    wonder whether those kinds of trips are meaningful, from my
    standpoint, I never learned more about a current event in my 25
    years here and never learned more about something that was
    important such as what is going on in North Korea. Had we gone
    nowhere else, it would have been a worthwhile trip. We will all
    be much more articulate and participatory when this Nation gets
    involved in what we should do about North Korea's situation
    regarding their food needs and others. I hope you thought it
    was as good as I did.
        Senator Inouye. Absolutely. I concur.

                 issues regarding Military costs and readiness

        Senator Domenici. I have a couple of questions with
    reference to the DBOF, but let me talk a minute about base
    closures in the BRAC Commission. This may be my first
    opportunity, Mr. Hinton, to be in front of you, and for that I
    apologize. I missed some subcommittee hearings where you
    testified. What I am hearing about another BRAC and that we
    need to close more bases and lessen our inventory of
    infrastructure. I would suggest that from this Senator's
    standpoint, and I say this to my good friend the Secretary of
    Defense, they better tell us how the next one is going to work
    better than the last two, or from my standpoint I am not going
    to be voting for it.
        First of all, we by now should have learned how to tell us
    how much the savings are really going to be. I think you would
    acknowledge that we have made some flagrant overestimations on
    what we are going to save. But for the most part we did not
    anticipate the effect of our own American laws on these
    closures. Had we talked to some American businesses about
    closing down a plant, they would have told you about all of the
    various environmental requirements and how clean it had to be
    when you decided that you were now going to turn it over to a
    city or up for sale, and how long it takes to get through a
    NEPA evaluation, and all the other things that go on.
        Second, it would seem to me that one way or another we are
    left with more bases in certain areas than the military was
    telling us they needed. We were left with more in some States
    than anybody thought would be there. Again, it is not for me to
    make allegations, but I think we had better be very sure that
    the next time through we can have some assurance that politics
    will play the least possible role in which bases get closed or
    which bases stay open. I think we need some absolute assurance
    that we are not making bad estimates up front, only to find
    that things were just left out of the evaluation which made it
    a charade once it gets to the Commission and it was easy as
    could be to convince them that somebody had goofed and that
    this was not a cost beneficial closure.
        All in all, I can tell you, having just put together the
    budget, where the Defense Department has its share of people
    who come and say we must give them everything they want. I hope
    the military does not think that every Member of Congress feels
    that way. There are many Members of Congress that feel we are
    not handling the money very well. We set up this capital,
    private sector fund that Mr. Brock had difficulty saying--which
    is the part that you had difficulty saying.
        Mr. Brock. Working capital fund. It just does not roll off
    the tongue, sir.
        Senator Domenici. OK. Well, for some of us, working capital
    fund rolls off our tongue very nicely. For others it is
    difficult. It sounds too much like private sector for some, but
    for us it sounds kind of nice. But to see it fail, as it has,
    in terms of the arguments between the services and who is using
    more and who is not using enough, you know, they may be rather
    insignificant in terms of total cost to the military. But I
    tell you, it provides great fodder for those who wonder what
    this whole thing is about in terms of how we get where we are.
        Mr. Hinton, we heard arguments as we were putting together
    this budget of why should we give the Treasury the money that
    is going to be saved, because the inflation rate built into
    these long-term contracts is noticeably lower now than when the
    contracts were let. Most people say if that is the case, take
    the money away from DOD. If you have a 12-year contract and you
    estimated inflation at 3 percent or 3.5, and it is going to
    turn out at 2, one would say that ought to cost less. Just
    plain old arithmetic. We did not decide to take all of that out
    and say it is gone because we figure they should get a benefit
    there because of some areas where things did not work out so
    well.
        From my standpoint, I thought I ought to let it be known
    today that DOD is going to have to do better. It is going to
    have to be more consistent at predicting base closures savings
    and excess infrastructure.
        I want to add another part to this. I think we made a very
    bad mistake in the build up in the 1990's when we had some real
    money to spend. I think we should have fixed some of the
    infrastructure problems at old bases that we are going to keep.
    I will not dare ask for a general inventory of how many
    buildings, water and sewer facilities, dormitories that we have
    across this land in areas that we are going to keep, and how
    many billions of dollars are going to be necessary to modernize
    those over the next few years, including housing. There is no
    question that we have had some major programs for housing, but
    it is pretty slipshod when we just take this base and say in
    the next 15 years our men and women are not going to be living
    in decent housing. We ought to do better. Part of that is your
    job, and part of it is some other people's job.
        But I tell you, if the ``Quadrennial Defense Review'' does
    not start to address some of those issues, then it is not going
    to be given a lot of credit when it comes up here and people
    look at it.
        My last comment is we all want readiness, and what we are
    doing in our quest for readiness, we are not taking into
    account that readiness also involves the most modern equipment.
    So we are giving the troops the benefits they deserve and that
    their families deserve, but what is getting the short end of
    the stick is new equipment and new R&D applied to new things.
    That is bothering DOD in the ``Quadrennial Defense Review,''
    there can be no doubt about it. They are trying to pay for that
    in the out-years and they are finding we are not giving them
    enough money in those out-years for that. If you come up here
    and say you are shortchanging the men and women in the service
    for long-term equipment, we are going to tell you this is a
    tough balancing act and we know that it is tough.
        It did not give you a very good opportunity to answer these
    questions, but I came here because I had something to say. I
    have said it, and if you would like to comment on any of the
    ideas that I have stated, I would greatly appreciate it. If you
    would choose to make your comments more comprehensive, fine.
        Sooner or later, Mr. Chairman, we are going to have to ask
    what have we learned from the BRAC closures, and what we
    learned that did not work right, how do we fix it if we are
    going to have some more closures. I think you would agree with
    that. It did not help you in your budgets when you were
    chairing this committee. It did not help at all.
        So I stop on that, and thank you very much.
        Mr. Hinton. Senator, I would just make one comment. In
    terms of what worked well and what did not work well, we have
    undertaken a job to look at lessons learned from the base
    closure commissions. We have that work in progress right now,
    and I expect in the next couple of months we will be in a
    position to come back up and share with the members what we
    have learned. We are covering all the bases, all the
    participants, both DOD, the outside participants, communities,
    and everything to get that perspective in there. I think that
    that will go a long way helping the decisionmakers up here to
    make decisions if we are faced with another round that we have
    to go through.
        Senator Domenici. Mr. Brock, did you have any comment?
        Mr. Brock. No, sir. I think Mr. Hinton covered that very
    well.
        Senator Domenici. Thank you very much, Mr. Chairman.
        Senator Inouye. Thank you. The subject matter we are
    discussing may seem dull and boring to the uninitiated, but
    what we are discussing this morning is rather fundamental. The
    decisions we make today may impact upon our readiness and our
    preparedness.
        I am one of the dinosaurs in the U.S. Senate. I have been
    around for awhile, and as a little hobby I do some reading. I
    noted in one of my readings that after every major conflict in
    which we have been involved there is a great public outcry to
    reduce the military, if not put it out of commission. After the
    great revolution in which General Washington led his forces,
    numbering about 30,000, and then later on became President, he
    requested the Congress to at least give him a Continental Army
    of some size so that he could protect the borders. Congress,
    after much heated debate, made a decision and created a
    Continental Army that consisted of 85 men. He requested over
    1,000, but he got 85; 55 at West Point and 30 in Pittsburgh,
    which was the headquarters for the Continental Army. And we
    wonder why the British came back again and nearly whacked us.
        After World War I there was a huge outcry to just wipe out
    everything, so on the eve of World War II, about 1 year before
    we experienced Pearl Harbor, Brigadier General Patton was
    assigned to Fort Benning and given the assignment of revving up
    an armored corps. There were 365 vehicles which they called
    tanks at Fort Benning. Of that number, about one-half could not
    move because of either no tracks or no bolts. He called up the
    War Department, and the War Department told him that what you
    have is what you get, and that is what you will make do with.
    Fortunately, as you know, General Patton was a
    multimillionaire, so he took his staff to Atlanta, GA, to
    Sears, believe it or not. He went into the parts department, he
    signed a check, and as a result we got our first armored corps.
        And now we have this situation of two BRAC's and a
    suggestion for a third BRAC. I am beginning to get a bit
    concerned that maybe history is repeating itself. To suggest
    that the millennium has arrived and we have no problems in this
    world is not only foolhardy, it is suicidal. Like all of my
    colleagues, I do not wish to spend money, but I would hope to
    prevent war. It costs a few dollars, but when one thinks of
    yellow ribbons and gold stars, I would prefer spending a little
    more than just having gold stars and yellow ribbons. I hope
    that you will keep that in mind.
        Up until now this committee has adopted the policy of
    readiness. For example, it would be cheaper I suppose to have
    one shipyard build submarines, but we have made a deliberate
    policy to maintain two shipyards so they would compete. I
    suppose it is cheaper to have one or two air depots in the
    United States, but we have made a conscious decision to keep
    five open at this time. The DOD has suggested we keep Texas and
    California open, and so I hope that if we are to make a
    decision, and I expect we will soon be called upon to make a
    decision, you will be able to provide us with information that
    we can act upon. In coming up with that information I hope you
    will very closely consult the Air Force and DOD. Because none
    of us relishes the thought of voting for Texas or against
    Texas, or for Oklahoma or against Oklahoma.
        As the Senator from Texas has suggested, keeping in mind
    readiness and preparedness, it should be possible to have some
    sort of system where we can maintain all of our air depots.
        With that, I would like to once again call upon the Senator
    from Texas.
        Senator Hutchison. You have stated the case very well, and
    I think we probably ought to go on to the next panel. Maybe I
    will be able to talk about readiness with some of the people
    who have been really dealing with this issue.
        I would just say that I think saying that there is excess
    capacity in the private sector is not really bearing on what we
    could do if we are more creative and innovative about the use
    of the facilities that we have, because right now we have got
    bids out the window for work to be done at Kelly, privatized
    work, and I think maybe some private sector companies that have
    excess capacity might see the benefit of doing public work and
    private work in the same place and closing a private facility.
    That is an option. I just want the options to be there and I
    want competition to be there, and I hope the GAO will not
    foreclose the issues of readiness or use just numbers to
    determine readiness when we are looking at these issues. I
    think we can make the three in place and the two that are
    authorized by BRAC to be privatized work to the benefit of
    everyone, and I would just ask for GAO's help in looking for
    ways to do that.
        Mr. Hinton. Senator, we will continue to follow the issues
    and provide our analysis, and I will take into consideration
    everything that has come up today. You know, I think the
    subject that we are dealing with and talking about here is one
    of inefficiencies right now. It is how do you overcome that and
    make that dollar go further. One dollar that is spent in an
    inefficient way is one less dollar we have to give the
    warfighter, that is kind of the way we look at it and that is
    why our work has been directed to try to find ways we can
    overcome the inefficiencies in the system.
        Senator Hutchison. Thank you, Mr. Chairman.
        Senator Inouye. Senator.
        Senator Domenici. I have no further questions. I have
    talked enough.

                         Additional committee questions

        Senator Inouye. Mr. Hinton, Mr. Brock, Ms. Denman, on
    behalf of the committee, I thank you for spending time with us
    this morning. If I may, on behalf of some of my colleagues I
    would like to submit questions to which I hope you will
    respond.
        Mr. Hinton. We sure will. Thank you very much, sir.
        [The following questions were not asked at the hearing, but
    were submitted to the Office for response subsequent to the
    hearing:]

                Question Submitted by Senator Richard C. Shelby

        Question. Mr. Hinton, in your statement, you indicate that
    GAO analysts recognize that the nature of some of the service
    depot work is inherently inefficient. If the depots are
    privatized, how would mission critical readiness be provided by
    a private enterprise in a competitive marketplace if such
    missions are inherently inefficient?
        Answer. In reality, it may not be practicable to provide
    these services competitively under the present conditions. It
    is easier and more efficient to provide industrial capability,
    including repair and overhaul, for equipment that is
    commercially available and off-the-shelf, than it is for
    military unique systems and equipment that form the foundation
    of DOD's weapons inventory. Acquiring depot maintenance and
    repair services by contract for military unique items--
    particularly where demand is infrequent, the volume of work is
    small and/or inconsistent, the technology is old, parts
    availability is uncertain, or the capital investment required
    to go into the repair business is large--is often done in a
    non-competitive environment for a number of reasons. For
    example, the government may not be in a position to offer the
    work competitively because it does not own the technical data
    and must rely on the original equipment manufacturer.
    Additionally, because of the market conditions surrounding
    these workloads, it may not be economical to have multiple
    repair sources. Further, multiple repair providers may not be
    interested in bidding on the work. Our research has determined
    that 91 percent of the nonship depot maintenance repair
    contracts were awarded non-competitively during the past two
    years.
        DOD has stated that it would like to increase the amount of
    contractor logistics support contracts, which are generally
    long-term sole source awards to the original equipment
    manufacturers. Historically, the Department has been able to
    count on these contractors to provide required maintenance
    services. The question that must be answered is whether
    privatizing depot repair and overhaul under these conditions is
    economical. Third party providers would like to have more of
    DOD's repair business, and indeed when outsourcing has been
    used successfully by the private sector, it has usually been
    through the use of third party providers. However, using third
    party providers would likely provide a greater risk and may not
    be a practicable alternative for many complex military unique
    systems. Traditionally, the organic depots have provided an
    effective and ready alternative source of depot maintenance
    capability. As DOD begins to consider the extent to which it
    plans to privatize depot maintenance in the future, it will be
    important to consider the value of this capability and whether
    the same service can be achieved in terms of quantity,
    timeliness, quality, and cost by relying on the private sector.
                                    ------

                Questions Submitted by Senator Robert F. Bennett

        Question. Mr. Hinton stated that he hasn't seen a clear
    articulated policy regarding depot maintenance. How does the
    absence of a clear policy impact how the Air Force is managing
    its depot maintenance from your view? Do you believe it is
    realistic for the Congress to expect the Department of Defense
    to clarify its policy?
        Answer. Let me take the second point first. It certainly is
    realistic for the Congress to expect DOD to clarify its depot
    maintenance policy. Such a step is essential to the
    accomplishment of any business activity. Without having a clear
    depot maintenance policy, it is uncertain how DOD intends to
    approach its depot maintenance mission in the future and what
    is the future role of the public depots and the private sector
    in providing that mission. Although DOD issued a policy report
    to the Congress in March 1996, this report was not well-
    received. Since that time, DOD has not clarified that policy so
    that the Department's plans regarding future performance of
    depot maintenance between the public and private sectors is
    clear. After implementation of prior Base Realignment and
    Closure (BRAC) decisions, DOD will be left with 19 major depots
    and other smaller industrial activities that perform
    maintenance activities, all having significant excess capacity
    and rising overhead rates caused by this excess capacity.
    Likewise, other maintenance facilities that are either
    government-owned and contractor-operated, owned and operated by
    contractors, or owned by reuse authorities and leased to
    defense contractors also have costly excess capacity that is
    increasing their rates. There is too little workload to
    efficiently spread among the available sources. Moreover, there
    is no approved plan to improve the efficiency of remaining
    depots, including the elimination of excess capacity.
        Further, the uncertainty of DOD's policy extends beyond
    depot maintenance to other aspects of weapon system support
    such as material management and program management. DOD has
    expressed a preference for using contractor logistics support
    for new systems. This management approach generally was used in
    the past for commercial derivative systems that have
    established infrastructure in the private sector. It is not
    clear that this approach would be the most cost-effective for
    DOD weapon system management of military unique systems,
    particularly since it would involve continued sole-source
    contracting with the original equipment manufacturers. Further,
    DOD needs congressional support before making significant
    shifts of these functions and activities from public sector
    performance to private sector performance. We have reported
    that we believe DOD should develop a strategic plan that
    provides a clear framework for reducing defense infrastructure.
    This plan needs to be presented to the Congress in much the
    same way that DOD presented its plan for force structure
    reductions in the Base Force Plan and the Bottom-Up Review.
    This would provide a basis for the Congress to oversee DOD's
    plan for infrastructure reductions and allow the affected
    parties to see what is going to happen and when.
        Until DOD clarifies its policy and reaches a consensus with
    the Congress with regard to the respective roles of various
    public and private sector entities in implementing that policy,
    it will be difficult to resolve the disparities that currently
    exist, including how best to eliminate excess capacity in the
    public and private sectors and how to derive the most cost-
    effective support system.
        Question. You have described excess capacity as being one
    of the biggest problems facing DOD. The Air Force seemed to be
    saying they are addressing excess capacity by privatizing. From
    your perspective, how effective is privatization in reducing
    excess capacity? Why or why not?
        Answer. Although prior BRAC decisions resulted in some
    improved efficiencies and cost reductions in DOD's
    infrastructure, DOD continues to have too much infrastructure
    to support its downsized force structure and support
    requirements. While decreasing the civilian workforce by 26
    percent and the military workforce by 29 percent, commensurate
    reductions have not been made to DOD facilities. As long as
    this condition exists, DOD will be paying more than needed to
    accomplish required operation and support missions. This
    condition is particularly troublesome since DOD wants to
    increase its investment in new and upgraded weapon systems and
    hopes to help pay for these planned initiatives by reducing
    infrastructure costs.
        Outsourcing or privatization is often recommended as an
    approach for reducing the costs of some DOD activities,
    including depot maintenance. We have noted that particularly
    where a military function or activity is already performed in
    the private sector and there is a highly competitive private
    sector market, there is a strong likelihood that savings from
    outsourcing can be realized. We have also noted that when
    privatization occurs without reducing excess capacity, it is
    more difficult to achieve savings through privatization--
    particularly privatization-in-place. We have examined the costs
    at an Air Force depot closed as a result of a 1993 BRAC
    decision and found that maintenance costs in the privatized
    facility are 12 to 47 percent higher than the costs prior to
    privatization. We also found that costs at a privatized Navy
    depot are more than the costs of performing the same work in
    remaining Navy depots. The current Air Force plan to compete
    the workload from the two closing Air Force depots could result
    in reductions to public sector excess capacity if the public
    sector wins the competitions. If the private sector wins and
    the work is privatized, excess capacity would not be reduced at
    the remaining public depots. With respect to the impact on
    excess capacity in the private sector, a recent Defense Science
    Board study team concluded that privatization-in-place should
    be avoided, since it tends to preserve excess capacity. A
    privatization task force comprised of top executives from the
    aerospace industry concluded that privatization-in-place
    ``inhibits the realization of cost savings intended from base
    closures and the performance goal improvements that
    privatization is intended to achieve. Privatization-in-place,
    therefore, does not solve the excess capacity problem within
    either the public or the private sector of the defense
    industrial base.''
        Question. You mentioned that the private sector has a
    problem with excess capacity. There are some that indicate that
    this does not impact the Department of Defense. Please explain
    a little more clearly how excess capacity in the private sector
    impacts the Department of Defense, and more specifically the
    Air Force.
        Answer. As a result of defense downsizing, private sector
    firms report they have significant excess capacity. In a survey
    recently requested by the Deputy Undersecretary of Defense
    (Logistics), defense contractors reported they had 57 percent
    excess capacity for military work and 56 excess capacity for
    commercial work. We have reported that excess capacity in the
    private sector is particularly acute for fixed-winged aircraft;
    communications, electronics, and avionics equipment; and
    engines.
        Excess capacity in the private sector increases the cost of
    the goods DOD procures from private sector firms having this
    excess capacity. When workloads are reduced, fixed overhead
    costs must be covered by fewer production units, increasing the
    cost of each item produced. Recognizing the impact of these
    costs, DOD supports defense contractor downsizing efforts by
    allowing the costs of contractor acquisitions and mergers to be
    charged to defense contracts.
        Question. There have been some accusations that the data
    you obtained was unreliable. Please describe the process
    wherein you gather your data. In addition, have there been any
    difficulties or irregularities in obtaining requested
    information from the Air Force regarding the cost and criteria
    of Air Force privatization efforts?
        Answer. To the extent possible we used approaches,
    methodologies, and data developed by DOD. For example, to
    estimate the potential overhead savings from transferring the
    closing depots' workloads to the remaining depots, we looked at
    similar evaluations the Air Force performed in evaluating
    alternatives for consolidating workloads at various locations
    during its 1995 BRAC process. Much of the data we used was
    certified during the BRAC process. We decided to base our
    analysis on 8.2 million hours of work--or about 78 percent of
    the projected fiscal year 1999 workload. We did this because
    the Joint Cross Service Group BRAC distribution would have
    transferred 22 percent of the Sacramento and San Antonio
    workloads to another service's depot or to a private sector
    firm. While these actions would have generated consolidation
    savings to other DOD depots or to the private sector, they
    would not have benefitted the remaining Air Force depots. We
    believe this approach resulted in a conservative savings
    estimate, and provided flexibility for less workload being
    generated without reducing the savings estimate we computed. We
    used a scheme developed for BRAC 1995 by the DOD Joint Cross
    Service Group for Depot Maintenance to identify the post BRAC
    location for repair; however, we modified it slightly to
    reflect more current workload distribution information that
    indicated the C-5 would be transferred to Warner Robins rather
    than Oklahoma City. We provided each center a breakout of the
    transferring workload they potentially would receive by
    commodity group. We then asked center personnel to estimate how
    additional workloads would affect their hourly rates by
    analyzing fixed- and variable-cost categories, excluding
    material, which we assumed would not change. In making their
    assessments, the three centers used the approach and
    assumptions developed by executive business planners from all
    five centers in developing the downsize-in-place Air Force
    proposal developed during the 1995 BRAC round as an alternative
    to closing depots. Air Force officials certified the data
    developed using this approach to the BRAC Commission. We
    discussed this methodology with workload and privatization
    officials at the Air Force Materiel Command. They agreed that
    our approach was sound for assessing the impact of additional
    workload on a depot's rate structure. We also provided the
    closing centers with an opportunity to comment on our
    methodology. San Antonio center officials agreed with the
    general approach, but commented that increases in variable
    costs were subjective. Sacramento center officials chose not to
    comment. Subsequent to our analysis, Air Force Materiel Command
    personnel provided us a document indicating that they had
    independently analyzed potential savings from workload
    consolidation. This document noted that annual savings of $367
    million could be achieved through consolidations and an
    additional $322 million could be saved by relocating workload
    to depots that already had lower hourly rates. Air Force
    officials later stated that this information was only one of
    several excursions developed to determine how our consolidation
    savings were developed. Air Force officials have stated that
    they do not agree with our cost analysis, but to this point has
    not provided specific data or an alternative analysis to
    support its position.
        Question. If DOD pursues privatization of excess capacity
    without consolidating the workload, is there any evidence that
    this could increase costs to the Department? Does the failure
    of the Air Force to reduce excess capacity prior to competing
    the workload impact savings that could come from privatizing?
        Answer. Privatization would increase DOD's costs unless the
    costs of performing the work after privatization are so much
    less than the current costs that the savings would offset the
    savings that could be achieved by consolidating the workloads
    at remaining Air Force depots to improve utilization, increase
    efficiencies, and spread the fixed overhead costs at the
    remaining facilities over a larger number of production units.
    We estimate that savings of about 30 percent would be required
    over the current cost of depot operations at the two closing
    depots facilities.
        Question. Your report states that the Air Force retains
    over 50 percent excess capacity. Please explain the definition
    or measurement of excess capacity from the perspective of GAO,
    BRAC, the Air Force, and the private sector.
        Answer. Excess capacity is the difference between the
    capacity of a facility to perform work, usually measured in
    direct labor hours, and the amount of work that is actually
    performed in that facility. We refer to capacity that is
    derived by determining what is the potential for doing more
    work after the programmed work is accomplished, assuming the
    production capability will be used to the maximum extent, which
    would require the availability of additional trained personnel.
    This same measure, which is sometimes referred to as maximum
    potential capacity, was used in the BRAC process to identify
    the potential for consolidating like workloads to improve
    capacity utilization of underutilized facilities and reduce
    redundancies that existed among depots. DOD normally measures
    capacity by an analysis that constrains facility and equipment
    availability by the availability of trained personnel and the
    organization of work stations, assuming an 8-hour workday, for
    5 days a week. Private industry uses the maximum potential
    capacity approach for measuring facility utilization. A maximum
    potential capacity utilization of about 75 to 85 percent is
    generally considered by commercial companies to be an efficient
    operating level.
        Question. I believe the Air Force is ignoring the BRAC
    directive to consolidate work. In addition, I am also concerned
    that the ``public-private'' competition has been set up to
    accomplish a predetermined outcome. How would the GAO
    characterize the current ``competition'' for the workload at
    Kelly and McClellan. Would you say it is a fair competition to
    both sides? Have there been any irregularities of which the
    Congress should be aware?
        Answer. The only solicitation that has been finalized at
    this time is that for the C-5 workload at the San Antonio
    depot. We have stated that this acquisition has all the
    requisites of a competition. Nonetheless, both public and
    private sector offerors have raised certain concerns about this
    competition. For example, the private sector has raised
    concerns about whether the public offeror will include all
    relevant costs. Depot personnel have questioned whether the
    private offerors will ``buy-in'' and are concerned that public
    depots cannot partner with a private firm and cannot protest an
    award through us. Until the competition is completed, it will
    not be possible to make an assessment of this competition
    process. Since the solicitations for the other two competitions
    have yet to be issued in final form, we cannot comment on them
    at this time.
                             DEPARTMENT OF DEFENSE

                                Depot Operations

    STATEMENTS OF:
            GEN. HENRY VICCELLIO, JR., COMMANDER, U.S. AIR FORCE MATERIEL
                COMMAND
            GEN. JOHNNIE E. WILSON, COMMANDING GENERAL, U.S. ARMY MATERIEL
                COMMAND
            VICE ADM. DONALD L. PILLING, DEPUTY CHIEF OF NAVAL OPERATIONS,
                U.S. NAVY

        Senator Inouye. Our next panel consists of the Commander of
    the Army Materiel Command, General Wilson, the Deputy Chief of
    Naval Operations, Vice Admiral Pilling, and the Commander of
    the Air Force Materiel Command, General Viccellio.
        Senator Hutchison. Mr. Chairman, as we are welcoming this
    new panel, I want to say that General Viccellio is using his
    very last day in the military to be with us. I think it is
    pretty special that he has chosen to go back to God's country
    in his retirement. I just want to say how pleased I am to
    acknowledge his wonderful service to our country, and that he
    would spend his last day with us is probably not his first
    choice but nevertheless we appreciate the fact that he is doing
    that.
        Senator Inouye. Senator, I thank you very much for advising
    us of that. I wish to join you in expressing the gratitude not
    only of this committee but of the U.S. Senate for the many
    years of great service you have rendered to our Nation.
        General Viccellio. Mr. Chairman, thank you very much. I
    doubt if you remember it, but I would like to follow on Senator
    Domenici's comments about your travels. Twenty-five years ago I
    worked here in this building as an Air Force liaison officer
    and I got the opportunity to travel with you to the Middle East
    just following the 1973 war, and indeed that was a learning
    experience, certainly for me and I think for both of us.
        Senator Inouye. See what happens when you travel with me,
    you get stars. [Laughter.]
        Senator Hutchison. I am sure everyone has taken note of
    that.
        Senator Inouye. General Wilson, General Viccellio, and
    Admiral Pilling, you have heard the comments of GAO. You each
    have the opportunity to express the views of your Department,
    and naturally we hope to hear from each of you on what your
    service is doing to improve its management of our depots and
    how you are coping with downsizing. Your formal statements have
    been made part of the record.
        So, in recognition of General Viccellio's last performance
    here, I call upon you to open the debate, sir.
        General Viccellio. Thank you very much, Mr. Chairman and
    distinguished members of the subcommittee. Indeed I have a
    prepared statement, but in the interest of time and in
    anticipation of some great discussions here later this morning,
    I think I would just submit it for the record, with your
    concurrence.

                               prepared statement

        But I would like to say on behalf of everybody in my
    command, and I am talking about our uniformed members and our
    civilian work force who, as you know, are a big part of AFMC,
    how much we appreciate the continued support of this
    subcommittee in ways that not only help us in a mission
    perspective but help us with quality-of-life issues that are so
    important in an all volunteer environment. As much as anybody
    on either side of Capitol Hill, your continued support and
    perspectives have been instrumental in our ability to get the
    mission done, and we appreciate that.
        [The statement follows:]

                Prepared Statement of Gen. Henry Viccellio, Jr.

        Good morning Mr. Chairman, members of the Defense
    Subcommittee. It's a pleasure to be here; we appreciate the
    continuing support of this subcommittee for our mission, the
    initiatives that bolster our force's readiness, and your care
    for the people working hard to sustain our capabilities in the
    field.
        The subject of evaluating the disposition of selected
    portions of our depot maintenance activity and structure
    through public/private competition is both important and
    timely. It is important in the sense that our Nation's
    commercial sector has traditionally played, and today continues
    to play an important and productive role in our depot
    capabilities. It is timely in that a dramatically changed world
    situation is driving corresponding changes in both our force
    sustainment needs and the manner in which we might best meet
    those needs.
        Today's Air Force depot structure and logistics support
    philosophy were forged by the experiences of WWII and shaped
    through more than four decades of Cold War challenges. We faced
    the imperative of sustaining large air forces, deployed world-
    wide against a formidable foe in potential conflict envisioned
    to occur on a global scale and be of a protracted nature. We
    established a robust organic depot infrastructure that at one
    time included 11 Air Materiel installations, sized to overcome
    time-consuming transportation and uncertain logistics command
    and control systems by pushing, producing, manufacturing, and
    repairing large amounts of supplies and equipment to our
    fielded forces. Faced with a perceived risk to our very
    national survival, we emphasized policies, and were supported
    by legislation that ensured substantial organic logistics
    production capacities.
        The fall of communism and the ensuing decline of the Soviet
    Union presents our nation with a fundamentally altered set of
    national security imperatives. For the foreseeable future,
    we'll face the possibility of regional conflicts not unlike
    Desert Storm, as well as the ``operations other than war'' that
    have captured so many headlines over the past five years. Our
    success in recent contingencies has illustrated, among other
    things, the potential for technology to transform logistics
    needs through dramatic improvement in the reliability of our
    modern weapon systems and the impacts of intransit asset
    visibility and a focused, responsive transportation system.
        As we look toward the future, several observations are
    worth mentioning. First, day-to-day readiness, or preconflict
    logistics support, has replaced mass sustainment, or support
    during the conflict as the predominant contribution and
    principal focus of our logistics activity. Second, the
    government owned and operated infrastructure supporting that
    activity is excessive and needs reduction--an initiative given
    both direction and timing by the 1995 BRAC Commission. Finally,
    the role and contribution of our nation's commercial sector in
    this activity--already substantial by any measure--warrants
    renewed consideration and review.
        It is the confluence of all these trends and factors that
    make reconsideration of the organic/contracted mix in our
    depots through the public/private competition process the right
    step for both our nation and our Air Force. An important point
    to add is that this would be the case BRAC or no BRAC, closure
    or no closure. This process, fueled by pressures of the
    competitive marketplace will allow us to explore the
    capabilities, costs and cost avoidances associated with
    alternative approaches to our activities, and may offer
    important command-wide advantages while helping to mitigate the
    costs of our depot closures. All this makes competition
    something we want to pursue; we intend to do so with due
    caution and in consideration of all applicable statutes and
    policies.
        Mr. Chairman, there are many strongly-held opinions that
    play on the issues we'll discuss today. There are those who
    would propose wholesale consolidation of our depot workload
    into non-closing organic facilities without careful
    consideration of the substantial costs and cost avoidances
    involved, or without any attempt to explore the potential that
    a competitive marketplace might offer. I feel this is
    shortsighted. In contrast, there are those who advocate
    wholesale privatization of our Air Force depot infrastructure,
    without regard to the cost and capability factors. I do not
    subscribe to this view. There are those who feel that
    additional involvement by the commercial sector in our defense
    depot activity puts America's security at risk. I do not agree.
    There are even those who feel that increased participation by
    our nation's businesses would lead to the eventual
    dismantlement of our organic logistics infrastructure. Not only
    do I disagree, but I feel that innovative partnering
    arrangements with industry could well prove to be a principal
    tool, not just to share the costs of sustainment, but to grow
    the size, increase the tempo, and improve the efficiency of our
    non-closing installations.
        Mr. Chairman, members of the Defense Subcommittee, the
    concept of exploring the options for disposition of carefully
    selected portions of our Air Force logistics activity through
    the process of public/private competition is not some misguided
    venture. In our view, it offers distinct opportunities and
    potential advantages which we are exploring with due caution,
    and which I look forward to discussing with you. I know I speak
    for my colleagues alongside me when I thank you each, once
    again, for your continued support for our Air Force men and
    women, both in and out of uniform.

                               prepared statement

        General Wilson. Good morning, distinguished Senators. Sir,
    since General Viccellio has been my mentor over a number of
    years, I am going to follow his lead and be brief. So I will
    just say thanks for having the opportunity to be here. On
    behalf of the young men and women that serve in your Army, I
    appreciate the support that you all have given us as well. I
    will stand by for any further questions.
        [The statement follows:]
                  Prepared Statement of Gen. Johnnie E. Wilson
        Good morning, Mr. Chairman and distinguished committee members.
    Thank you for inviting me to address the status of the Army's
    maintenance depots. I hope that I can provide a helpful perspective on
    the impact of the depot level maintenance mission in the reshaping of
    the federal civilian workforce, the impact of constrained funding of
    depot workloads, and the effect of current laws and statutes concerning
    the outsourcing and privatization of depot workloads.
        The mission of the Army Materiel Command is to research, develop,
    acquire, supply and maintain the equipment required to meet Army, and
    in some cases, joint service warfighting requirements. Accomplishing
    this task means nurturing a viable and responsive industrial and depot
    maintenance base balanced between private and government capabilities.
    Our government and contract employees are the best in the world and are
    dedicated to producing quality products for our service men and women.
    Let me begin by discussing the overall state of the Army's depot
    maintenance base.
                           background--brac decisions
        Depot maintenance has seen significant changes since my predecessor
    at the Army Materiel Command last spoke to this distinguished committee
    several years ago. The biggest impacts have resulted from the decisions
    of the last Base Realignment and Closure (BRAC) Commission. Our
    original proposal, as detailed in the Army stationing strategy, was to
    retain core maintenance depots to perform ground combat,
    communications-electronics, and rotary-wing aircraft maintenance
    missions. However, BRAC, now being implemented, realigned two of the
    Army's five maintenance depots and retained the three core maintenance
    depots as well. To be specific, Letterkenny Army Depot, in
    Chambersburg, Pennsylvania, will cease work on artillery systems. This
    mission is transferring to Anniston Army Depot in Anniston, Alabama.
    Letterkenny's missile guidance and control maintenance mission will be
    transferred, either to Tobyhanna Army Depot--also in Pennsylvania--or
    to the private sector if it is the better value. Red River Army Depot,
    in Texarkana, Texas, is also being BRAC realigned. BRAC left Red River
    Army Depot with only one major depot maintenance mission--the Bradley
    family of fighting vehicles, which includes the multiple launch rocket
    system (MLRS). The depot maintenance for the M-113 family of vehicles
    and the M-9 armored combat engineer vehicle is moving to Anniston Army
    Depot. In addition to the Bradley mission, Red River retains its
    ammunition mission, rubber production facility, and missile
    recertification office. Corpus Christi was unchanged by the last BRAC
    decisions, except for the absorption of Navy helicopter work as a
    result of BRAC 93. Further, Tobyhanna Army Depot, under the BRAC
    decision, is set to receive the electronic maintenance mission from
    Sacramento Air Force Logistics Center.
                                    strategy
        Several challenges result from changes brought on by BRAC
    decisions, plus the general downturn in workload due to the Army
    reshaping. We are now faced with challenges to keep our remaining
    depots running efficiently and cost effectively while retaining the
    viable capabilities needed to support America's Army. Because of this,
    we have developed a depot strategy for the Army which will get us to
    the right size. The strategy was developed to provide the most
    economically efficient and militarily effective rebuild facilities in
    the world in terms of numbers of people, distribution of workload,
    sizing of facilities, and plant equipment. We will accomplish this by
    prudent investments, smart divestitures and a deep sense of
    responsibility for the workforce, the community, and our Army. To
    successfully implement our strategy we will: Maintain a viable depot
    maintenance capability; provide the depots with maintenance workload;
    assure the public-private split complies with existing statutes--and
    results in best value for the military; size the work force to funded
    workload; and size the facilities to funded workload.
        Our first and foremost goal is to maintain a viable Army depot
    maintenance system, which effectively provides the depot maintenance
    support required for warfighting. The reason for this is the mission
    critical role of a depot--that is, the depot supports pre-deployment,
    deployment, and reconstitution of the weapon systems and equipment used
    by the Army in conjunction with the Army's force projection capability.
    Our depot system for the foreseeable future consists of five
    maintenance depots, two with somewhat limited missions as I have
    already described and three with full, distinct missions.
        The next major piece of our strategy is to correctly workload the
    Army maintenance depots. To retain the capability to perform essential
    maintenance, the depots must be given adequate work. This consists of
    depot maintenance of major items and depot level maintenance of
    reparable components.
        In choosing and prioritizing maintenance requirements to be
    accomplished in a particular year, we have to select the source for the
    work to be performed. At times--for economic, preservation of the
    industrial base, or other reasons--the source of repair may be in the
    commercial sector. We include in our decision-making process the
    assurance that we are complying with all existing statutes for
    performance of depot maintenance; in particular, the core logistics,
    ``60-40,'' and the ``$3 million'' statutes.
        The first three elements of our depot strategy deal with the depot
    maintenance dollars we receive from Congress. The last two concern
    sizing the depots to perform the work we need to accomplish today and
    in the future. The most difficult task concerns the people part of this
    sizing equation. I want to stress that people are our most important
    asset. However, during the cold war we kept excess depot capacity as a
    hedge against risk. Depots were sized to support the fight in two,
    three, and sometimes four simultaneous theaters. Those days are gone.
    However, everywhere we have a depot there are thousands of employees
    who have dedicated their careers to the Army. In our depot community
    they are invaluable. I am proud of each and every one of them. They are
    our unsung heroes in supporting our young soldiers in the field.
    However, when you look at the picture of how many people we need for
    our long-term workload, there are more people at the depots than are
    required for the shrinking funded workload. Therefore, the placement of
    the work--considering all the constraints of the defense budget, BRAC,
    other laws, and efficient management of the mix of skills needed, tells
    us where we must make the painful decision to decrease people at our
    depots. As we critically look at each maintenance depot for the future,
    we are creating a stable work force to efficiently accomplish the work
    to be done. First, we will reshape the workforce at our depots to align
    with funded workload. In the near term, Red River and Letterkenny Army
    Depots are projected for significant workload reductions, as they have
    had large portions of their mission removed by BRAC. At this point in
    time, Corpus Christi Army Depot has more total people on board than
    their funded workload supports. Both Anniston and Tobyhanna Army Depots
    will retain a level of employment approximating where they are today
    due to steady funded workload and previous BRAC decisions. As we
    achieve these steady-state levels of employment at each depot, our plan
    is to balance any workload ``peaks'' above the normal amount of work
    with temporary, term, or contract employees. Finally, as part of the
    reshaping of the work force to match the workload, we must achieve the
    most efficient combination of skills--to include the mix of direct and
    indirect employees. The cost of not reshaping our work force now would
    be to make it less likely that our depots can be the best value choice
    for depot work. Additionally, we currently have a variety of on-going
    initiatives to review our management processes to make the necessary
    changes to upgrade our efficiency. Such actions are geared to enhance
    our competitiveness. I truly believe competitive balance is the key.
        As a final element of our strategy for the future stability of the
    Army depot system, the depots themselves must be sized internally to
    retain sufficient plant equipment to perform the required workload. In
    doing so, depot shops will, by necessity, be identified which are
    excess to the needs of depot maintenance. In order to keep the
    maintenance depot affordable, the excess shops will be either laid
    away, dismantled, or put into some other productive use. There are two
    key ways to achieve productive use. For BRAC-affected depots, we are
    working with the local re-use authorities to turn over excess real
    property to the local community as quickly as possible. In these cases,
    the more quickly users outside the Army can take these over, the sooner
    savings can be garnered by the Army from lower overhead expenses. Of
    course, our environmental responsibility will play a part in the
    decision. For other facilities which might be needed in the future, or
    which cannot be physically excessed from the rest of the depot, leases
    can be arranged to commercial users. These can be either Army
    contractors performing depot maintenance or upgrade work--usually in
    partnership with the depot also performing a portion--or purely
    commercial ventures. This lease arrangement can remove much of the cost
    of maintaining these facilities from the Army and at the same time
    bring more commercial activity and employment to depots that might be
    losing government jobs.
                                   conclusion
        The reshaping of the Army's depot system, which I have laid out for
    you today, is not easy. However, the alternative is to put the depots
    into a glide path of higher costs, fewer customers, and ever decreasing
    lower productivity. By reshaping now, our depots can remain the
    efficient, economical, and productive source of vital support for the
    fighting forces that we have come to expect. In closing, I welcome any
    questions you may have.

                               prepared statement

        Senator Inouye. Admiral Pilling.
        Admiral Pilling. Sir, as the junior service member up here,
    I had better follow the lead of my seniors and keep my remarks
    very brief.
        Senator Inouye. Nothing junior about you, sir.
        [The statement follows:]
               Prepared Statement of Vice Adm. Donald L. Pilling
                                  introduction
        Good morning Mr. Chairman and members of the Senate Appropriations
    Defense subcommittee, I am Vice Admiral Donald L. Pilling. I am
    currently serving as Deputy Chief of Naval Operations for Resources,
    Warfare Requirements, and Assessments.
        I am pleased to appear before you this morning to address the
    current status and capabilities of the Navy's ship and aircraft depots
    and to discuss some recent changes in the way they operate,
    particularly with respect to the Navy Working Capital Fund, formerly
    the Defense Business Operations Fund.
                 impact of decreased force structure on depots
        In recent years the Navy's depot maintenance requirements have
    decreased substantially due to a number of factors, primarily a
    declining force structure which dropped from nearly 600 ships to about
    350. A corresponding reduction in aircraft inventory, revisions to
    maintenance strategies, and smaller budget toplines have also
    contributed. These changes have occurred rapidly and have had
    significant effects on our depot infrastructure. By the end of this
    year we will have gone from eight to four public shipyards and from six
    to three aviation depots. In terms of our depot workforce we have seen
    similar reductions. Naval shipyard employment levels have gone from
    over 72,000 in fiscal year 1987 to less than 21,000 by the end of this
    year. Our aircraft depot workforce drops from 15,000 in fiscal year
    1995 to 12,000 in fiscal year 1997. We believe we have reached the
    right level of aviation depot capacity to ensure that we can perform
    our core related workload. By retaining core related capacity we ensure
    that we maintain the critical capabilities and skills to perform depot
    level repair in support of JCS warfighting scenarios. These skills and
    capabilities are crucial to maintaining readiness and ensuring that we
    can sustain our required warfighting capability. In the case of
    shipyards, the current level of new ship construction leads us to
    conclude that there is more capacity in the public and private yards
    than will be needed in the foreseeable future. If further near term
    force structure changes occur, the Navy will be faced with some
    difficult choices in how best to support repair and new construction
    infrastructure within the already fragile balance of combined public-
    private ship maintenance capacity.
                        current workload and performance
        During fiscal year 1996 the naval aviation depots performed
    overhauls to 258 fleet aircraft and 938 engines. They repaired almost
    110,000 components. By comparison, we plan to overhaul an additional
    131 airframes this year. Engine and component workload remains
    relatively stable. We are forecasting the overhaul requirement to
    increase slightly in the outyears due to the fact that we are retaining
    aircraft in the inventory longer.
        The naval shipyards performed four overhauls and 26 other
    availabilities in fiscal year 1996. The public yards also performed a
    significant amount of ship inactivation and modernization work. By
    contrast, the private sector accomplished three overhauls and 86 other
    maintenance availabilities, primarily on surface ships. We intend to
    perform four overhauls and 28 other availabilities in public shipyards
    in fiscal year 1997. Workload planning for public and private shipyards
    requires careful balancing of ship operational schedules, quality of
    life considerations, workload capacity, and compliance with the 60/40
    workload statute.
                       depot efficiencies and initiatives
        As we have consolidated our depots over the past few years we have
    been aggressively pursuing ways to improve efficiency. We have reduced
    overhead at the NADEPS by 44 percent and the ratio of overhead cost to
    total cost has dropped from 40 percent to 34 percent as a result.
    Similarly, naval shipyards have reduced their overhead to total cost
    ratio from 46 to 38 percent in the span of two years.
        The Navy is continuing to seek additional efficiencies in the way
    we operate and manage our depots to maximize the amount of work we can
    perform in the current fiscally constrained environment. Regional
    maintenance is one approach to achieving these savings. Regional
    maintenance is the shared use of maintenance capacity and facilities
    which have been right-sized and level workloaded. This helps to
    eliminate excess infrastructure; provides customers with a single,
    accessible, accountable provider of maintenance and strengthens battle
    force intermediate maintenance activities.
        Other initiatives in process for ship maintenance include the Joint
    Industry-Navy Improvements Initiative which partners the Navy and the
    ship building and repair industry to improve common business and
    technical processes. The goal is to reduce the costs to build and
    maintain Navy ships. Aircraft Carrier Partnering is joining Newport
    News Shipbuilding with the Norfolk and Puget Sound Naval Shipyards to
    identify best practices in planning, managing, and performing carrier
    availabilities and nuclear propulsion work. The Naval Sea Systems
    Command is conducting extensive self-assessments of headquarters and
    field activity performance to recommend areas for improvement and
    facilitate strategic planning for future ship maintenance requirements.
        The naval aviation maintenance community is actively working to
    incorporate new business and technical processes to reduce the cost of
    aircraft maintenance. They are initiating Reliability Centered
    Maintenance (RCM). RCM is a maintenance philosophy designed to
    determine product reliability and prevent costly damage, rather than to
    inspect and repair after the fact. We have made real progress at our
    three depots in reducing the turnaround time for aircraft repair. This
    means aircraft are out of service (and thus not available to the fleet)
    for shorter periods of time. Other initiatives, such as industry
    partnering, reliability incentive warranties, and in-service
    maintenance improvements are intended to help us do more maintenance at
    stabilized funding and personnel levels. This is expected to reduce
    backlog and absorb increased work content as the age of our aviation
    equipment increases.
                          working capital fund issues
        At this point I would like to address the Navy's management of the
    Working Capital Fund, especially in the areas of advance billing and
    rate setting. The Navy works very hard to maintain the financial
    integrity of its Working Capital Fund activities and, to that end, was
    proactive in our fiscal year 1998 budget submission.
        The fiscal year 1997/1999 Navy Working Capital Fund (NWCF) budget
    includes a plan to generate a total of $1.6 billion in cash (through
    rates and surcharges) to liquidate outstanding advance billings and to
    re-establish a sufficient operating cash corpus. This plan considers
    the $512 million cash surcharge directed by the Congress for fiscal
    year 1997. That surcharge was resourced, in accordance with
    Congressional direction, and has already been collected by the NWCF to
    reduce our need to advance bill this fiscal year. For fiscal year 1998,
    rates increase by $408 million to recover prior year losses and by an
    additional $500 million to generate cash. $150 million is included in
    preliminary fiscal year 1999 rates to achieve the DOD goal of 7-10 days
    of operating cash. These efforts are expected to result in a sufficient
    cash corpus to sustain operations and eliminate the need to advance
    bill by the end of fiscal year 1999.
        Fiscal year 1998 rates are structured to cover all budgeted
    operating costs, in addition to generating the cash discussed above.
    The NWCF should ``break even'' by the end of fiscal year 1998. It
    should be emphasized, however, that during budget execution, a number
    of factors could contribute to unanticipated operating losses or gains.
    The most common and significant contributors are changes from the
    budgeted amounts/levels/timing of workload from customers. Changed
    customer requirements and priorities during a fiscal year often reduce
    the revenue received by NWCF activities to cover budgeted costs. Since
    most NWCF costs are fixed (vice variable) in the short term (such as
    civilian salaries), the NWCF absorbs losses or gains in the year of
    execution and recovers them (or rebates them in the case of a gain) in
    a subsequent fiscal year by increasing/decreasing rates. Each budget
    makes refinements and, if necessary, reductions to budgeted costs to
    ensure the NWCF activities are structured to fulfill only budgeted
    customer requirements.
        Just over half of the $408 million in loss recovery in fiscal year
    1998 rates is for the Naval Weapons Stations which are part of the
    Naval Ordnance Center business area. These losses are the result of a
    sharp decline in customer funded workload and reflect the carrying
    costs of significant excess capacity. A surcharge of $224 million has
    been included on Navy Receipt, Segregation, Storage and Issue workload
    to recover the accumulated losses associated with the large overhead
    required to support this program. Our budget restructures the weapons
    stations to stem future losses. Actions include elimination of the
    Atlantic and Pacific management divisions, tailoring weapons stations
    operations, and decreasing capacity to match reduced workload levels.
        The newly created Defense Working Capital Fund Improvement Study
    Group has been working aggressively to generate initiatives which
    should result in improvements to Service working capital fund
    operations. Every Navy Working Capital fund manager in the chain-of-
    command is focused on cost containment, process improvements, and
    achieving budgeted operating results. These study group initiatives
    address their concerns and offer them opportunities to make a
    difference. The study group is reviewing a wide range of proposals to
    improve operations. We are hopeful that it will result in many
    significant improvements.
        Mr. Chairman, thank you again for this opportunity to share with
    the committee the innovative concepts we are incorporating into the
    area of aircraft and ship maintenance and the strides that we are
    making in working capital fund fiscal management.

                                Excess capacity

        Senator Inouye. If I may, I would like to begin with the
    questioning. One of the major subjects looked into by GAO was
    excess capacity. General Wilson, how many organic depots do you
    believe the Army needs, and if the Army is left with five
    underutilized depots, how will the Army bring down the costs of
    the depot maintenance program? What is the likelihood of
    success in your efforts?
        General Wilson. Sir, in the BRAC 95 process, as you know,
    the Army recommended that we retain three core maintenance
    depots. First, the decision from BRAC was to maintain the three
    core and two realigned depots, these being Letterkenny and Red
    River Army Depots. We are currently doing our best in each one
    of the locations to compress the excess capacity and to insure
    that we right size them based upon the funded workload we have.
    Second, if we have to retain the five, it is our view that we
    need to have the flexibility to bring in private sector
    companies to partner inside the depot complex, similar to what
    we are currently doing at Letterkenny. We have a little of that
    that is ongoing at Anniston as well.
        Senator Inouye. Have you considered that partnership to be
    successful? Do you believe increased partnering might be the
    answer to some of the problems?
        General Wilson. Sir, I believe, in fact, that is one of the
    options that we need to continue to pursue.
        Senator Inouye. Let me now turn to General Viccellio.

                                Depot partnering

        The GAO report states that closing depots and consolidating
    workloads to reduce excess capacity is the most effective way
    of improving the efficiency of your remaining Air Force depots.
    You have stated in your formal report that excess capacity can
    be reduced through partnering. Can you identify the extent that
    partnering has already reduced excess capacity in the Air
    Force, and give me estimates for the future?
        General Viccellio. Yes, sir. With respect to the effect of
    partnering on excess capacity, partnering is one of four things
    that we are doing which will have a beneficial effect on the
    underutilization of the three depots that will continue to
    operate as Government installations following the successful
    completion of the BRAC 95 directives.
        Partnering is authorized under title X, 2471, and it allows
    us to offer to a commercial operator excess capacity in our
    depots, equipment facilities, et cetera, on a lease basis, and
    I think that this could apply to two types of activity.
    Partnering with the commercial offer or doing something for us
    as a customer working side by side with us in the depot, or a
    commercial offer or doing work for a commercial customer side
    by side with us in the depot. This is a concept that we have
    been pushing for some time.
        How much potential there is out there and how much interest
    there is, I believe remains to be seen. We have today
    approximately 8,000 contractor personnel operating in or near
    our depots, in other words colocated with our depots, many of
    them on base. They perform a wide range of activities, ranging
    from helping us maintain the installation to helping us do
    depot work. Whether we can double that or triple that in the
    next 5 years is difficult to say.
        A few examples are underway. At Warner-Robins in Georgia we
    are looking to bring a Lockheed LANTIRN night infrared pod
    repair line on base to work directly with us. They do
    predominantly foreign customer work, we do work for our own
    customers, but we could probably save in the cost to either
    customer by working together and sharing supply sources, et
    cetera.
        On a larger scale, but yet at Warner-Robins, is the idea of
    bringing aboard a depot for our new JSTARS surveillance
    aircraft. Warner-Robins will be the sole home operating
    location of that aircraft. As we have learned with AWACS at
    Oklahoma City, at Tinker Air Force Base, there is tremendous
    synergy when we can have the operating location of an airplane,
    that is small in number, colocated with the depot. That is what
    we would like to do with JSTARS at Warner-Robins. We expect
    some kind of a proposal in the near future from the prime
    contractor on the JSTARS, Northrop-Grumman, about a concept
    where they do a portion of or all of the depot activity, but at
    Warner-Robins. That would have partnering potential on a larger
    scale.
        At Oklahoma City, for some time, we have been forced to
    take a portion of our large aircraft and, during the middle of
    our overhaul cycle, move them off base to get either depainted
    or repainted, an expensive procedure both in terms of cost and
    in terms of the time that we have to work the airplane and keep
    it out of the warfighters' hands. We went out to industry with
    an idea of establishing a commercially operated large aircraft
    paint facility in addition to the one we operate on Tinker Air
    Force Base.
        We only got one bid, and that was from the Boeing Corp.
    Unfortunately, the original offer placed too much of the risk
    and the assumption of a certified or guaranteed workload on the
    service. In other words, we felt that Boeing was not willing to
    bet on the availability of a commercial market in addition to
    our workload. So we sent the bid back to them for
    reconsideration, and that is where it is today. It remains to
    be seen yet how successful that might be, but it is both a
    requirement and an opportunity from our point of view.
        At Ogden, UT, a couple of interesting possibilities,
    including some from a variety of companies that would like to
    use our landing gear facility. No formal, firm proposals yet,
    but we have a world-class facility there that does work for all
    three services in the landing gear overhaul area. There is one
    company that plans to manufacture booster rocket fuel tanks for
    space launch vehicles, and has talked to our commander at Ogden
    about possibilities. This would involve composite material with
    activity on base at Ogden.
        So those are some of the concepts that we are talking about
    and some of the leads that we are trying to develop. But with
    respect to a company coming in with a firm proposal, the only
    one we have thus far is the one that Boeing gave us for the
    paint facility at Tinker, and, as I said, we had to send that
    back to them for reconsideration. I think there is real
    potential here. The Army has shown that it can work in the
    ammunition depots, and I think it is probably something that we
    all need to pursue.
        I hope that is responsive to your question.
        Senator Inouye. General Viccellio, do you believe that the
    GAO report is realistic from the perspective of maintaining
    readiness?
        General Viccellio. Our depot structure today is doing its
    job, I feel, very well. We have some financial problems in
    execution this fiscal year, as was pointed out by Ms. Denman,
    and I would be willing to discuss those in more detail if you
    would like.
        But with respect to providing our forces with the
    wherewithal, the spare parts, and the overhaul support needed
    to keep them ready, I think we are doing a very good job. To
    some degree we are coming out of a period in which we took
    advantage of the strong logistics budgets of the early
    eighties, and then followed that by a drawdown during which
    time we retired force structure but kept the spare parts that
    were on hand to support that force structure. Now the drawdown
    is somewhat leveling off and we need to step up our logistics
    budgeting and financing requirements to sustain our current
    level of support.

                                 lean Logistics

        With respect to cash management accountability, and getting
    our job done from that perspective, we are making a fundamental
    change in the Air Force that we call lean logistics. We are
    moving from a World War II philosophy of a large manufacturing
    and repair capability that pushes extensive goods and services
    out to a fielded force in an era of uncertain and slow
    transportation and limited management information about what
    those folks out in the field really need today. Desert Storm
    showed us the value of focused transportation for high priority
    parts and the capability of knowing exactly what a deployed
    flying unit needs on a daily basis. A big part of making this
    transition is helping our depots become more accountable about
    what they are doing.
        In the days of appropriated funds for logistics support,
    the measure of merit was to spend your money, hopefully, on
    what it was appropriated for. In today's environment, we need
    to change our mindsets, so that the measure of merit is to make
    sure that as we obligate from our working capital fund for
    labor, or for materiel, or for overhead, we do it in a way that
    produces something that the user needs and buys, producing
    revenue to a zero sum gain. This is a fundamental mindset
    change for us that, and I will be honest, we are struggling
    with it but I think we are making progress.
        So there are some challenges ahead, but I think we have our
    eye on the target, and I think as we make these changes we will
    be able to continue providing the logistics support to our
    forces that they need, sir.

                                Ordnance centers

        Senator Inouye. Thank you very much, General. Admiral, one
    of the ideas being considered is to remove the ordnance
    stations from the Navy working capital fund in 1999. First, are
    you supportive of this plan? And if you do, why do you think
    the ordnance stations should be treated differently from
    aviation depots or shipyards?
        Admiral Pilling. Well, sir, in response to the first
    question, we are supportive of the idea of moving the ordnance
    centers out of the Navy working capital fund for a variety of
    reasons. As you know, we have incurred losses over the last
    several years because of the loss of workload as the fleet size
    and ordnance inventories have come down. We are also
    transferring some functions that they previously performed to
    the fleet. With the smaller operation and with many of their
    functions transferred out, it just seems that mission funding
    it makes more sense to us because we no longer have the
    customer relationship that we had before with the level
    workload.

                           Nuclear shipyard capacity

        Senator Inouye. Do you have any comment to make on GAO's
    assertion that there is excess capacity in nuclear shipyards or
    nuclear activities?
        Admiral Pilling. Well, sir, as you know, we have come down
    in shipyards from eight depots to four. The four we retained
    were the nuclear capable shipyards. If you look at the forecast
    of nuclear work in the submarine area over the next several
    years, you can see there is a real decline in that level of
    work because we are bringing the force structure of nuclear
    submarines down. I do not think they put any strategic value,
    though, on nuclear rework capability that we have inherent in
    our four remaining yards, not only because we have four of
    them, but where they are located is vital to the way we operate
    as a global maritime force. Having them in Conus and in Hawaii
    provides us a lot of strategic value that is very difficult to
    quantify in dollar terms.
        Senator Inouye. Thank you very much. Senator Hutchison.
        Senator Hutchison. I think Senator Domenici was actually
    here first, so I will say that since Senator Domenici has a
    birthday today that is a very important one, which I will not
    mention in any further detail, I will respect the rights of my
    elders.
        Senator Inouye. I recognize you, sir.
        Senator Domenici. Mr. Chairman, Mr. Vice Chairman, I have
    been accused by those who think the budget that I helped work
    out did too much for seniors----
        Senator Inouye. Oh, really?
        Senator Domenici. I have been accused of having a vested
    interest----
        Senator Hutchison. A conflict of interest.
        Senator Domenici [continuing]. In that I turn 65 today. It
    is interesting to think that 40 or 50 years ago, somebody of my
    age probably would not be up here working this way. We have
    come a long way in wonderful kinds of health preventive things,
    so I feel very, very good and thank you for yielding to me.
        I do not have a lot to say. I guess I would just focus on
    three things real quick for you. First, I think with reference
    to how we consolidate and save money, whether it is through
    closure or consolidation, I think the one thing that many of us
    would be interested in is what are the statutory impediments to
    it. We entered into the first round of consolidations and
    closures, and we were pretty naked in terms of what laws were
    going to apply. We would get reports at the end of a year,
    well, we are not there yet because we have not complied with
    this law and it is going to take 2 more years. I think it would
    be very good if at some point as a preamble to consolidation
    efforts and closures if you went through and scoured the laws
    to say which ones cause long delays. We ought to be prepared,
    where those kind of rules are not in the genuine public health
    and interest, we ought to be prepared to waive some of them in
    an effort to get things done.
        Second, it is now quite obvious, and my staff confirmed it
    for me in between my last comments and this, that what is
    happening in consolidations and closures is that there is a
    spike, and the spike is a very inordinate cost, not savings,
    for x years before the savings start. That is not a little bit.
    It is a big chunk of money, so that you almost draw a pyramid
    with the costs going up, some 3 years, and then you start
    getting savings. Well, I think it is very important that
    somebody square with us if we are going to add a new closure
    commission. General Wilson, clearly we ought to know how much
    do we have to add in the early years in order to get the
    savings in the out-years. Because what we will end up with is
    our appropriators, headed by Senators Stevens and Inouye, will
    be in a bind trying to give you the rest of the things you want
    and ordered and needed, because we need an extra $1 billion on
    this upward front end increase.
        Last, I do not know how we can prevent this and how you can
    prevent it, and I guess as I say it about you, you can say it
    about us, but I do not think there is any question that certain
    generals and admirals have preferential bases and preferential
    facilities for a lot of reasons--they grew up in them, they
    became warfighters at them. I know human nature and I would
    never, ever, ever ask if anything like that is true, but I do
    believe that just as we are going to be asked to be objective
    and let go regarding our States, that we have got to make sure
    somebody in this military is asking generals and those who are
    patrons of facilities to let go too.
        I already note in some preliminary exposures on the
    ``Quadrennial Defense Review'' that great ends are being made
    within certain parts of the military to move things here and
    there so we can preserve this, or take this away from the Army.
    Now, nobody is going to admit that, but I think you all
    understand what I am talking about. I would really hope that if
    you ask that we really be objective, then I believe you ought
    to get all your subjectivity based upon preferential treatment
    and likes and dislikes that are not necessarily related to the
    warfighting machine, that you ought to do your best to do
    something about that too.
        General Wilson, from the Army's standpoint, let me just say
    I assume you read and are participating with great dismay in
    the situation that is occurring in the Army with reference to
    drill sergeants. The only thing I want to comment about is
    somebody that now wants to lay blame on the Army for this
    misconduct just says well, you should have taught them moral
    values. You know, that is not so easy. Our society is what is
    teaching people moral values. I do believe you have got to have
    some better screening mechanisms, but nobody is expecting you
    to totally change the behavior patterns of a grown up person,
    other than if they do not comply with your rules they are out.
    I hope that we get this squared away. You come from a very,
    very historically respected organization, and I hope this too
    passes.
        Thanks, Mr. Chairman.
        Senator Inouye. Thank you. Senator Hutchison.

                                 Privatization

        Senator Hutchison. Thank you, Mr. Chairman. General
    Viccellio, I think that the Base Realignment and Closure
    Commission [BRAC] was very clear in its last session about the
    Air Force depots. It said that three would stay open and two
    would be closed, but privatization was an option that should be
    left to the military. I think it is fair to say that people
    from the three open depots are fighting the ability to fulfill
    the privatization of Kelly and McClellan, because they are
    concerned about capacity and would like to think that they
    would be able to take jobs from Kelly or McClellan if they were
    not privatized. I would just like for you to address in a
    general way if you think that the Air Force in its decision to
    try to work with all five, in the two privatization and in the
    three to maintain the Government workload, if this is feasible,
    if it is good for the Air Force as well as the taxpayers? And
    if so, how can it work, and if not, say so at your peril.
        General Viccellio. Senator, obviously I have to say that
    since it is our plan, you can assume that I support it. But let
    me kind of take it from the top. As you point out, in the BRAC
    Commission report recommendations having to do with Air Force
    depots, it is clearly stated that we should close two ALC's, we
    should close one base where the ALC exists and we should
    realign the other, which is Kelly. That realignment reflected
    the fact that there are substantial tenant units there, to
    include two flying operations which will eventually become part
    of Lackland Air Force Base. We had that option at Kelly, so
    that was a reasonable recommendation.

                            consolidation of Depots

        With respect to the disposition of the workload, as you
    point out, it is very clear that we should consider
    consolidating it into the remaining depots or look at options
    that involve the commercial sector. There is a process directed
    by statute called public-private competition that is the way we
    should go about handling workload that has been done
    organically in an Air Force depot but which we are considering
    moving to the commercial sector. That is the mechanism through
    which we are pursuing the competitive consideration of these
    various options.
        There are strong points of view about this, as you well
    know. There are those who say we should consider privatizing
    everything in the Air Force depot structure. I do not subscribe
    to this, and I think it is clear by now that OSD continues to
    subscribe to a concept of core workload to help us maintain
    technical competence in depot maintenance and insure that the
    wartime mission gets done. There are those who say that based
    on this problem of excess capacity and how grave that is, that
    we should consolidate and ignore the forces of the competitive
    marketplace. We do not subscribe to that either.
        We are doing our very best as we consider all possible
    outcomes; a commercial operation in place, a commercial
    operation somewhere else, or consolidation into the three
    remaining depots or some other public entity, to capture all
    the risks, all the costs, all the savings, and all the cost
    avoidances, in a way that will allow a source selection
    authority, and we have a good one, to compare them side by side
    and determine what is really the best value. I certainly
    subscribe to the notion, to the reality, that if you are going
    to move workload into an underutilized depot, you will gain in
    efficiency and you will reduce your costs. What I do not
    subscribe to is an analysis that touts hundreds of millions of
    dollars of savings by doing that based on an assumption that
    you can move that workload with no additional production
    overhead and no additional G&A.

                                Source selection

        We are currently in source selection for the C-5
    competition. I do not want to get into much detail about the
    public bid, but I will say that even in the opinion of those
    who had the most to gain, which are the folks in my command who
    built that bid, we showed that in considering what it might
    cost and what it might save to move the workload, the C-5
    workload to Warner-Robins, that a significant portion of the
    production overhead that was involved at Kelly would be needed
    at Warner-Robins. A lesser percentage, but some of the G&A
    would have to be moved as well. I know I am getting into
    details here, but I guess my point is we have confidence that
    this process will truly show us costs, benefits, savings, and
    cost avoidances in a way that supports the right decision, and
    it gives all players a chance to put their cards on the table,
    in the format of a formal proposal.
        Senator Hutchison. Do you think this competition that we
    now have for workload is going to be in the best interest of
    the Air Force and the taxpayers? And, General Viccellio, do you
    believe that this can work in the way that the Air Force is now
    going, that you can make the best use of the three open depots
    and continue to privatize at the other two?
        General Viccellio. I absolutely feel it will. I have no way
    of predicting the outcome, or the potential for privatization-
    in-place. That option has costs and it has benefits. One of the
    benefits that I presume will show clearly in the bid is the
    fact that the American taxpayer over the years has made
    tremendous investment in these depots, and if there is a way to
    continue to capture those past investments in terms of
    someone's exploitation to our benefit the facilities and the
    equipment and the trained work force that is there, in San
    Antonio in this particular case, that is good news for us.
        Said another way, people tend to expect me to feel that
    privatization would be a loss and continued organic operation
    would be a win. To me the win is getting the best deal for the
    Air Force and achieving the cost reductions we need, as was
    pointed out by our earlier panel, to become better business
    people about our depot business.
        Senator Hutchison. Do you think that the fact that you are
    able to have bids in itself is going to bring the costs down,
    the fact that you are able to have competition?
        General Viccellio. Oh, absolutely. People often ask me what
    do you expect the outcome to be. As you might suppose, I am a
    bit more optimistic than the GAO witnesses that were just here.
    What do I base that on? I base it on observation across many
    years that when we do have competition the right things happen.
    Our command has been a champion of competition in the depot
    business. Back in the early nineties when we did some of this,
    irrespective of who the successful offeror was, whether it was
    a depot or commercial offeror, we saw substantial savings, and
    I think we will in this case. I will tell you again, I cannot
    say much about our public bid in this ongoing source selection,
    but if it is successful it will represent substantial savings.
    And if a commercial offeror tops us, then we will see even more
    savings.

                                   Partnering

        Senator Hutchison. Do you think you could make better use
    of the three open depots by opening things up to allow them
    also to take in Government workload, but allow private workload
    to be done in the same place where it does not conflict with
    any kind of security?
        General Viccellio. Definitely. As I answered in the earlier
    question from the chairman, I would love to borrow on the
    example of the Army munitions plants and do as much partnering
    as we can interest industry in doing. The earlier panel talked
    about excess capacity in the commercial sector. Indeed it is
    there, but we have had interested folks talk to us about
    leaving their facilities and installations where they are doing
    their work elsewhere to come and colocate with us. Again, I
    feel our depots offer world-class infrastructure that
    represents business opportunity for people. We just need to
    learn to be good salesmen of that fact.
        Senator Hutchison. I want to come back to you on a
    different issue, but I would like to ask General Wilson if you
    see the potential for building up some of the Army depots to
    make them also more efficient and viable by using privatization
    within an existing depot? Is that something that you are
    looking at?
        General Wilson. Yes, ma'am. That is one of the many options
    we are looking at. As a matter of fact, I took UDLP to Red
    River to see if there was a way we could do some upgrades
    there. I am not sure we are going to be able to do that, but we
    have been working with the local reuse authority down there to
    move the fence line and to assist them with bringing in some
    commercial work. But as General Viccellio mentioned, I think
    there is a great potential for us to continue to pursue, just
    like we have been able to do in the ammunition plants. Most of
    our ammunition plants, as you know, Senator, are Government-
    owned, contractor-operated, and they are doing very well. We
    have a few, because of the drop in the workload, that are
    having some challenges. But we really need to try and explore
    that as best we can.
        Senator Hutchison. Thank you. Did you have anything to add,
    Admiral?

                            Louisville privatization

        Admiral Pilling. We have privatized one depot in
    Louisville. There is a disagreement between the Navy and the
    General Accounting Office [GAO] on whether that was a savings
    or a cost to us. We believe it was a savings, obviously. We are
    pleased with what we have been able to accomplish in
    Louisville.
        Senator Hutchison. Why do you see this discrepancy between
    what the GAO says about cost savings and what the military is
    saying?
        Admiral Pilling. Well, I think part of it is the ground
    rules on how you do cost comparisons are very, very technical,
    and I know there are disagreements on the Louisville issue with
    the GAO on whether they have double counted BRAC savings or
    not. We think they might have. And also on, for example, a
    technical point on whether portability of pension should count
    as a cost of privatization. So those are fairly technical
    issues that accountants get into.

                                  GAO findings

        Senator Hutchison. General Viccellio, is that also what GAO
    is doing, they are saying the same thing about Ohio, that
    privatization is not saving?
        General Viccellio. Our concern about using the analysis
    that we did in Ohio this early in the contractor performance
    period, and it is just into the first few months of
    performance, is that trying to extrapolate their performance,
    their cost performance in a period when they are on a learning
    curve as what is to be expected in perpetuity, or even for the
    rest of this year, is a bit premature. The GAO asked us to do
    these analyses, and they are underway. There are three parts to
    the Newark workload, and we are working on the third analysis
    right now. But our point is that since starting performance,
    this contractor has done very well in terms of quality and
    productivity. In terms of cost, he is on a cost reduction curve
    that he thinks will take him below contract cost by the end of
    the year.
        Our suggestion to anyone who is interested, to include the
    GAO, is to wait and give the contractor at least a full year of
    production to get through any transition effects, and see how
    they are doing before we make a prognostication about whether
    this is a success or a failure.
        Senator Hutchison. Let me go on to the readiness issue,
    because that was something that I do not feel comfortable can
    be measured in numbers, and I hope the GAO will give a lot of
    consideration to what the military is saying, because obviously
    that is what the military expertise is. On the issue of moving
    trained workers, I think it is fair to say that San Antonio and
    Kelly are different in that you have third generation Kelly
    workers and the experience factor I think is great and the
    possibility of moving those workers is probably much less
    because of the ties to family and community. So what do you
    lose? Is there a readiness factor that is not being measured
    when you lose trained work force for engine maintenance or
    technical types of depot maintenance work that is done?

                               Production breaks

        General Viccellio. I think absolutely. When workload is
    relocated you are going to see an effect on production that is
    very real. Perhaps I can best illustrate by relating my
    experience. When I was in the Air Education and Training
    Command we closed four bases, two or which were large
    production bases, one in Chanute, IL, and one in Denver, CO.
    They were totally different operations than a depot, but they
    were production entities. They produced trained airmen and
    officers.
        When we closed those installations, despite our very best
    efforts, we had breaks in production lasting from 4 to 14
    months because you had to take the training materials, and the
    depot equivalent would be your equipment, and break it down in
    one location, facilitize or renovate your facilities to be
    ready to accept it in the receiving location, move it to that
    location, set it up, and then train the work force. Experience
    tells us that depending on the situation and how far the move
    is, somewhere between 20 and 30 percent of our work force may
    consider moving, but the others will not. You pointed out there
    are factors in San Antonio that might even make that number
    lower.
        It is unavoidable. You are going to see a break in
    production. We can plan carefully, we can phase transition in
    and phase it out, but we are still going to see some sort of
    what we call a bathtub in production. We are dealing with that
    right now in the move of the workload in communications
    electronics from Sacramento to Tobyhanna. How do we do that
    best? We will probably have to step up and get some contractor
    support to help us shallow that bathtub so we can preserve
    readiness. It is truly a factor.
        Senator Hutchison. Let me just ask you, one of the previous
    panel members said that there is excess capacity in the private
    sector and, therefore, she felt that you would not be able to
    make the pie bigger and, therefore, help the existing depots. I
    think perhaps all the factors in how a private contractor might
    approach the ability to do Government work plus private sector
    work within one place might not have been considered. Do you
    think that the fact that there may have been a survey saying
    there is excess capacity in the private sector will have a
    bearing on whether you could add private sector to the existing
    depots?
        General Viccellio. It is my observation, having talked to
    industry extensively over the last 2 years, that most of the
    claims about excess capacity in the private sector come from
    the industry associations that portend to represent industry as
    a whole. Indeed there are companies that have more capacity,
    more physical plant capability than they need, but there are
    others who do not. It is those who do not who would be looking
    to perhaps come and do work for us in a location that is either
    closing, like Kelly, or perhaps under the partnering concept at
    one of our depots that is remaining open, on a competitive
    basis.
        Senator Hutchison. Have you had a lot of interest from
    private sector companies? You are the one that has been
    really----
        General Viccellio. Well, absolutely. As I indicated
    earlier, there are a few examples at all three depots remaining
    open that we think will lead to something. As I said earlier, I
    have talked to industry representatives who indeed have excess
    capacity, but they talked to me in terms of divesting
    themselves from that capacity and coming to work with us.

                                   60/40 rule

        Senator Hutchison. Just a final question I would like for
    each of you to answer, and that is the 60/40 rule obviously is
    constraining, or will be soon, for the flexibility to do what
    the Department believes is in the best interest of the
    Department in getting the best price and the best readiness.
    What do each of you think we ought to do with that 60/40 rule?
        General Wilson. Senator, from the Army's standpoint I think
    that we need to relax it a little bit, and by doing that it
    will give us much more flexibility to increase our partnering
    that is currently ongoing. This year the Army will finish at
    about 66/34 or thereabouts, so we have been very close over the
    last 3 years. I just think as we look for more creative ways to
    try and compress the excess capacity, we just need all the
    flexibility within the framework of the law to execute our
    business.
        General Viccellio. From an Air Force point of view,
    Senator, we sit today at about roughly 70/30. We are faced with
    workload disposition decisions concerning Kelly and McClellan
    of some magnitude. Having looked at our workload at those two
    locations and talked to industry, we feel that there is more
    potential for savings through public-private competition than
    what we have in that 10 percent headroom remaining. That is why
    last year we asked the Congress to consider relaxing the rule
    and allowing us to at least go through the competition process
    to deter the outcome. We would certainly still endorse that
    kind of approach.
        Admiral Pilling. I think I would second their endorsements.
    The Navy would still like some flexibility on 60/40. Of the
    three departments, we are actually the closest, I think. We are
    down around 63 or 62 percent in-house. The more flexibility we
    can get, the more efficient we will be.

                                Readiness issue

        Senator Hutchison. Do any of you have any concerns about
    readiness, if it is opened up that the core workload will
    somehow not be held in the depots?
        General Wilson. I think from our standpoint, Senator, we
    are very careful in terms of watching the readiness of the
    fleet. As you know, General Reimer each month receives a
    briefing on the 16 top warfighting systems. Each time we
    determine an item that we think we should privatize and
    outsource, we go through a pretty rigorous process to insure
    that the private sector is robust enough to have the surge
    capacity if needed. So readiness is No. 1 with us, and I
    suspect with the other services.
        Senator Hutchison. Any other comments on that issue?
        General Viccellio. No; that is exactly the way we see it.
        Admiral Pilling. We see it the same way. In fact, on loss
    of readiness you can actually make a case if you could use the
    original equipment manufacturer. On several of our aircraft,
    for example, we might be able to increase the readiness because
    they are so much more familiar with the new type of aircraft,
    for example.
        Senator Hutchison. Well, thank you very much. I think this
    has helped bring the readiness issue forward, and certainly you
    are the arbiters of that and should be, and I hope as we are
    discussing these things that we can work for all of the depots
    toward making them more efficient and for giving you the
    flexibility to use your defense dollars the way they would be
    best used from your judgment standpoint. I think the artificial
    constraints of 60/40 should not be left in place by Congress
    when you are trying to prioritize your spending in the
    shrinking defense dollars that you have.
        Thank you, Mr. Chairman.

                         Additional committee questions

        Senator Inouye. Thank you very much. Before recessing I
    would like to convey to all of you the regrets and apologies of
    the chairman of the committee for not being able to be with us
    today, but, as you know, he is managing the emergency
    supplemental appropriations bill. I would also like to request
    that questions submitted by Senator Bennett of Utah be studied
    and responded to.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                Questions Submitted to Gen. Henry Viccellio, Jr.
                Questions Submitted by Senator Richard C. Shelby
                               a-76 competitions
        Question. I am aware that the Department of Defense intends to hold
    A-76 competitions for some of the Defense Logistics Agency's work. Is
    DOD planning to compete depot maintenance work it the same manner? If
    so, how would DOD propose holding this competition considering current
    law such as 10 U.S.C. 2464, 10 U.S.C. 2466, and 10 U.S.C. 2469?
        Answer. It is the AF intention to hold public/private competitions
    in accordance with all applicable laws.
                      depot maintenance command structure
        Question. Since 1970, maintenance depots have down-sized at
    approximately the same rate as private industry in the defense sector.
    The depot command overhead structure, however, has remained largely
    intact during this same period. Has DOD looked at the depot maintenance
    command structure for potential savings?
        Answer. Yes, DOD has looked at the depot maintenance command
    structure for potential savings. The AF depot maintenance overhead
    structure has downsized by 28.3 percent from 1988 through March 1997.
    The depot maintenance overhead structure will continue to downsize as
    workloads from the two closing depots are competed and transferred.
                             core weapons platforms
        Question. According to GAO testimony before the House National
    Security Committee, each of the military Services is identifying the
    core weapons platforms that are used to calculate the work for the
    service depots. When does DOD intend to provide this list to Congress?
        Answer. The Air Force addresses core as a depot capability required
    to ensure organic support for the weapon systems tasked for the
    contingency. The contingency plan identifies specific weapon platforms
    and the Air Force determines the core depot capability using the DOD
    Core Methodology. Core is reported to DOD in direct labor hours. Air
    Force depots are technical repair centers that support multiple weapon
    platforms, i.e. all landing gear repair at OC-ALC, engines at OC-ALC
    and SA-ALC, airborne electronics at WR-ALC, etc.
        One requirement of the core methodology is an assessment of the
    commercial capability to provide depot repair services for weapon
    platforms that are tasked for the contingency. Incrementally, the Air
    Force is evaluating the commercial sector's capability to support the
    mission requirements. Capability assessments have been completed for
    some of the workloads and all of the remaining workloads will be
    completed incrementally by July 1998. After the commercial capability
    assessment is completed, a final core posture will be reported based on
    the existing contingency plan.
        This requested workload breakout will only be available following
    the completion of a core determination process on all USAF depot
    workloads. Until such time as all workloads have been evaluated,
    workloads previously rated as core will remain so for reporting
    purposes. Using that caveat, USAF core capability projections are as
    follows:

                    [Direct product actual hours in millions]
    ------------------------------------------------------------------------
                                                 Fiscal year--
                                 -------------------------------------------
                                     1996       1997       1998       1999
    ------------------------------------------------------------------------
    Core Workload...............       25.5       23.1       23.1       23.1
    Total Workload..............       31.6       30.9       31.1       30.2
    ------------------------------------------------------------------------

                                 age of workers
        Question. I am told that without any change to current policy the
    average age of workers at the service depots will be approximately 50
    to 51 years old within the next three years. Are the military services
    aware of this problem, and if so, how do the services propose
    correcting this situation?
        Answer. Our current data indicates that within the command, the
    average age of our work force at the depots is 46.7. The average years
    of service at our depots is 19. This compares with the entire Air Force
    Materiel Command work force where the average is 46.2 years old and
    18.2 years of service. This information reflects that we have an
    experienced and capable work force with the ability to accomplish our
    mission in a most effective manner.
                                     ______

                Questions Submitted by Senator Robert F. Bennett
                            infrastructure reduction
        Question. General Viccellio pointed out in his testimony that
    infrastructure needs to be reduced. What are the Air Force specific
    plans to do so?
        Answer. Two of the five ALC's are scheduled for closure in 2001
    (Sacramento ALC and San Antonio ALC), which will eliminate their
    infrastructure costs. Workloads that support core capability and
    workloads won during competitions will be transferred to the remaining
    depots. AFMC is also exploring partnering opportunities with private
    industry which should result in better utilization of the
    infrastructures at the remaining depots.
        AFMC performed a comprehensive study on workload consolidation,
    which resulted in the Technical Repair Center (TRC) concept. Completing
    the implementation of this concept will decrease the infrastructure
    costs at the remaining centers.
                          depot workload consolidation
        Question. BRAC recommended that depot workload be consolidated. GAO
    says the failure of the Air Force to consolidate is costing money.
    Please provide the committee with specific analysis that demonstrates
    the cost-benefit of consolidation vs. privatizing. (General Viccellio
    referred to an analysis in the April 17, 1996 Senate Armed Services
    Committee hearing.)
        Answer. The outcome of the public/private competitions should
    provide the true costs and savings associated with transferring
    workloads to another depot or to the private sector. GAO can review
    this actual data after the source selection process. GAO's earlier
    audits were based on unrealistic assumptions, rather than actual
    proposal data and postulated workload consolidation without increasing
    overhead.
        Question. Much of the discussion about consolidation and
    privatizing implies that these are mutually exclusive. Did the Air
    Force look at consolidating workload FIRST, and then holding a public-
    private competition? Why or why not?
        Answer. The Air Force is looking at consolidating workload. The Air
    Force is developing a strategy for moving the workloads that must
    remain in public depots, and will not be competed under public-private
    competition, to other DOD centers.
        For the workloads that are not required to move, the Air Force
    plans to use public-private competition to determine the true costs and
    savings associated with the various approaches. In preparation of the
    public bids associated with ongoing public-private competitions, the
    real impacts of workload movement and consolidation will be considered.
                                excess capacity
        Question. Please explain how privatizing at McClellan and Kelly Air
    Force Base address the problem of excess capacity at the three
    remaining depots in the short and long term? If not, how does the Air
    Force plan to increase utilization and production rates at these
    depots?
        Answer. The Air Force is not pursing a privatization plan, but
    rather is pursuing a public/private competition process to ensure
    mission readiness and obtain best value. Capacity is only one of many
    factors affecting the outcome.
        Substantial workloads will relocate from McClellan and Kelly to the
    remaining depots. In addition, if the depots are successful in the
    competitions, other workloads will transfer. The Technical Repair
    Center (TRC) concept will then be used to further consolidate workload
    among the depots and allow the Air Force to divest itself of duplicate
    capabilities and capacities.
        The Air Force is also exploring dual and joint-use initiatives with
    the private sector to use more effectively the existing industrial
    capacity at the remaining ALC's. These initiatives will allow the DOD
    to share its operating costs with industry.
        Each ALC continually looks at its excess capacity and searches for
    opportunities to divest itself of unneeded facilities and equipment. We
    are currently reviewing and prioritizing projects to consolidate
    workloads at the remaining ALC's and both reduce excess capacity and
    increase the efficiency of the production operations. The projects with
    the greatest return on investment will become part of our fiscal year
    2000/2001 budget submission.
                    depot maintenance system inefficiencies
        Question. What specific types of inefficiencies, other than excess
    capacity, do you have in the depot maintenance system? What type of
    inefficiencies do you hope to correct by privatizing?
        Answer. The private sector can expand and contract its workforce
    and capital investment plans more rapidly than the public sector. The
    Air Force does not plan to privatize the depot maintenance system.
                            current excess capacity
        Question. By Air Force figures, what is the current excess capacity
    at the five Air Force Depots? How does this excess capacity differ from
    five years ago? How does the Air Force measure excess capacity?
        Answer. The Air Force follows the procedures in DOD 4151.18-H,
    Depot Maintenance Capacity and Utilization Measurement Handbook. Excess
    capacity is the capacity, in direct labor hours, that is available in a
    shop or depot, but for which no funded requirement exists. It is
    calculated by subtracting the funded workload from the total capacity.
    The utilization percentages shown are defined as the funded workload
    divided by the total capacity, measured in direct labor hours.

    ----------------------------------------------------------------------------------------------------------------
                                                                      Fiscal year 1992          Fiscal year 1997
                                                                 ---------------------------------------------------
                                 ALC                                 Excess    Utilization     Excess    Utilization
                                                                    capacity    (percent)     capacity    (percent)
    ----------------------------------------------------------------------------------------------------------------
    Oklahoma City...............................................      572,000           93      843,000           89
    Ogden.......................................................      275,000           96      831,000           54
    San Antonio.................................................      742,000           92      898,000           87
    Sacramento..................................................    1,210,000           84    2,604,000           66
    Warner Robins...............................................    1,029,000           87    2,071,000           73
    ----------------------------------------------------------------------------------------------------------------

        All data shown is for a peacetime scenario, and does not include
    the reserve capacity required for wartime surge. Capacity data for
    fiscal year 1997 was taken from the fiscal year 1996 capacity data call
    to the ALC's; funded workload for fiscal year 1997 was taken from the
    fiscal year 1995 workload review.
                                 job projection
        Question. How many jobs do you project to be at Kelly, McClellan,
    Hill, Warner-Robins, and Tinker for the next five years? Does the Air
    Force have a minimum job level guarantee at any of these bases?
        Answer. Projecting employment levels over the next five years at
    the Air Logistics Centers is a difficult task because it necessarily
    requires the Air Force to make assumptions about the outcome of
    competitions for the workloads currently performed at Kelly and
    McClellan Air Force Bases. Since the Air Force is attempting to conduct
    those competitions as fairly as possible, it is not appropriate to make
    any assumptions about the outcomes of these competitions. The Force
    does not have a minimum job level guarantee for any ALC.
                      cost/negative sides of privatization
        Question. General Viccellio mentioned that there were costs and
    benefits to privatizing Air Force installations. We have heard about
    the benefits today. I would be interested to know what the costs and
    negative sides are to privatizing?
        Answer. The Air Force is not pursuing the privatization of Air
    Force installations. Instead the Air Force is conducting public/private
    competitions for workloads at closing bases that no longer need to be
    performed in a public depot to maintain a core logistics capability.
    The potential costs and negative aspects of contracting with the
    private sector for those workloads will be assessed ruing the
    competitions.
                        co-location of private companies
        Question. General Viccellio said the private companies are leaving
    their own facilities to co-locate at an Air Force installation. What
    incentives does the Air Force provide for the commercial sector to do
    this?
        Answer. There are both tangible and intangible incentives for the
    commercial sector to co-locate at an Air Force installation. Over the
    years, the Air Force has invested heavily to develop and maintain state
    of the art facilities and equipment. From a financial perspective,
    leasing excess Air Force facilities and equipment enables the
    commercial sector to expand its business base without additional
    capital investment. This improves private firms' ability to compete and
    to provide the DOD with quality services and products. Co-location to
    Air Force installations may also provide a synergistic effect among
    companies resident on the Air Force installation. Co-located companies
    will be able to develop alliances with one another which could lead to
    further business opportunities. All of these factors ultimately improve
    a company's opportunities for profit.
                           public/private competition
        Question. Describe how the Air Force has ``leveled the playing
    field'' between public and private bidders.
        Answer. The Air Force has tried to level the playing field between
    public and private bidders by using impartial evaluators, separating
    public sellers from public buyers, providing equal access to
    information to both public and private bidders, applying the same
    evaluators criteria and standards to offers from both public and
    private bidders, validating the accounting systems of both public and
    private bidders, and making cost adjustments according to predefined
    cost comparability procedures where required.
                                 core workload
        Question. How did the Air Force determine what workload would be
    available to be competed?
        Answer. The Air Force is reviewing the workloads at Kelly and
    McClellan to determine which workloads must continue to be performed at
    a public depot to maintain a core logistics capability. Those workloads
    that need not be performed in house to maintain a core capability are
    available to be competed, to the extent permitted by the 60/40 rule.
                           private/public competition
        Question. Please outline the process the Air Force used in
    determining how the workload would be ``bundled'' for competition. What
    were the cost considerations?
        Answer. In determining what workloads would be included in each
    competition, the Air Force grouped together those workloads in which
    economies could be realized by obtaining offers to perform the workload
    as a whole. Where backstops or other efforts supported multiple
    workloads, those workloads tended to be grouped for competition saving
    bid and proposal costs, and cost savings from the allocation of
    overhead to a wider base were considerations.
                                moving workloads
        Question. It was mentioned today that moving workload is a problem,
    has a negative impact on production, and impacts readiness. Is moving
    workload a new problem in the Air Force Materiel Command and can this
    problem be overcome?
        Answer. The Air Force has never transferred such a large amount of
    work as that which exists in the depots at Kelly and McClellan Air
    Force Bases. Through the public/private competition process, the Air
    Force is reviewing and evaluating how that might be done, and at what
    cost. The Air Force must be careful to assess the risk and impact to
    readiness of any transfer plan that is proposed to the public or
    private sector.
        Question. Would it be appropriate for Congress to prohibit moving
    workload between depots because of readiness concerns?
        Answer. The Air Force is reviewing and considering the impact on
    readiness in evaluating public and private proposals.
        Question. In the event a commercial bidder won a bid to move the
    workload, how would the Air Force address the readiness issue?
        Answer. The Air Force intends to address the risk to readiness of
    each offer in a competition. A private offer would not be accepted if
    it posed an unacceptable risk to readiness.
        Question. How does the Air Force currently get around the readiness
    issue related to moving workload?
        Answer. The Air Force does not get around the readiness issue when
    moving workloads. Readiness is addressed whenever depot maintenance
    workloads are moved.
                         current competition structure
        Question. Please explain how the competition is currently
    structured, including: Do the requirements of the competition give any
    preference to the bidder who does the work in place?
        Answer. The Air Force is not requiring that the workload be
    performed at Kelly AFB or McClellan AFB. The Air Force is using
    acquisition strategies that avoid favoring particular offeror
    performance strategies. The competitions are structured to reflect the
    technical work requirements and leave maximum flexibility for offerors
    to propose innovative methods to effect performance. This full and open
    process does not attempt to favor or temper any particular competitive
    advantage that may accrue to a specific performance strategy.
        Question. Does the competition require all the work to be done in a
    single location?
        Answer. No, all work is not required to be done at a single
    location.
        Question. What is the time line?
        Answer. Final decision on the C-5 Programmed Depot Maintenance
    workload is scheduled to be made in September 1997. Final decision on
    the Sacramento Maintenance workload and Propulsion workload are
    scheduled to be made next year.
        Question. What type of contract will be used at McClellan and
    Kelly? Does this type of contract provide the maximum benefit to the
    government and taxpayers?
        Answer. The Air Force will award a fixed-price award fee contract
    for the C-5 Programmed Depot Maintenance workload. This contract type
    provides maximum protection for the taxpayer against cost growth while
    providing the ability to influence contractor performance. The
    remaining public-private competitions are in the strategy development
    phase and the contract types have not been announced.
        Question. How much money is being made available for contractors to
    study the workload?
        Answer. The Air Force awarded two contracts for $750,000 each to
    study the workload. Ogden Air Logistics Center was also provided
    $750,000 to study the workload.
                              competition savings
        Question. General Viccellio said that ``substantial savings''
    result when conducting competitions. Would the Air Force provide those
    figures demonstrating these savings?
        Answer. Substantial savings did result from the previous round of
    competition. The savings totaled $353.7 million over the life of the
    contracts as shown in the following table:

    Competition savings for competitions held during fiscal year 1991-93

                                                                 In millions

    Projected Cost Without Competition................................$717.1
    Award Value....................................................... 353.6
    Gross Savings..................................................... 363.5
    Cost of Competition...............................................   9.8
    Net Savings....................................................... 353.7

        Projected Cost Without Competition is the budgeted cost of the
    workload before competition.
        Award Value is the actual value at the time of award.
        Cost of Competition is all of the costs associated with preparing
    the bid and include bid preparation costs, facilities modifications,
    equipment costs, transportation costs and any other costs necessary to
    be able to perform the work.
        These savings may not be representative. True savings from the
    current competitions will not be known until the source selections are
    completed.
                       teaming requirements/opportunities
        Question. Please outline the teaming requirements and
    opportunities. Can Air Force depots team with commercial industry? Can
    the Air Force depots team with each other? Why or why not?
        Answer. Public offerors may propose to team with another public
    depot or depots to perform the required work. Public offerors may not
    propose to subcontract major portions of depot maintenance workloads to
    private contractors. Subcontracting by public offerors is permissible
    for those supplies or services normally contracted for in support of
    depot maintenance operations.
                                core maintenance
        Question. What is the criteria that the Air Force uses to determine
    ``core maintenance'' for fiscal year 1997. What workload is considered
    ``core'' for fiscal year 1997? What workload was considered ``core'' in
    fiscal year 1995? Please outline how the criteria has changed? (Gen.
    Viccellio alluded to the change in philosophy in his testimony.)
        Answer. In fiscal year 1997, the Air Force used the revised DOD
    core methodology which was developed by the services and approved by
    the Defense Depot Maintenance Council (DDMC) in January 1996. This
    methodology includes the 2 Major Regional Conflicts (MRC's) and a risk
    assessment of accomplishing a specific workload by the private sector.
    The DOD's risk assessment process has been applied to several Air Force
    capabilities including major aircraft and associated commodities at the
    two closing ALC's. Based on the existing commercial capabilities and
    other DOD sources, these workloads were determined not needed to be
    performed in a public depot to maintain a core logistics capability.
        In fiscal year 1995, the methodology was based on a 2 MRC scenario,
    but did not include a risk assessment of the private sector to
    accomplish workloads.
                                 core workload
        Question. General Viccellio referred to the ``dynamic'' nature of
    core workload. Exactly how ``dynamic'' will this definition be, and how
    will the Air Force alert Congress to the status of what workload is
    considered core? Does this pose any difficulty in long-term planning
    and readiness considerations?
        Answer. The ``dynamic'' nature of core is influenced by a variety
    of elements. First, the war contingency plan, two Major Regional
    Conflicts (MRC's), can change over time and is not static in nature.
    This plan may change from year to year. Second, core is influenced by
    changes in the weapon system inventory. The C-17 replaces the C-141 and
    the F-22 will replace the F-15. Depending upon the role of the new
    weapon system in the war contingency plan, core can increase or
    decrease. Lastly, prior to the approval of the revised DOD core
    methodology in January of 1996, core was influenced entirely by the war
    contingency plan. Presently, core is influenced by the war contingency
    plan and an assessment of the commercial base to accomplish the
    workload. If the risk to DOD is low, the workload can be accomplished
    by private contractors.
        The ``dynamic'' nature of core does not pose any difficulty in long
    term planning and readiness considerations. In contrast, it enhances
    the Air Force ability to be more exact in determining the correct depot
    skills, facilities and equipment needed to support the war contingency
    plan.
                                     ______

                 Questions Submitted to Gen. Johnnie E. Wilson
                Questions Submitted by Senator Richard C. Shelby
                               a-76 competitions
        Question. I am aware that the Department of Defense intends to hold
    A-76 competitions for some of the Defense Logistics Agency's work. Is
    DOD planning to compete depot maintenance work in the same manner? If
    so, how would DOD propose holding this competition considering current
    law such as 10 U.S.C 2464, 10 U.S.C. 2466, and 10 U.S.C. 2469?
        Answer. The Army is not planning to hold A-76 competitions for
    depot maintenance work in the way that the Defense Logistic Agency is
    competing some of their work. Any competitions held for depot
    maintenance work would be conducted in accordance with all applicable
    statutes.
                      depot maintenance command structure
        Question. Since 1970, maintenance depots have down-sized at
    approximately the same rate as private industry in the defense sector.
    The depot command overhead structure, however, has remained largely
    intact during this same period. Has DOD looked at the depot maintenance
    command structure for potential savings?
        Answer. The depot command overhead structure within the Army has
    been subject to the same force structure downsizing as any other
    segment of the workforce. In addition, under Base Realignment and
    Closure 1991, the Army eliminated its U.S. Army Depot Systems Command
    Headquarters, then located in Chambersburg, Pennsylvania, and realigned
    and combined the residual workforce with ammunition management
    personnel located at Rock Island, Illinois, to form the U.S. Army
    Industrial Operations Command. This action resulted in the elimination
    of about 500 personnel from the overhead structure.
                             core weapons platforms
        Question. According to GAO testimony before the House National
    Security Committee, each of the military Services is identifying the
    core weapons platforms that are used to calculate the work for the
    service depots. When does DOD intend to provide this list to Congress?
        Answer. I am not aware of a requirement to provide DOD with a list
    of CORE Weapons Platforms used to calculate the organic workload for
    the depots. However, a core analysis is done biennially. The fiscal
    year 1998 core analysis update is on-going with a projected completion
    date of 2nd quarter fiscal year 1998.
                                 age of workers
        Question. I am told that without any change to current policy
    average age of workers at the service depots will be approximately 50
    to 51 years old within the next three years. Are the military services
    aware of this problem, and if so, how do the services propose
    correcting this situation?
        Answer. Current average age at the U.S. Army Materiel Command
    depots is 47.49 years. Assuming present workforce with no input of new
    employees, the average age is projected to reach 50.49 years in three
    years. Offsetting actions that impact projected average age increase
    include external (entry and mid-level) hiring and use of Voluntary
    Separation Incentive Programs (VSIP) as part of the Command's reshape
    strategy. VSIP offers retirement eligibles a pay incentive as a means
    to retain younger (years of service) workers while achieving essential
    reshape objectives.
                                     ______

               Questions Submitted to Vice Adm. Donald L. Pilling
                Questions Submitted by Senator Richard C. Shelby
                               a-76 competitions
        Question. I am aware that the Department of Defense intends to hold
    A-76 competitions for some of the Defense Logistics Agency's work. Is
    DOD planning to compete depot maintenance work in the same manner? If
    so, how would DOD propose holding this competition considering current
    law such as 10 U.S.C. 2464, 10 U.S.C. 2466, and 10 U.S.C. 2469?
        Answer. The Navy is not planning to hold A-76 competitions for
    depot maintenance workload. As you indicated, 10 U.S. Code has numerous
    provisions which restrict competition under Circular A-76 procedures.
                      depot maintenance command structure
        Question. Since 1970, maintenance depots have downsized at
    approximately the same rate as private industry in the defense sector.
    The depot command overhead structure, however, has remained largely
    intact during this same period. Has DOD looked at the depot maintenance
    command structure for potential savings?
        Answer. The Navy's depot maintenance command structure has
    downsized significantly over the past 20 years. The Naval Sea Systems
    Command (NAVSEA), which manages naval shipyards, has reduced its
    headquarters staff from 5,268 in fiscal year 1989 to a planned 3,221 in
    fiscal year 1999. The Naval Air Systems Command (NAVAIR), which
    oversees naval aviation depots, has undergone a similar reduction. In
    1977, several depot command activities which had 1,115 civilian and
    military personnel were closed or consolidated and reduced the number
    of on-board employees to 733. In 1987 this headquarters group again
    downsized to approximately 350 civilian/military personnel. A further
    consolidation took place as a result of BRAC 95 which reduced the
    number of personnel managing depot operations to under 200.
                             core weapons platforms
        Question. According to GAO testimony before the House National
    Security Committee, each of the military Services is identifying the
    core weapons platforms that are used to calculate the work for the
    Service depots. When does DOD intend to provide this list to Congress?
        Answer. The Navy quantified its organic core depot maintenance
    requirements and submitted them to the Office of the Secretary of
    Defense (OSD) in March 1996. I understand that OSD submitted a list of
    all Service core requirements in response to a question for the record
    from the House National Security Committee hearing on depot maintenance
    that was held 16 April 1996.
                                 age of workers
        Question. I am told that without any change to current policy, the
    average age of workers at the Service depots will be approximately 50
    to 51 years old within the next three years. Are the military Services
    aware of this problem, and if so, how do the Services propose
    correcting this situation?
        Answer. The average age of workers at the naval aviation depots
    tends to fluctuate between approximately 40 and 50 years of age. The
    average age at naval shipyards is currently 45 and is expected to rise
    to 48, then level off. In a continual downsizing environment it is
    difficult to rejuvenate the workforce. However, this is not considered
    to be a major problem, since the average retirement age for Federal
    workers is approximately 60, and rising. In addition, there is a ready
    and available labor pool should the need arise.
        Although the Navy operates under a number of regulatory constraints
    that limit our ability to control the age of our workforce, we have
    aggressively recruited at major college and university campuses,
    established intern programs, on the job training, and apprentice
    programs.

                              subcommittee recess

        Senator Inouye. With that, we would like to thank you all
    for your participation this morning. The subcommittee will
    stand in recess until Tuesday, May 13 at 10 a.m. At that time
    we will receive testimony from DOD on environmental issues.
        [Whereupon, at 12:40 p.m., Wednesday, May 7, the
    subcommittee was recessed, to reconvene at 10 a.m., Tuesday,
    May 13.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                             TUESDAY, MAY 13, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:01 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens and Inouye.

                             DEPARTMENT OF DEFENSE

                             Environmental Program

    STATEMENT OF HON. ROBERT M. WALKER, ASSISTANT SECRETARY
                OF THE ARMY (INSTALLATIONS, LOGISTICS, AND
                ENVIRONMENT)

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Good morning. Today we are going to focus
    on environmental programs that are managed by the Department of
    Defense, and we welcome the three officials of the military
    services responsible for these programs, the Assistant
    Secretary of the Army, Mike Walker, Assistant Secretary of the
    Navy, Bob Pirie, and the Assistant Secretary of the Air Force,
    Rodney Coleman.
        The fiscal year 1998 budget request for the Department of
    Defense environmental programs is $4.8 billion. In an era of
    diminishing budgets and downsizing, we want to ensure that we
    are good stewards of both our Nation's environment, but also of
    the taxpayer's dollars. This subcommittee has advocated several
    initiatives to improve the management of the Department's
    environmental programs, such as the devolvement and creation of
    restoration advisory boards, or RAB's.
        We are very pleased that the services do feel that these
    need to play a larger role in the administration of this
    program. The coordination and communications with local
    communities impacted by the cleanup projects I think have
    already paid real dividends. Much work needs to be done to
    clean up all of the active and BRAC installations as well as
    the formerly used defense sites, which we call FUDS.
        We want to be a partner in the responsible, effective, and
    well-managed cleanup initiatives, and we at the same time urge
    the Department to join in the fight against waste and excessive
    spending.
        Today, we hope we will receive an update on the status of
    these efforts, and the views of these gentlemen on further
    steps the committee could take to enhance the Department's
    environmental programs.
        Gentlemen, your statements will be made a part of our
    record in full, as though read. We welcome any comments you
    want to make to us today, and let me turn to the vice chairman
    now, Senator Inouye.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. Thank you very much. Secretary Walker,
    Secretary Pirie, and Secretary Coleman, I wish to join my
    chairman in welcoming all of you here. The Department has come
    a long way in the past 10 years in creating a comprehensive and
    result-producing environmental program. It has been a work in
    progress, with DOD and all the services fine-tuning and
    expanding upon both the successes and failures to find the most
    fiscally responsible and acceptable solutions to the
    Department's environmental responsibilities.
        I think all of us will conclude that environmental
    restoration is relatively new ground to most of us. It began in
    earnest only about 20 years ago, with regulations and standards
    continually changing.
        It is pleasing to see the services so amenable to
    constructive criticism and positive change. In fact, over the
    last 3 years you have moved from studying projects to actual
    cleanup and restoration.
        Furthermore, you have taken to heart the concerns of the
    community in developing a system of priorities and joint
    partnerships, and so we are moving in a positive direction in
    which funding is stabilizing, pollution prevention initiatives
    are moving to the forefront, and complete installation
    environmental restoration is actually a goal in our near-term
    sights.
        However, there are still matters that need to be ironed
    out, including the handling of unexploded ordnance, oversight
    of all services' environmental management systems, the cost
    effectiveness of partnering contracts, and the fiscally frugal
    development of new technologies, so I look forward to your
    views this morning.
        Thank you very much.
        Senator Stevens. Gentlemen, I think we should keep in mind
    someone told me once it costs less than $1 billion to maintain
    a division. We are talking about 4\1/2\ divisions here, so the
    money we spend on this program is directly related to the
    reduction in our force structure if we are not careful.
        Secretary Walker.
        Mr. Walker. Thank you, Mr. Chairman, Senator Inouye.
        Mr. Chairman, we are very mindful of exactly what you say.
    For the Army, our program is about $1.6 billion this year. That
    is a great deal of money, and since my report last year before
    this committee we have continued to emphasize innovation and
    efficiency in the program, and I think we have made some
    progress.
        Simply put, I will tell you that our emphasis is in trying
    to get the biggest bang out of the environmental buck. We are
    expanding our partnership with regulators and communities, and
    we continue to refocus the program on pollution prevention,
    because we believe that is the best way to reduce future cost.
        Mr. Chairman, we know that the world's best Army can only
    remain the best if we are able to train. We have to conduct
    realistic and rigorous training, and we are learning how to do
    that every day, to provide soldiers with that kind of training
    while at the same time mitigating potential environmental
    damage.
        We have a very complex environmental program. As I said, it
    is $1.6 billion this year. We have 12 million acres that we are
    stewards of. We have 153 endangered species on Army bases. We
    have 35 Superfund sites, and these are just some of the
    challenges that we face.
        But we are engaged in this complex program not only because
    it is the right thing to do for future generations, but simply
    because it is good business. The less we pollute, the less we
    will have to pay in the future to clean up, so our
    environmental program is an investment in the future
    effectiveness of the Army.

                             Environmental cleanup

        Mr. Chairman, if you read the Army's most recent annual
    financial statement you noted that we believe it will cost us
    an additional $8 billion to clean up all the remaining
    contaminated sites on Army bases. In addition, as you know, the
    Army is the Department of Defense executive agent to clean up
    formerly used sites, or FUDS, for all the military services.
    That cleanup is estimated to be another $5.3 billion.
        Well, $13 billion is an enormous amount of money just to
    clean up past pollution, so we are committed to providing the
    best management possible for the Army's environmental program.
        As Senator Inouye alluded to, 3 years ago, the Army was
    devoting less than 50 percent of its cleanup money to actually
    cleanup. More than 40 percent of the budget was being spent
    just to study cleanup. A lot of lawyers and consultants were
    making a lot of money and there was still pollution in the
    ground.
        Well, in the budget before you, almost 75 percent of funds
    for restoration will be used for actual cleanup. We have cut
    the cost of those studies more than one-half, and we have also
    reduced the amount that we spend for program management from 12
    percent to less than 10 percent, and our goal is to continue to
    reduce management costs until they are well under 8 percent.
        Mr. Chairman, we have also reduced the number of annual new
    enforcement actions from 360 to 221. That is a reduction of
    almost 40 percent in 3 years. We have also reduced the number
    of fines from 51 to 11, and the amount of those fines, what we
    have to pay to regulators from $6.3 million to $400,000. We
    have reduced solid waste by 30 percent, and we have reduced
    hazardous waste by 31 percent, and we are on track to meet the
    statutory deadline for underground storage tanks.
        Since last year, we have petitioned the Environmental
    Protection Agency to take three installations off the Superfund
    list. One of those installations, Senator Inouye, that we have
    petitioned to take off the list is Schofield Barracks in
    Hawaii.
        Mr. Chairman, we are continuing with our plans to take
    innovative approaches wherever possible. As I indicated, last
    year we issued a policy to require that natural attenuation be
    considered at all possible sites that require cleanup. We found
    that we can literally save millions of dollars if we adopt
    innovations such as natural attenuation instead of traditional
    pump-and-treat systems.
        Last year, I also reported that we were testing
    phytoremediation, the use of plants to break down contaminants
    in the soil. Well, based on the tests that we are currently
    undertaking at Milan Army Ammunition Plant in Tennessee, we are
    considering using this technology in Iowa, Hawaii, Kansas, and
    Minnesota.
        We have recently completed a review of weapons systems to
    identify military specifications which require the use of
    hazardous materials, and we have identified more than 1,000
    specifications where nonhazardous materials can be substituted.

                                   Partnering

        Mr. Chairman, I think we all agree that an effective
    environmental program can only succeed if we have the
    confidence of the regulators, and especially if we have the
    confidence of impacted communities.
        Since last year, we have issued a partnering policy memo to
    the field and we have encouraged the development of more
    restoration advisory boards, or RAB's.
        Since last year, we have doubled the number of RAB's in the
    Army. Today we have 48, and we are working with another 25
    communities to establish RAB's before the end of the fiscal
    year.
        Mr. Chairman and Senator Inouye, I believe very strongly,
    as you do, that through partnering we can have a more viable
    and a more cost-effective environmental program. We certainly
    found that true at Fort Bragg this year when we signed an
    agreement with the Fish and Wildlife Service on the red-
    cockaded woodpecker, an agreement that freed up 7,000 acres of
    training land, an agreement that will assure that the 82d
    Airborne Division will be able to maintain readiness while at
    the same time protecting the habitat of that endangered
    species.
        We are finding that partnering works everywhere we make an
    effort. At Fort Riley and Fort Campbell we are routinely
    inviting regulators to participate with us to review
    environmental action plans at those bases, and we found that
    partnering especially worked at Rocky Mountain Arsenal when we
    signed the record of decision in June of last year, which
    significantly cut projected cost of that most complex defense
    cleanup.
        We know that establishing partnerships builds trust. It
    lays the foundation for cost-effective cleanups, and one of the
    best examples of partnering just happens to be in Alaska, Mr.
    Chairman. The Army gave its environmental cleanup award to Fort
    Wainwright this year because of that partnering effort. They
    developed there a one-of-a-kind, a very successful restoration
    program that is actually grounded in a close communication with
    the local community and with partnering with Federal and State
    regulators.
        I believe that the success of the Army's environmental
    program in Alaska, in Hawaii, and throughout the Army is due to
    the professionalism of thousands of soldiers and civilians in
    the Army, so if you will permit me on behalf of Secretary West
    I would like to recognize their hard work and dedication, and I
    thank them for their efforts.

                               prepared statement

        So, Mr. Chairman, again I thank you for the opportunity to
    provide this report on the Army's environmental program, and I
    look forward to your questions.
        [The statement follows:]
                  Prepared Statement of Hon. Robert M. Walker
        Mr. Chairman and Members of the Committee: It is a pleasure to come
    before the subcommittee today to discuss the Army Environmental
    Program. The Army's Environmental Program includes military and civil
    responsibilities. My testimony will address the military environmental
    program requirements, the Army's commitment to environmental
    stewardship, our vision for the future, and our accomplishments to
    date.
                         army environmental commitment
        The Army's Environmental Program serves two primary functions: (1)
    it is essential to military readiness and quality of life for our
    soldiers; and (2) it fulfills a public trust to manage funds in natural
    and cultural resources in accordance with Federal, state and local
    laws. Our focus is on improving business practices, preventing
    pollution before it occurs, complying with laws and regulations, and
    conserving natural and cultural resources, while continuing to clean
    polluted ``active sites'' and closing bases.
        Business processes are being improved through continuing strategic
    planning, reinvention, refocusing organizational roles and missions,
    emphasizing pollution prevention, partnering with the public and other
    governmental agencies, and using new technologies.
                           mission essential support
    Readiness
        Our soldiers value the land on which they train. In no other
    military service is mission success so closely linked to the land. The
    Army must provide soldiers with tough, realistic, battle-focused
    training in preparation for a wide variety of missions. Our commitment
    to environmental stewardship supports readiness through: Conserving
    training lands, preventing pollution, complying with laws and
    regulations, partnering with local communities, and cleaning up
    contamination at active sites.
    Force Modernization
        Modernization is essential for the Army as it prepares to enter a
    new century. The Army's modernization strategy enhances our soldiers'
    warfighting capabilities and their ability to survive in combat by
    taking advantage of technology and state of the art weapon systems. An
    important part of this strategy is to design weapon systems in a manner
    that reduces the generation of wastes and minimizes pollution during
    their life-cycle.
        The Army has expended a great deal of effort and resources during
    acquisition to replace toxic and hazardous substances with more
    environmentally friendly materiel. Through our use of new technologies
    and material substitution we intend to reduce the generation of waste
    throughout all phases of the acquisition process beginning with concept
    development and continuing through final disposal. In 1996 the Army
    completed its review of weapon system documentation under Executive
    Order 12856 to identify military specifications that required the use
    of hazardous materials. This year we began the revision process of
    identifying acceptable substitute materials and in 1998 we will
    implement recommendations. The Army's acquisition program managers are
    committed to integrating pollution prevention into the acquisition
    process. They recognize that the most cost effective way to manage
    waste is to avoid generating it. Environmental support of force
    modernization and acquisition includes: Life cycle environmental
    analysis, compliance with the National Environmental Policy Act (NEPA),
    and aggressively pursuing opportunities to integrate pollution
    prevention into the Army's acquisition program.
    The Public Trust: Environmental Stewardship
        The Army has an obligation to soldiers and their families,
    surrounding communities, the nation and to future generations to care
    for the environment and resources that have been entrusted to us. The
    Army is committed to this obligation. Army stewardship responsibilities
    include: Managing 12 million acres of land, protecting a half million
    soldiers and their families, protecting 153 endangered species of
    plants and animals, managing more than 36,000 known cultural resource
    sites, ensuring cleaning up of DERA, BRAC, and FUDS sites, and
    complying with all federal, state and local laws.
                   the army's fiscal year 1998 budget request
    Fiscal Year 1998 Environmental Budget
        I've indicated the approaches and major areas of innovation we will
    apply to keep Army environmental programs tightly focused and
    responsive to national policy and law. The Army Environmental Program
    is directed at supporting warfighting and other specialized missions by
    enhancing the training environment, removing environmental threats to
    soldier health at home and on the battlefield, removing compliance
    distractions from commanders' shoulders and fostering continued
    national support for an environmentally attuned Army.
        We are determined to do what we must do now to accomplish urgent,
    current requirements expeditiously before costs escalate, particularly
    in the two high expense areas of compliance and contaminated site
    restoration. We are further determined to accomplishing work of coming
    years with effectiveness and resource efficiency. To that end, we must
    apply the management process change, technology transfer and pollution
    prevention groundwork. This budget provides for lean, but effective
    program implementation and investment in both corrective and preventive
    actions to continue eliminating past problems and preventing future
    ones.

                              DEPARTMENT OF THE ARMY FISCAL YEAR 1998 ENVIRONMENTAL BUDGET
    ----------------------------------------------------------------------------------------------------------------
                                                              Fiscal year 1996   Fiscal year 1997   Fiscal year 1998
                                                            --------------------------------------------------------
                                                              Amount   Percent   Amount   Percent   Amount   Percent
    ----------------------------------------------------------------------------------------------------------------
    Technology.............................................      40.3       2       64.2       5       30.4       2
    Prevention.............................................      80.1       5       72.7       5      108.3       7
    Compliance.............................................     582.6      34      572.3      40      606.7      39
    Conservation...........................................      54.6       3       30.8       2       49.6       3
    DERA:
        Army...............................................     416.3      24      338.8      24      377.3      24
        FUDS...............................................     209.4      12      256.1      18      202.3      13
    BRAC...................................................     345.7      20       85.9       6      198.6      13
                                                            --------------------------------------------------------
          Total............................................   1,729.0     100    1,420.8     100    1,573.2     100
    ----------------------------------------------------------------------------------------------------------------

        It is critical to continue moving forward on: Defense Environmental
    Restoration Account (DERA), DERA-Formerly Used Defense Sites and Base
    Realignment and Closure, which are all concerned with returning
    precious land resources to productive use. We have turned the corner,
    the pace of actual cleanup is accelerating, in response to
    congressional pleas to get past the studies and on with the work. These
    three areas constitute 50 percent of the budget, a 14 percent increase
    from the 1997 budget, and are the non-negotiable legacy of former
    times, that we must resolve.
        The Compliance item, at 39 percent of the requested budget, a 6
    percent increase from the 1997 budget, pays for direct responses to
    legislated requirements that are not voluntary on the Army's part. We
    must fix the things regulators say are broken, and we must install the
    programs, renovations and new facilities mandated by current law and
    regulation to meet deadlines. Otherwise we will face new rounds of
    expensive, legal actions to force compliance. We routinely include a
    maximum of cost-saving, cost avoiding and pollution preventing features
    in compliance remedies to keep overall compliance costs down.
    Nevertheless, the Army also has to invest the requested technology and
    pollution prevention dollars in physical plants, processes and materiel
    as cost-effective ways to indirectly reduce waste generation that would
    otherwise manifest itself ``down stream'' in the form of pollution and
    entail costly mitigation costs.
        Additionally, pollution prevention (limits exposure) and
    conservation (integral to quality training and stewardship
    responsibilities) both support readiness. Pollution prevention reduces
    risks of soldier illness at critical times in training and deployment.
    Conservation ensures high quality training realism that is critical to
    survival and victory on the battlefield. The budget increase for
    pollution prevention is almost 34 percent from 1997 to 1998, indicating
    the shifting emphasis from reaction to prevention. The budget for
    conservation increased 61 percent increase from 1997 to 1998. All
    requested line items in the table are in balance with the others.
    Elimination or reduction of any will seriously harm achievement of the
    entire suite of national environmental policies and goals to which the
    Army is mandated to respond.
                      program management and organizations
    Management
        Goals of the Environmental Program include the improvement of
    business processes to include planning, execution, and measuring
    program performance. The revised Army Environmental Strategy continues
    to focus on improving management and leadership, integrating
    environmental responsibilities into planning, training, operations, and
    acquisition while highlighting pollution prevention, employing new
    technologies and increased use of partnerships.
    Integrating Environmental Stewardship into the Army Mission
        The Army has developed comprehensive guidance for integrating
    environmental considerations into Army training and operations. The
    Army's Environmental Training and Doctrine Action Plan (ETAP) develops
    an aggressive, systematic approach to address environmental issues in
    the same way that the Army addresses any new operational challenge or
    weapons system. This plan represents a significant milestone towards
    accomplishing the difficult goal of conducting training while
    exercising sound environmental stewardship practices.
        The Army's Integrated Training Area Management (ITAM) program
    integrates training land needs with sound land management principles.
    Land management and conservation ensure the long-term availability of
    land for tough, realistic training needed to achieve military
    readiness. ITAM helps the Army make smart decisions as we plan,
    develop, and operate our training ranges and maneuver areas. There is
    further discussion of ITAM's contribution later in the Conservation
    section.
        Another important Army initiative supporting readiness is the
    Theater Army Medical Laboratory (TAML) recently activated in 1995. The
    TAML helps identify and evaluate health hazards in the area of
    operations through unique medical laboratory analyses and rapid health
    hazard assessments of nuclear, biological, chemical, endemic disease,
    occupational health and environmental health hazards. By knowing
    regional and localized contamination problems prior to deployment, the
    Army can better protect its soldiers and equip them to do their jobs to
    protect American interests overseas.
    Cost-Effectiveness through Pollution Prevention
        The Army's strategy will focus on pollution prevention to reduce
    the cost of environmental compliance. This strategy includes the ENVEST
    initiative, which provides procedures for improvement suggestions at
    the installation level; designing new processes, substitution of non-
    hazardous materials for those that are hazardous; recycling and reuse
    of wastes; education and awareness training; and the development of new
    materials and using new technologies when possible.
        The Army leadership promotes pollution prevention by recognizing
    success and sharing lessons learned. The Army uses annual Environmental
    Lessons Learned Workshops as a vehicle for sharing information and
    improving business practices. The workshops break out into small
    workgroups to discuss innovative approaches to implement business
    practices that result in significant cost savings and pollution
    prevention.
        Pollution prevention requires innovative thinking. To encourage
    innovative thinking, the Army provides opportunities for our workforce
    to step out of the box to examine their processes and procedures from a
    different perspective. The Army participates in the National Conference
    of the American Planning Association and in the Joint Federal Planners
    Workshop in order to partner and share lessons learned with the Air
    Force, Navy, other federal agencies, and the public. This type of
    planning and information sharing results in continuous process
    improvements. Exchanging perspectives on environmental issues in
    workshops such as these, provides an opportunity for the Army to build
    bridges between our installations and members of local communities.
    Army Environmental Quality Technology (EQT)
        The Deputy Assistant Secretary of the Army for Environment, Safety,
    and Occupational Health co-chairs the Environmental Technology
    Technical Council (ETTC). This Council provides management oversight of
    environmental technology with a view to using technology to achieve
    Army environmental objectives. One of the objectives of this technology
    program is to integrate environmental factors into the acquisition
    process. The goal is to achieve, through technology, environmentally
    compatible systems and installations without compromising readiness or
    training.
        In response to users' environmental requirements, the EQT program
    is structured around the following thrusts: energetic materials and
    processes; sealants and adhesives; organic coatings and removal;
    cleaning and degreasing; reduction of low level radioactive wastes;
    plating and metal finishing; batteries and alternate energy sources;
    packaging; textiles, composites and automotive/petroleum products; and
    life cycle environmental cost assessments and modeling. These efforts
    can significantly eliminate toxic materials, reduce volatile organic
    compounds (VOC's), and eliminate ozone depleting chemicals by
    addressing pollution at the source. Current ``green initiatives''
    underway address the elimination of lead in small caliber ammunition,
    elimination of toxics and reduction of solvents used in the manufacture
    of missile propellants, and reduction of VOC's in the formulation and
    application of Chemical Agent Resistant Coatings (CARC paint). Planned
    fiscal year 1998 efforts include Green Gun Barrel (elimination of
    chromium plating wastewater) and Green Packaging (minimization of
    hazardous and non-hazardous solid wastes).
        Last year the Army announced that Milan Army Ammunition Plant, TN
    is field testing phytoremediation, the use of certain species of plants
    to break down contaminants in soil. This field test was successful, and
    we are now considering the use of this technology at ammunition plants
    in Hawaii, Iowa, Kansas, and in Minnesota at Twin City Army Ammunition
    Plant. Last year I also discussed the use of natural attenuation at the
    Sierra Army Depot. Following up on this success, the Army recently
    issued an interim policy encouraging the consideration of natural
    attenuation at all cleanup sites as an alternative to costly cleanup
    methods such as groundwater pump-and-treat systems.
    Partnerships
        Next, I would like to discuss an important element of our revised
    strategy, the establishment of partnerships. Partnerships, or
    cooperative teamwork, expedite implementation, improve cost-
    effectiveness, and enable us to anticipate and prevent conflict. Army
    partnering efforts have evolved dramatically over the past year. In
    July 1996, the Army, as the leader of the Tri-Service Committee,
    published the ``Partnering Guide for Environmental Missions of the Air
    Force, Army, and Navy.'' This guide has been distributed Army-wide and
    will be available on the World Wide Web. In addition, an ``Army
    Partnering Policy Memo'' issued to the field this year endorses
    partnering at the policy, program and project level with federal,
    state, and local agencies, the regulatory community, tribes, non-
    governmental organizations, and the general public. One example of
    significant partnering is the agreement between the Army, other federal
    agencies, and the State of Alaska, which establishes pollution
    prevention as the preferred environmental strategy, and fosters the use
    of innovative pollution prevention technologies. Several other
    excellent examples can be found within the Restoration section.
        International.--Internationally, the Army has been a partnering
    leader for many years through theatre commander outreach programs in
    Europe, Central and South America, and Asia. More recently, the Army
    has supported DOD's preventive defense initiative to enhance regional
    environmental security. This effort established environmental
    collaborations with the Hungarian and Czech Republic Ministries of
    Defense, and included a collaborative pollution prevention opportunity
    assessment at Hungary's premier fighting base in Kecskemet. We believe
    that these relationships are important for building stronger bonds with
    other militaries. This not only helps build trust and understanding
    between individuals, the very foundation of sound diplomacy, but also
    support each element of our National Military Strategy--enhancing our
    security, supports our economy, and promoting democracy.
        Other Federal Agencies.--The Army has maintained a long standing
    program with EPA to provide liaisons with various offices. HQ EPA and
    my office are currently exchanging a person for each office.
    Additionally the U.S. Army Environmental Center (USAEC) has formal
    partnerships with six federal agencies that enable the Army to be a
    more effective manager of natural and cultural resources. This type of
    partnering fosters a mutual understanding of each officials role in the
    environmental arena. This win-win situation enhances the ability to
    develop environmental policies that are cooperative and cost-effective.
        DOD Regional Environmental Offices (REO's).--The Army is executive
    agent for managing four REO's established to support the Army/DOD
    mission through coordination, communication, and facilitation of
    regional environmental issues and activities. As a critical link in
    facilitating partnering initiatives, the REO's are directly supporting
    the DOD Range Rule and Munitions Rule partnering initiative with the
    states and tribal communities by providing open and continuous
    communication among all parties during review of DOD's draft
    regulation.
        The REO's have been invaluable in identifying and resolving issues
    between installations and regulators. In May 1997 the Southern REO is
    co-hosting ``Progress through Partnering'' the second DOD and EPA
    Region IV annual meeting. It promotes further partnership formation
    among military installations, the Regional EPA, the states, and local
    communities. The Central REO has promoted better business practices and
    increased communication between the DOD/Army installations and
    regulators within the region. This interaction has resolved regional
    issues around land easements, Record of Decision (ROD) review and
    remedial action prioritization. The Western REO has hosted roundup
    meetings, enabling installations to understand the impact of evolving
    legislation and regulations, and thus facilitating planning, budgeting,
    and programming efforts. The Northern REO has provided partnering
    training to its installations within its region to fulfill the spirit
    of true implementation of the ``Partnering Guide for Environmental
    Missions of the Air Force, Army, and Navy.'' Overall the REO's have
    served as the Army's catalyst to approach environmental issues with
    regional partnering.
        Army Environmental Policy Institute (AEPI).--AEPI supports
    management of Army environmental issues, and identifies concerns the
    Army will face in the future. AEPI has enhanced attainment of Army
    environmental mission goals by partnering with federal government
    agencies, major research institutions, and Historically Black Colleges
    and Universities and Minority Institutions (HBCU/MI's). AEPI has formal
    memoranda of agreement (MOA's) with Clark Atlanta University (CAU) and
    Georgia Institute of Technology, enabling the Army to obtain unique
    expertise. CAU evaluated Environmental Justice (EJ) issues at three
    installations: Ft. McClellan, Memphis Defense Depot, and Oakland Army
    Base. This analysis serves as the basis for recommended guidance on
    incorporating environmental justice into the Army NEPA process. AEPI is
    partnering with CAU to develop an Army environmental justice training
    manual for use at Army installations.
        AEPI has partnered with DOD and other services to produce a multi-
    service video on EJ. The video uses ``real life'' examples of on-going
    activities at military installations addressing environmental justice
    issues (e.g., Restoration Advisory Boards, Local Reuses Authorities,
    etc.). The video focuses on public involvement and outreach; Native
    American issues; subsistence fishing, farming and gaming; and
    environmental impact assessments.
        AEPI has also initiated a study with the Army War College on
    managing environmental issues in contingency operations, such as Bosnia
    or Somalia. This study will improve decision-making and will help
    prevent international legal and political problems as well as promote
    standards for protection of U.S. personnel.
        Though the use of AEPI's unique ability to reach out to these
    organizations for partnerships, the Army has been able to utilize the
    Nation's best experts in its strategic planning and policy studies.
    These partnerships provide the Army an ability to anticipate
    impediments and to develop cost-effective solutions to address
    environmental issues.
                  overview of the army's environmental program
        In 1992, the Army Environmental Strategy into the 21st Century
    divided Army environmental responsibilities into four pillar areas:
    Pollution Prevention, Compliance, Conservation, and Restoration
    (Cleanup). Before I discuss our budget request, I will provide a brief
    overview for each of these areas. Later I will provide a detailed
    discussion of our accomplishments and new initiatives for each pillar.
        Pollution Prevention focuses on how to eliminate pollution to the
    greatest extent possible through the elimination or modification of
    processes that generate wastes. Some examples of pollution prevention
    initiatives include substituting non-toxic materials for hazardous
    materials, giving a preference to recycled or recyclable materials in
    procurement, and encouraging recycling to reduce the waste stream. The
    Army recognizes that pollution prevention is clearly the best long-term
    solution for reducing risks to human health and the environment from
    pollution and is the most cost effective approach. The Army is
    instilling an environmental ethic in soldiers of all ranks and
    supporting pollution prevention by changing its behavior to avoid
    future compliance and restoration problems.
        Compliance recognizes the Army's responsibility to comply with all
    federal, state, local, Army, and applicable host-nation environmental
    requirements. This is a challenging task, but one that has the total
    commitment of the Army leadership. The Army accepts its responsibility
    as a federal agency to comply with all federal laws and accepts its
    obligation as a member of the local community to comply with state and
    local requirements. Command emphasis on compliance at our installations
    has significantly reduced the dollar amount of assessed fines/penalties
    and number of enforcement actions brought against them.
        Conservation focuses on managing our natural and cultural resources
    to enhance the quality of life and to support readiness. Implementing
    sound land management practices maximizes the long-term availability of
    our lands for realistic field training exercises. While force
    modernization is increasing the Army's requirement for land to support
    training, the availability of land for this purpose is decreasing. It
    is an Army imperative to ensure that the tough, realistic training
    needed to achieve military readiness is balanced with the important
    requirement to preserve and enhance our limited land resources for
    long-term use.
        Restoration focuses on cleaning up contaminated sites in order to
    protect the health and safety of our soldiers, their families, and the
    residents of the local communities surrounding our installations. The
    Army cleanup program consists of active sites, Base Realignment and
    Closure (BRAC) sites, and Formerly Used Defense Sites (FUDS). We
    continue to use risk analysis and innovative technology to determine
    the most efficient and cost effective remedial alternatives.
        As we move forward with our new vision and strategy it is important
    to acknowledge the solid accomplishments of the Army during the past
    year. While maintaining readiness, the success of the Army's
    environmental program, in pollution prevention, compliance,
    restoration, and conservation, is due to the dedication and hard work
    of our soldiers and civilians.
                              pollution prevention
        The Army recognizes that pollution prevention (P\2\) is clearly the
    most efficient and effective long-term solution for reducing risks to
    human health and the environment. The Army is making a paradigm shift
    from the end-of-pipe compliance to eliminating or reducing pollution at
    the source. The Army is actively partnering with other federal agencies
    and regulators to institutionalize P\2\ as the preferred environmental
    protection strategy to meet compliance requirements.
    Budget
        In order to maintain our current focus on development of pollution
    prevention initiatives, integration of environmental issues throughout
    the Army readiness program, innovative technologies, and establishment
    of partnering programs to gain significant savings and improve
    effectiveness and efficiency, the Army requests $108.3 million for its
    fiscal year 1998 pollution prevention program.
    P\2\ Strategy and Prioritization
        Major Command-level Army Pollution Prevention Business Investment
    Strategies are in development. The Army will begin collecting cost and
    benefit data for all P\2\ projects in our annual Environmental Program
    Requirements (EPR). Beginning in the fall of 1997, this report will be
    used to assist in establishing priorities for applying limited
    resources.
    Integration in Acquisition
        The Army also is aggressively pursuing acquisition reform and the
    integration of acquisition P\2\ into all phases of the Army's
    acquisition program, from concept development to final disposal.
        In 1996, the Army completed reviewing weapon system documentation.
    To prevent pollution and reduce environmental costs by substituting
    safe material for hazardous materials, the Army must modify 1016
    specifications and 4,300 unique applications. The Army Acquisition
    Pollution Prevention Support Office (AAPPSO) provides centralized
    program management for hazardous material (HAZMAT) elimination in
    acquisition. AAPPSO developed a methodology to review and revise
    technical documentation mandated under Executive Order 12856 and
    isolated a list of military specifications and standards that still
    require hazardous materials. The Army extended the methodology to
    review other key forms of weapon system documentation and is
    incorporating the results into a single integrated effort.
        For example, the Program Manager, Bradley Fighting Vehicle Systems
    (PM BFVS), MI incorporated the Bradley Program Pollution Prevention
    Program into the Bradley Program Environmental Planning Guide. The PM
    BFVS has successfully integrated the environmental ``cradle to grave''
    process and developed Life Cycle Environmental Documents for the BFVS
    A2, BFVS A2 Operation Desert Storm, Command and Control Vehicle, and
    Bradley Fire Support Team Vehicle weapons systems. The PM BFVS finished
    reviewing all required uses of hazardous materials in fourth quarter
    fiscal year 1996 and will start identifying alternate materials in
    fiscal year 1997.
        National Defense Center for Environmental Excellence (NDCEE).--The
    National Defense Center for Environmental Excellence (NDCEE) supports
    the Army and DOD in analyzing environmental consequences of major DOD
    acquisitions. Support included requirements analysis, validation of
    Pollution Prevention technologies, and environmental cost analyses.
        The NDCEE is involved in supporting the Army and DOD in a number of
    important areas. An example is the successful Joint Group on
    Acquisition Pollution Prevention (JG-APP) Program. The focus of the JG-
    APP initiative is to integrate pollution prevention issues and
    alternatives acceptance into a commonly shared point in the acquisition
    process--the contractor location.
        The JG-APP Objectives are to reduce or eliminate hazardous
    materials, foster joint services cooperation, provide single interface
    to weapon systems program managers, and to provide a bridge to the
    Sustainment Community.
    Installation Operations
        At the installation level, the Army has made fundamental
    adjustments to move away from end-of-pipe treatment and control of
    waste, revising policies where possible to eliminate processes and
    activities that generate wastes or emissions.
        Pharmacy Concept for Issuance of Hazardous Materials.--The Army is
    in the process of implementing the DOD ``pharmacy'' concept
    (centralized hazardous waste and materials management). This program
    improves material management practices while meeting environmental
    listing and reporting requirements for hazardous materials/wastes.
        Hazardous Substance Management System (HSMS).--HSMS is the DOD
    standardized automated hazardous substances tracking system to automate
    the management and implementation of the pharmacy concept. HSMS was
    deployed to four sites in 1996. In 1997 we will field HSMS at several
    sites. One shining example is Fort Campbell's (KY) operational
    Hazardous Material Control Center (HMCC) with HSMS at five satellite
    locations, supports a geographically dispersed host of units. This
    management system was implemented in the fort's Aviation Brigade. Also
    created was a post-wide inventory and substitution program, shelf-life
    management and rotation program, and centralized recycling operations.
        P\2\ Planning and Execution.--Fort Lewis, WA built evaluation and
    feedback into its P\2\ program. The program prioritizes P\2\ products,
    extends a broad outreach to all installation organizations, and applies
    high quality technical solutions to minimize waste streams. The plan
    resulted in 95 percent reduction in paint booth waste with a savings of
    $236,000 annually. Fort Lewis also saved $2 million in 1995 from a
    variety of P\2\ process modifications, including $175,000 annually from
    its used oil waste management program and fuel reclamation program.
        Broad Spectrum Technology Application.--Corpus Christi Army Depot
    (CCAD), TX implemented a broad array of P\2\ technologies and process
    modifications, providing savings of over $6 million annually. CCAD's
    hazardous material control program saves $2.3 million a year. These
    successes are attributed to CCAD's excellent working relationship with
    regulatory agencies.
    Toxic Release Inventory
        To meet the requirements of Executive Order 12856 (Compliance with
    EPCRA and Pollution Prevention), the Army will publish a Toxic Release
    Inventory (TRI) Strategy the third quarter of fiscal year 1997. The
    strategy incorporates weapon system and installation P\2\ initiatives.
    The Army reduced its toxic releases 30 percent from 1994 to 1995.
    Examples of installations that implemented process modification P\2\
    initiatives and reduced reportable TRI releases are:

                        Installations                                           Actions/Results

    Forts Campbell (KY), Hood (TX), and Lewis (WA).  Contracts to recycle antifreeze.
    Fort Hood, TX..................................  Various with total TRI reduction of 21 percent.
    Alaskan Installations..........................  ``Smart washers'' using non-toxic, non-flammable degreasing
                                                      agent.
    Anniston Army Depot, AL........................  Various, including high power pressure washers in lieu of vapor
                                                      degreasers. Reduced TRI, despite increased production levels.
                                                      Planning further reductions by changing paint stripping
                                                      operations. Total TRI reduction of 22 percent.
    Letterkenney Army Depot,  PA...................  Initiated elimination of primers with hazardous air pollutants
                                                      and volatile organic compounds (VOC's).
    Aberdeen Test Center at Aberdeen Proving         Firing Impulse Simulator enables test firing without using live
     Ground, MD.                                      rounds, thus reducing noise and powder emissions. Installed
                                                      full scale ``Superbox'' for total capture of all emissions and
                                                      wastes from large caliber live fire testing.
    Aberdeen (MD) and Yuma (AZ) Proving Grounds....  Installed Depleted Uranium (DU) Catch Boxes to capture DU
                                                      projectiles during soft target testing.
    Corpus Christi Army Depot,  TX.................  Ozone Depleting Chemical (ODC) Solvents Elimination Program.
    Tank-Automotive Res., Dev. and Engineering       Halon (an ODC) Elimination Program. Substitute identification
     Center, MI.                                      almost completed will reduce risk to mission and costs.

    Recycling
        Army policy mandates recycling. In 1994, the Army achieved its 1999
    solid waste recycling goal, five years early. I am pleased to report an
    over 100 percent increase in recycling in 1996 from 1992. A 1996 survey
    of all Army installation reports that over 90 percent have or
    participate in recycling, over 70 percent operate a formal ``qualified
    recycling program'', the average recycling rate is approximately 22
    percent of the total waste stream, and an average of $250,000 is saved
    annually.
        Army recycling efforts emphasize waste stream reduction, closed-
    loop approaches, resale of materials, and innovative technology
    developments. Tobyhanna Army Depot, PA, received the Army's 1996
    recycling award. Their accomplishments as well as some other
    installation achievements are listed below.

                        Installations                                           Actions/Results

    Tobyhanna Army Depot, PA.......................  Reduced solid waste by 70 percent eliminating need for 90,000
                                                      cubic yards of landfill space. Implemented Residual Waste
                                                      Source Reduction strategy prevented 205 tons of waste and
                                                      saved $20,090 in fees. Implemented technology to recycle coal
                                                      fly ash to encapsulate coal mine refuse and prevent drainage
                                                      into area streams saving $25,000 annually.
    Fort Hood, TX..................................  Implemented 3-tier recycle incentive program. Recycled
                                                      13,000,000 lbs in five years with savings of $1 million
                                                      annually. Programs integrated into various military and civil
                                                      activities.
    Fort Carson, CO................................  Instituted ``closing the loop'' recycling regulation
                                                      integrating recycling into procurement.
    Fort Irwin, CA.................................  Instituted technology recycling contaminated soil in paving
                                                      saving $500,000.

                                   compliance
        The new vision for our Compliance program is to achieve
    environmental compliance through a proactive pollution prevention
    program. Pollution Prevention has been and continues to be the
    preferred means of achieving compliance. In the past, we have focused
    on engineering end-of-pipe solutions and reactively complying to a
    strict set of regulations and standards imposed on us by states and the
    Federal Government. The nature of our military operations and
    industrial support for our maintenance and manufacturing activities
    necessarily includes the use of hazardous materials. We know that these
    materials can increase cost and impose compliance obligations. In
    addition, restraints on our access to training areas, because of a
    breach of environmental standards, impact our military readiness. The
    Army is continuing to develop innovative pollution prevention
    initiatives; however, we still have many issues that must be resolved
    by our compliance program.
    Budget
        The Army requests $606.7 million for fiscal year 1998 compliance
    program costs. Funding will be used for upgrading infrastructure such
    as drinking water and waste water treatment plants, and meeting new
    Clean Air Act (CAA) requirements; and recurring costs such as permits,
    management and administration, corrective action, monitoring, manpower,
    and hazardous waste management and disposal.
    Reporting and Monitoring
        The Army has developed a reporting and monitoring system to ensure
    that installations are managing environmental requirements properly.
    The Environmental Compliance Assessment System (ECAS) initiated in
    1992, is being updated for the third time and the Installation Status
    Report (ISR), Part II (Environment) initiated in fiscal year 1996, will
    be revised this year.
        ECAS.--ECAS, involving external and internal assessments, allows
    Army commanders to identify environmental compliance deficiencies and
    develop corrective actions to address the deficiencies. The ECAS
    program is continuously reviewed and improved to streamline the process
    and enhance the quality and usefulness to installation commanders. The
    Army has initiated planning for the third revision of ECAS, ECAS III
    which will be used in fiscal year 1998 with many improvements. ECAS III
    will integrate pollution prevention measures into the compliance
    assessment process, develop an improved programmatic evaluation
    approach within the assessment, improve Reason and Root Cause
    determination and develop a tier structured format of causation,
    consider feasibility of the International Standards Organizations (ISO)
    14001 concepts being integrated into the Army ECAS process, and evolve
    Army ECAS software into a more user-friendly Windows format.
        ISR.--The ISR is a status reporting system that established Army-
    wide standards to assess environmental compliance and program
    performance. The ISR provides a summary of the environmental condition,
    measurement of environmental mission impacts, and report on resource
    shortfalls and outcomes. The Army fielded ISR Part II to all CONUS
    installations in fiscal year 1996. During fiscal year 1997, we will
    field test newly developed standards that are more quantitative and
    specific. These modifications will allow the Army to capture the macro-
    level status of the environmental programs at Army installations to
    improve the justification and prioritization of limited resources.
    Enforcement Actions
        The Army's commitment to environmental compliance has resulted in a
    significant reduction in the number of enforcement actions (ENF's)
    brought against our installations. The results exceeded the fiscal year
    1996 goals. The Army contributes much of this success to the management
    of the ECAS program. As a result, the Army has achieved a significant
    reduction in its assessed fines. From fiscal year 1994 through fiscal
    year 1996, the dollar amount of the fines has decreased by 94 percent
    and the number of fines has decreased by 62 percent. From fiscal year
    1994 to fiscal year 1996, new ENF's have been reduced by 39 percent.
        Fort Campbell, KY.--Fort Campbell's environmental division looked
    for common causes of compliance problems and developed a long range
    plan to minimize the impact of post operations on the environment and
    to overcome the installation's history of violations. Fort Campbell
    identified the root cause of most violations and negative environmental
    impacts as poor training and/or lack of knowledge. Fort Campbell
    developed an environmental management program which also fit in Army
    organizational constraints.
        Partnering Initiatives.--The Army has established many important
    partnerships with state, local, and regulatory agencies, and other
    organizations to achieve compliance requirements or improve
    performance.
        The U.S. Army Soldier Systems Command (SSCOM).--SSCOM environmental
    staff have teamed with researchers to produce a practical training
    manual for environmental and safety compliance. SSCOM developed a
    ``Seven Step Solution'' to integrate environmental protection
    considerations and safety into laboratory practices, which they are
    sharing with high schools, colleges, and universities.
        Fort Carson, CO.--Fort Carson is working with Colorado regulators
    to resolve particulate matter and opacity concerns. This relationship
    resulted in an operating agreement between the state and the
    installation allowing limited fog oil training as long as a strict Fort
    Carson Standard Operating Procedure (SOP) is followed.
        Aberdeen Proving Ground (APG), MD.--APG has a Memorandum of
    Understanding with the State of Maryland Department of the Environment.
    This is a cooperative agreement to foster sound environmental
    stewardship in the ecologically sensitive upper Chesapeake Bay.
    Privatization
        The Army is seeking regional solutions to installation water
    issues. The Army is also initiating privatization efforts for utilities
    where feasible and cost effective. The privatization program ranges
    from partial to complete divesting of water treatment operations.
    Facilities can be contracted or services purchased from off-post
    sources. In a privatization, the installation attempts to transfer both
    ownership and operation/maintenance of Army utility plans and system to
    a municipal, private, local, or regional utility authority. The end
    result being major reductions in the cost of operating and maintaining
    the utility systems while ensuring the highest levels of environmental
    compliance. Major Commands and installations have identified a total of
    45 drinking and wastewater privatization initiatives for funding
    through fiscal year 2001 and have funded 18.
    RCRA Implementation
        As the DOD executive agent for Resource, Conservation and Recovery
    Act (RCRA) implementation issues, the Army has analyzed several EPA
    initiatives which may have significant impacts on DOD installations.
    The Army chairs the DOD Hazardous Waste Management (HWM) subcommittee.
    The HWM has developed the ``RCRA Rule Matrix'' to track concurrent RCRA
    related rule-makings and initiatives. Some of the more important
    rulemakings for which comments have been prepared include the Land
    Disposal Restrictions Phase IV, the Hazardous Waste Identification Rule
    for process waste, the Hazardous Waste Identification Rule for
    contaminated media, the hazardous waste combustor rule, and an advanced
    notice on RCRA corrective actions.
        The Army is working to reduce RCRA Part B permitting expenses by
    requiring a ``Needs Analysis'' (AR 200-1 and DA PAM 200-1) to justify
    the pursuit or renewal of any Treatment, Storage, Disposal (TSD)
    permit. New or renewed RCRA Part B permits will require HQDA approval.
        The Army is on track to meet its December 1998 statutory deadline
    of RCRA-I regulated Underground Storage Tank compliance. The Army is
    also on track to meets its 1999 solid waste disposal reduction goal.
    There has been an approximate 30 percent reduction of solid waste
    disposal from 1992 to 1995 as a result of pollution prevention
    recycling and source reduction efforts. The Army has achieved a 31
    percent reduction in hazardous waste since 1992.
    Military Munitions Rule
        The Army is the DOD Lead Agent for coordinating with EPA on the
    implementation of the Military Munitions Rule (MMR) and for development
    of the DOD Range Rule. The MMR was signed on February 3, 1997 and will
    become effective August 12, 1997. The establishment of the DOD
    Munitions Rule Partnering Team allowed the Army to successfully educate
    state, tribal, and interest group representatives on DOD management of
    munitions with on-site visits to installations.
    DOD Range Rule
        The DOD Range Rule will set forth the process for evaluating and
    responding to unexploded ordnance at closed, transferred and
    transferring military ranges. The Army and service and DOD
    representatives have been coordinating with other federal agencies
    (principally the Departments of Agriculture and Interior) over the
    language for the DOD Range Rule. In November 1996, the services began a
    partnering effort with state, tribal and interest group representatives
    (similar to that conducted on the MMR) to seek their input/concerns
    regarding the DOD Range Rule. Although the original schedule was to
    promulgate the DOD Range Rule in conjunction with the EPA MMR, the
    timeline for the Range Rule has been delayed to permit more time for
    the partnering effort with the states. The Army/DOD now plans to
    propose the Range Rule in the Federal Register in the summer of 1997,
    with final promulgation by the spring 1998.
    Environmental Awards
        The Army has recognized two Army installations for their
    outstanding environmental quality programs by awarding them the 1996
    Environmental Quality Award. Fort Eustis demonstrated its effective
    environmental program as a leader in environmental stewardship through
    its implementation of innovative programs and technology;
    implementation of the National Environmental Policy Act (NEPA);
    integration of military mission and environmental programs; excellent
    environmental management; partnering with regulatory community.
    Kwajalein Atoll's extensive environmental program has also achieved
    many successes. Kwajalein completed 96 percent of the mitigation
    actions required by an Environmental Impact Statement (EIS) and Record
    of Decision (ROD) on time and at a saving of almost $6 million. The
    installation also decreased its air pollution by 90 percent by using
    multi-chamber incinerators instead of burning its solid wastes. Water
    pollution has been reduced by installing dockside receptacles on the
    Kwajalein pier for collecting all sewage from ships.
                                  conservation
    Program Challenges
        Conservation includes the sound management of Army natural and
    cultural resources to sustain the military mission and protect access
    to land used for munitions testing, development of weapon systems, and
    combat training exercises. The Army must maintain the resources upon
    which it depends. With stewardship responsibilities for more than 12
    million acres of land, the Army must protect the land and the natural,
    historical, archeological, sacred and cultural resources thereon. On
    these lands, the Army is training half a million soldiers, housing
    their families, protecting approximately 153 endangered species of
    plants and animals, and preserving approximately 36,000 known cultural
    resource sites. The Army supports programs that help us make smart
    decisions as we plan and develop training ranges, maneuver areas, and
    other capital improvements.
    Budget
        The Army has continuously developed and implemented effective
    management practices that will ensure the sustained use of our natural
    and cultural resources in support of both Army missions and public
    needs. The fiscal year 1998 budget request of $49.6 million will allow
    the Army to continue to execute its natural and cultural resources
    protection programs by (1) developing land and resource information,
    (2) integrating environmental land management throughout Army
    operation, (3) developing management plans, and (4) fostering of
    partnering efforts to leverage funds available.
    Land Management Programs
        The following examples demonstrate the Army's approaches to land
    management.
        Integrated Training Area Management (ITAM).--The Army's ITAM
    program helps us monitor environmentally sensitive areas, rehabilitate
    those that have become damaged, and properly manage all land resources.
    The Office of the Deputy Chief of Staff for Operation and Plans
    (ODCSOPS) is now the program proponent.
        ITAM demonstrates how to successfully apply environmental
    protection to support essential Army training, by integrating sound
    land management principles into training and testing requirements. ITAM
    has increased realistic training, improved training safety, minimized
    environmental degradation, and increased our readiness posture.
        Fort Carson, CO was the first installation to fully implement the
    ITAM program and now more than 80 installations are using at least one
    element of ITAM to manage land resources.
        Range Management with use of Range XXI.--The USAEC and the Army
    Training Support Center (ATSC) have developed a series of key
    initiatives using innovative technology for range managers called Range
    XXI.
      --Management Tools.--We have developed an operation and maintenance
            manual and computer software to test munitions migration.
      --Bullet Traps Feasibility Study.--The Army used a shock-absorbing
            concrete at West Point, NY and Fort Knox, KY to collect
            bullets, preventing the need to remediate lead contamination.
            This successful study has been completed and will be
            transferred to other installations.
      --Redesign small arms ranges.--An eroded small arms range at Fort
            Rucker, AL was reengineered with environmentally friendly
            alternative technologies to identify the best techniques for
            designing ranges that avoid erosion, stabilize lead from
            bullets, and reduce lead migration. This successful model will
            be used for redevelopment of other ranges.
      --Range cleanup.--At Fort Polk, LA, soil washing and soil leaching
            technologies were used to demonstrate the effectiveness of
            range cleanup technique. This demonstration model was
            successful.
      --Green Ammo.--The Army Research and Development Engineering Center
            (ARDEC) developed small arms service ammunition to eliminate
            lead and other toxic metals on training ranges. The new
            formulation and material development has been completed;
            qualifying tests will follow.
        The Army emphasizes the continued development of these technologies
    to sustain our range resources while allowing the Army to train for
    readiness requirements.
        Natural Resources Management.--Integrating natural resource data
    with military training information has been challenging for the Army.
    To facilitate this effort, the Army National Guard (ARNG) and Utah
    State University partnered to incorporate standard national and state
    data, satellite remote-sensing data, and site-specific surveys. This
    joint effort integrated a Geographic Information System (GIS) with
    Army-standard natural resources and military training information (ITAM
    and Range Facility Management Scheduling System). The project
    demonstrated that natural resources and military data can be integrated
    to determine relationships between military activity and land
    condition, to better manage both.
        The Integrated Natural Resource Management Plan (INRMP).--Army
    installations must not only manage the land for training but protect
    the natural resources on the land as well. The Integrated Natural
    Resource Management Plan (INRMP) defines management goals and
    determines actions required to achieve those goals. The Army has
    determined that 148 installations merit an INRMP. As of the end of
    fiscal year 1996, 35 installations have approved plans, 26
    installations need updated plans, and 87 installations have plans under
    development.
        Fort Carson, CO.--The Army has presented Fort Carson, CO, with the
    1996 Natural Resource Conservation Award. The installation has
    integrated natural resources management with military training by using
    engineer battalions to perform erosion control work as an Army training
    exercise. Fort Carson also developed a tree planting project that
    enhances both training realism and provides a habitat for wildlife.
        Newport Chemical Depot, IN.--Newport Chemical Depot (NECD), IN
    serves as an Army model for the natural resources conservation program.
    This installation was the small installation 1996 Natural Resources
    Management Award winner in the small installation category. Partnering
    efforts by this installation have developed its INRMP, supported by an
    array of approved cooperative agreements with various other agencies.
        Fort Bragg, NC.--Cooperative efforts with the U.S. Fish and
    Wildlife Service (USFWS), The Nature Conservancy, and other local
    partners have resulted in a win-win solutions for Fort Bragg, NC and
    endangered species protection. Restrictions on Army training activities
    are eased while the Army agrees to manage and enhance red-cockaded
    woodpecker (RCW) habitat to the maximum extent compatible with
    training. On 3 June 1996, Mr. George T. Frampton, Jr., Assistant
    Secretary of Interior for Fish Wildlife and Parks commended the Army
    for its ``pivotal role in the Sandhills Initiative.'' Mr. Frampton's
    memo concludes that ``we can implement cooperative solutions to our
    mutual and dual missions--that is, recovering endangered species and
    ensuring our military readiness and national security.''
    Ecosystem management
        The Army's approach to managing its land has now taken on a
    regional focus so that we can successfully balance the need to provide
    adequate training lands while protecting habitats and working closely
    with the surrounding communities. Taking a regional approach, Army land
    managers, as well as those from other federal, state, and private
    entities, understand the characteristics and limits of a given
    ecosystem. Examples like the Mojave Desert Ecosystem Initiative (MDEI),
    and initiatives by the Missouri Army National Guard (MOARNG) and Fort
    Carson, CO, (discussed below), demonstrate the potential for broader
    Army application.
        Mojave Desert Ecosystem Initiative (MDEI).--Development around Army
    installations, such as Fort Irwin, CA, requires the Army to look at its
    neighbors in new ways. The Mojave Desert is under increasing pressure
    to serve conflicting uses: population growth, Army training lands,
    Department of Interior parks and wilderness areas. The Departments of
    Defense (and affected service installations/bases) and Interior are
    cooperating with California state agencies under the auspices of the
    MDEI to apply the latest in scientific data-gathering and analysis of
    ecosystem management principles. Fort Irwin, CA, serves as the
    executive agent for management and coordination of the MDEI. On May 21,
    1996, in recognition of the success of this initiative, Secretary of
    the Interior Bruce Babbitt presented a Vice Presidential ``Hammer
    Award'' to Brigadier General William S. Wallace, commander of Fort
    Irwin. The Mojave Desert Ecosystem Initiative has dramatically improved
    communication among the federal landowners in the Mojave Desert.
        Missouri Army National Guard (MOARNG).--The Missouri Army National
    Guard (MOARNG) completed an INRMP for the 1,287 acre Camp Clark
    Training Site. This plan was a significant benchmark because it was
    among the first to integrate ecosystem management with the military
    training mission. This plan has reduced costly Land Rehabilitation and
    Maintenance (LRAM) projects and minimized environmental impacts by
    tailoring mission requirements to inherent land capabilities.
        Fort Carson, CO.--A concept called ``watershed management'' is the
    key element in the evolving range management philosophy that will
    provide training sites for future generations of soldiers. Fort Carson
    is in the process of employing watershed management technology. The
    technology involves strategically placing water control features within
    the watershed to prevent excessive runoff of water or sediment, despite
    disturbances from armored vehicles.
    Cultural and Historic Resources
        We recently issued a new policy on cultural resources (Army
    Regulation 200-4) and are in the process of developing implementing
    guidance to support the new regulation to protect approximately 36,000
    known cultural, historical, archeological and Native American sacred
    sites on Army lands. The Army's cultural resources program is being
    developed in a partnership with the Advisory Council on Historic
    Preservation by means of an Interagency Agreement between the federal
    agency and the U.S. Army Environmental Center (USAEC).
        To manage these resources and still sustain combat readiness, the
    Army has initiated a program for Integrated Cultural Resources
    Management Plans (ICRMP). Currently, 52 installations have approved
    plans and 109 installations have plans under development. This year
    Fort Carson, CO, was awarded the Cultural Resources Award for its
    comprehensive cultural resources management program. The program
    effectively manages numerous historic districts and archeological
    sites, curates extensive archeological collections, and preserves
    Native American sacred sites while continuing to support combat
    readiness and training missions.
        Removing historic quarters from Army Responsibilities.--The Army is
    pursuing a three-part strategy to reduce the costs of managing historic
    quarters: reduce inventory, reduce maintenance and repair costs, and
    streamline regulations (28 March 1997 report to Congress).
        Advisory Council on Historic Preservation (ACHP).--The Army is
    partnering with ACHP to streamline the National Historic Preservation
    Act (NHPA) Section 106 review process.
        U.S. Army Military District of Washington (MDW).--The MDW Historic
    Building Preservation Program and the State Historic Preservation
    Offices for Renovation of Quarters signed an MOU to reduce the time and
    cost of renovating historic structures. MDW is working to develop a
    long-range maintenance plan for each set of quarters to help schedule
    maintenance and provide an historical record of expenditures.
    Renovation contracts for 12 historic quarters have been awarded and
    will serve as prototypes for all 171 historic building renovations
    within MDW.
        Coordination among Native American groups: Three Initiatives.--Many
    regulations and executive orders require consultation with Native
    Americans, Native Alaskans, and Native Hawaiians before engaging in
    activities that may affect resources of interest to them. USAEC
    coordinated the first national workshop between the Army, Native
    American tribes and Native Hawaiian organizations at Fort Sill, OK, in
    March 1996. The workshop was a major success, and a second is planned
    for May 1997.
        Another key Army initiative to aid in Native American consultation
    is the preparation of draft Native American consultation guidelines to
    assist Army installations. The guidelines will provide basic protocols
    for establishing working relationships with Native Americans. USAEC
    will distribute the revised guidelines to the Army and participating
    Native American tribes in fiscal year 1997 as part of the new DA
    Pamphlet AR 200-4, Cultural Resource Management.
        The Army is required to comply with the Native American Graves
    Protection and Repatriation Act (NAGPRA). USAEC has developed a
    centrally managed and centrally funded NAGPRA compliance program. All
    Army installations have been provided material to conclude their
    consultation responsibilities with Native American tribes. In addition,
    167 installations and facilities have received reports and compliance
    documents that meet NAGPRA Section 6. The Army is the first military
    department to complete this report. Completion of Section 5
    requirements is programmed for the end of fiscal year 1998. This
    centrally managed program approach has saved the Army $3 million due to
    its economy of scale.
                             restoration (cleanup)
        The Army's environmental restoration program continues to
    accelerate cleanups and reduce costs. The Army has completed
    restoration actions at 7,765 sites out of a total 12,185 in its cleanup
    program to date. The Army and other components implemented the Relative
    Risk Site Evaluation system in fiscal year 1996 that ranks all sites in
    three categories high, medium, and low relative risk. Our program and
    budget reflects a commitment to emphasize cleanup of High Relative Risk
    (HRR) sites.
    Budget
        We strongly encourage Congressional funding of our budget requests
    for our fiscal year 1998 environmental cleanup programs. Reduction of
    funding results in fewer and slower cleanups, as we saw in 1996.
    Although the Army will take action to address all immediate threats to
    human health and the environment, reduced funding stretches out the
    life of the cleanup program and increases total cost. That often means
    that contaminants will remain longer as potential hazards to drinking
    water supplies, and beneficial reuse of land will likely be delayed.
    The Army needs this Subcommittee and the full Congress to provide
    support and help to defend our fiscal year 1998 budget request of
    $377.3 million for Army cleanup, $202.3 million for FUDS cleanup, and
    $198.6 million for BRAC cleanup.
    Cleanup Program Priorities
        The Army maintains a policy of ``worst first'' prioritization
    supported by the relative risk site evaluation process described above.
    The numbers of sites under investigation continue to decrease while
    sites in actual cleanup or completed cleanup are increasing. The Army's
    focus is on moving sites into remedial action and response complete
    phases, and out of non-evaluated phase.
        The number of contracts issued for cleanup is a significant
    challenge to manage. The Army is the only service that has implemented
    the use of an environmental tracking code to accurately track
    environmental contracts and provide specific answers regarding cleanup
    costs. The Army implemented this database using available technology
    and resources. The database tracks money spent to cleanup sites and
    funds provided to each contractor from October 1994 to present.
        Currently the Army has three petitions submitted to EPA to delete
    installations from the EPA's National Priorities List (NPL):
      --Riverbank Army Ammunition Plant, CA, petition was submitted 4th
            quarter fiscal year 1996.
      --Schofield Barracks, HI, petition was submitted 1st quarter fiscal
            year 1997.
      --Petition to delist a small portion of Rocky Mountain Arsenal, CO,
            was submitted to EPA in late fiscal year 1996.
        The Army continues to seek additional sites for deletion from the
    NPL. In order to delist, the Army must demonstrate to EPA that all
    necessary remedies are in place and operating properly.
        To complement the Army's integrated environmental restoration
    oversight program, the Army adopted the Air Forces' technical review
    process. This peer review process allows Army installations to obtain
    outside unbiased technical expertise to ensure the most effective and
    efficient use of the Army's environmental restoration funds. The
    purpose of peer review is to evaluate the rationale for selecting
    remedies, ensure proper use of risk assessment and application of risk-
    based decisions, evaluate technical merits of selected remedies, and
    provide improvement or alternative technical recommendations for
    remedies.
    Success at Rocky Mountain Arsenal, CO
        The environmental cleanup program at Rocky Mountain Arsenal (RMA),
    our most complicated and largest cleanup site, continues to progress.
    Dynamic community involvement, partnering with the USFWS and Shell Oil
    Company, and regulatory participation resulted in agreement on future
    cleanups and a structure to manage those efforts. The Army, EPA, and
    state regulators signed the On-post Record of Decision (ROD) in June
    1996, specifying the selected cleanup remedies within the installation
    boundary. The final remedies reflects a balance among risk management,
    future land use, public concerns and cost. Remediation actions were
    grouped into 31 cleanup projects based upon practical implementation
    considerations such as geographical proximity to one another. These
    projects will protect the public from current or future exposure to
    contaminated soil or structures, reduce contaminant migration into the
    groundwater, and treat contaminated groundwater at the boundary to meet
    remediation goals.
        In fiscal year 1997, the Army will award a Program Manager Contract
    (PMC) to supervise the execution of the 31 remediation projects. The
    contract will include a performance award that will reward the
    contractor for cost avoidance and schedule acceleration. This will
    assist the Army in meeting public expectations to complete cleanup of
    all remedial high risk activities ahead of the 14-year current
    schedule.
        Pursuant to Public Law 102-402, and upon EPA certification of
    remedy completion, the RMA will be transferred to the Department of
    Interior and become the Rocky Mountain Arsenal National Wildlife
    Refuge. To provide overall management and execution of the final
    remedy, the Army, Shell Oil, and USFWS have entered into a cooperative
    partnering agreement and created the Remediation Venture Office (RVO).
    This innovative tri-party arrangement will be responsible for the
    planning, design, construction, operations, procurement, and oversight
    of the RMA cleanup. The RVO partnering concept brings together the Army
    and Shell as service providers with USFWS as the final customer to
    efficiently and effectively accomplish the remediation. As an active
    member of this partnership, USFWS is fully engaged in decisions up-
    front, thereby and preventing future issues with the end-state of the
    remedy.
    Base Realignment and Closure (BRAC) Activities
        Over the course of four BRAC rounds, the Army is closing 112
    installations and realigning 27 others. At these affected
    installations, approximately 268,000 acres are available for reuse by
    local communities. To date, we have earmarked approximately $1.2
    billion toward cleaning up those areas in need of environmental
    remediation and have programmed another $980 million for our BRAC
    Environmental Program in the fiscal year 1998/1999 President's Budget.
    Our main goal is cleaning up property identified for reuse as quickly
    as possible in support of the President's Five Part Program. In that
    regard, the priority for the limited funds available goes to the sites
    where there is imminent beneficial reuse.
        Success Stories.--The Army is making steady progress toward cleanup
    goals, evidenced by the 38 installations reporting Response Complete or
    Remedy-in-Place. We feel our past and future successes are due to the
    existence of strong BRAC Cleanup Teams, consisting of the Army's BRAC
    Environmental Coordinator, state regulator and representative from the
    Environmental Protection Agency (EPA). All 39 Fast Track Installations
    have active BRAC Cleanup Teams. Strong partnering with the state and
    EPA is often responsible for our successes.
        Cameron Station, VA.--In December 1996, the Army transferred 101
    acres of Cameron Station, VA to Greenvest Incorporated, a private
    developer, for $33 million. By the time we turned on the pump and treat
    system, it was only a matter of weeks before the regulators judged the
    system was operating ``effectively and successfully'' so a final
    transfer could take place. Within weeks of the transfer, the developer
    received permission to modify this pump and treat system to conform to
    their planned development. Cooperation between the regulators and a
    hard working Army team made it possible for successful redevelopment
    while protecting the integrity of the remediation system.
        Woodbridge, VA.--Over 580 acres of woods, marshes and meadows,
    formally used as a radio transmission and electromagnetic research
    facility will be open to the public later this year. The refuse harbors
    one of the richest concentrations of bird life in Virginia. More than
    214 species of raptors, songbirds, wading birds and waterfowl have been
    counted.
        Tooele Army Depot, UT.--At Tooele Army Depot, UT, the Army was
    successful in getting regulators to issue an ``operating effectively
    and successfully'' determination in less than three weeks to permit
    transfer of the consolidated maintenance facility to the Tooele City
    Redevelopment Authority for Detroit Diesel and its over 300 employees.
    We hope to see another ``partnering'' success at Tooele where we plan
    to use new legislative authority for the first time and defer the
    covenant under CERCLA 120(h)(3) and transfer property before cleanup is
    complete. The BRAC Cleanup Team is making steady progress in preparing
    the documentation necessary to support the transfer. Current
    indications are that the regulators support the use of this new
    authority.
        Fort Ord, CA.--At former Fort Ord, CA, the Army continues to issue
    Findings of Suitability to Transfer for turning property over to the
    community after a large pump-and-treat system was accepted as operating
    ``effectively and successfully'' in January of this year. The Army will
    save $10 to $14 million by using an innovative approach for disposing
    of lead from beach ranges at an existing landfill project.
        Umatilla Depot, OR.--By using innovative technology, the Army was
    able to save $2.6 million at Umatilla Depot, OR. Instead of using
    costly incineration, and in consultation with state and EPA regulators,
    the Army selected bioremediation with composting as the remedy. This
    project involved the use of biological organisms in compost piles to
    degrade explosives. The contractor successfully completed this project
    a year and one-half ahead of schedule. We intend to use this composting
    method at other installations that have explosive residuals in their
    soils.
        Jefferson Proving Ground, IN.--At Jefferson Proving Ground, IN, the
    Congressional directed technology demonstrations in the north area have
    resulted in improved commercially available technologies. The ability
    of detection systems to find subsurface ordnance increased 20 percent
    from the baseline best probability. We continue to have problems
    discriminating between buried metals in general and unexploded
    ordnance. The funds appropriated last year for a fourth phase will be
    used to develop improved data fusion and software integration
    technologies rather than detection hardware.
        Unexploded Ordnance.--Cleaning up unexploded ordnance remains one
    of our toughest challenges in the BRAC environmental program. The Army
    has archive search reports underway at BRAC installations. These
    reports are the first step in identifying the potential for unexploded
    ordnance at an installation. Our current cleanup approach parallels the
    draft Range Rule and will help us make good decisions. We still expect
    that there will continue to be areas similar to portions of Jefferson
    Proving Ground, which will neither be economically nor technically
    feasible to clean using today's technology. These properties will have
    to remain in federal hands. We hope to make the most out of these
    properties and welcome arrangements with agencies such as the Fish and
    Wildlife Service for wildlife refuges like the one at Jefferson Proving
    Ground.
        Other BRAC Projects.--The BRAC environmental program differs from
    the DERA program in that the BRAC account pays for BRAC-related
    compliance and conservation as well as restoration projects. The Army
    is proud of its accomplishments for transferring historic property.
    After over a year of negotiations with the Advisory Council on Historic
    Preservation, we developed a boilerplate agreement that will assist
    Army installations with consultations with the State Historic
    Preservation Offices and the necessary steps for compliance with
    Section 106 of the National Historic Preservation Act (NAPA). The
    agreement will cut down on consultation time and protect historic
    property while giving reuse authorities the flexibility to consult
    further on changes in their reuse plans.
    Formerly Used Defense Site (FUDS) Program
        The Army is the DOD executive agent for the Defense Environmental
    Restoration Account (DERA) funded FUDS program. The goal of the FUDS
    program is to reduce, in a timely and cost-effective manner, the risk
    to human health, safety, and the environment resulting from past DOD
    activities at formerly used defense sites. Meeting environmental goals
    at FUDS properties depends on strong communication, partnership, and
    community involvement among DOD and program stakeholders. Priority
    setting for the FUDS program is based on the evaluation of relative
    risk, along with other factors such as legal agreements, stakeholder
    concerns, and economic considerations.
        The scope and magnitude of the FUDS program is significant, with
    9,029 potential properties identified. Environmental cleanup procedures
    at FUDS are similar to those at active DOD installations. However,
    information concerning the origin and extent of the contamination, land
    transfer information, past and present property ownership, and program
    policies must be evaluated before DOD considers a property eligible for
    the FUDS program. Despite a reduced level of funding in fiscal year
    1996, the FUDS program made significant progress. Preliminary
    assessments to determine property eligibility were completed at 934
    properties in fiscal year 1996. About two-thirds of those (619
    properties) were determined to be either ineligible for the program or
    require no further action.
    Innovative Technologies for Cleanup
        Based on the success at Sierra Army Depot in reducing cost and
    effectiveness cleanup, the Army has developed an interim policy to
    require that natural attenuation be considered at all cleanup sites.
    Natural attenuation refers to the use of naturally occurring processes
    within the context of a carefully controlled and monitored site cleanup
    approach which will reduce contaminant concentrations to levels that
    are protective of human health and the environment within a reasonable
    time frame. The ``natural attenuation processes'' that are at work in
    such a remediation approach include a variety of physical, chemical, or
    biological processes that act without human intervention to reduce the
    mass, toxicity, mobility, volume, or concentration of the contaminants.
    Where applicable natural attenuation will yield major cost savings. The
    Army established a groundwater modeling Center of Expertise at the
    Waterways Experiment Station in Vicksburg, MS, to advise installations
    on the use of natural attenuation. The Center of Expertise will also
    provide expert consultation to Army installations to support 5 year
    reviews and demonstration of natural attenuation.
        A new technology relying on plant life to absorb and break down
    contaminants, phytoremediation, is still undergoing field testing at
    Milan Army Ammunition Plant, TN. This technology successfully uses
    certain species of plants to remove explosives from affected waters.
    This process is not toxic and does not result in a hazardous waste. We
    estimate the cost of phytoremediation to be one-third that of activated
    carbon pump and treat systems, the conventional treatment technology
    for explosives contaminated groundwater. The Army is considering
    exporting this technology to Schofield Barracks, HI; Iowa Army
    Ammunition Plant; Twin Cities Army Ammunition Plant, MN; and Sunflower
    Army Ammunition Plant, KS.
    Partnerships
        Partnering initiatives have been extremely beneficial to the
    cleanup program. For example partnering by three installations has
    resulted in a total of $38 million in cost avoidance. These
    partnerships resulted in reduced requirements, less conservative
    cleanup levels, greater acceptance and use of innovative technologies,
    and expedited processes through joint planning and concurrent reviews.
    Specifically, Iowa Army Ammunition Plant gained acceptance for the use
    of phytoremediation and natural attenuation from EPA. Fort Bliss, TX,
    negotiated reduced groundwater monitoring requirements. Fort Campbell,
    KY, also experienced similar cost avoidance savings through an
    aggressive partnership with EPA and state regulators.
        Many other Army partnerships resulted in more efficient and cost
    effective cleanups. The Army joined EPA Region IV in a three tier
    partnering effort. This effort includes military services, Secretariat
    level staff, and EPA branch managers. The partnership develops trust
    and builds confidence, fosters regional level consistency among states,
    allows for better cleanup decisions, facilitates sharing of experiences
    and solutions, and limits cleanups to those necessary to protect human
    health and the environment. Partnering initiatives at Jefferson Proving
    Ground, IN, and Fort McClellan, AL, started in fiscal year 1996. These
    partnerships involved formal partnering agreements with EPA and state
    agencies to resolve regulatory conflicts. Early progress reports are
    positive. At the former Fort Ord, CA, coordinated efforts of the Army,
    EPA, California Department of Toxic Substance Control (DTSC), and
    Regional Water Board allowed for use of an innovative Corrective Action
    Management Unit (CAMU) that will save $11 million. Fort Lewis, WA,
    partnered with the Ecological Society and federal agencies resulting in
    significant streamlining of the cleanup programs that saved 18 months
    and $80,000. Fort Wainwright, AK, was awarded the 1996 Environmental
    Cleanup Award because of its exceptional partnering efforts with
    regulators and the community that allowed for an innovative technology
    program. The installation's program also integrated environmental
    cleanup with the Army training mission.
        Some of our installations have taken an extra step in partnering by
    inviting regulators to participate in annual reviews of installation
    action plans for cleaning up contaminated sites. By participating in
    such reviews, the regulatory community gains a better understanding of
    Army funding allocations and constraints for environmental restoration.
    For example, Fort Riley, KS, invited regulators from the State of
    Kansas and EPA Region VII to its annual review soliciting their views
    on issues ranging from technical matters to funding and scheduling of
    projects. The regulators appreciated the opportunity to participate in
    setting priorities and planning cleanup activities for the next five
    years.
        Fort Campbell, an installation that straddles the states of
    Kentucky and Tennessee, invited regulators from both states to the
    annual review of its installation action plan. The state regulators
    found the meeting positive and informative. One of the regulators
    complimented Fort Campbell on a meeting that, ``allowed unique
    regulatory relationships to be developed between the Kentucky and
    Tennessee agencies'' and offered ``all parties * * * an opportunity to
    be true partners in the protection of the environment.'' Establishing
    partnerships with regulatory agencies during the planning process
    builds trust and lays the foundation for cost-effective cleanups based
    on risk.
        The Defense-State Memoranda of Agreement (DSMOA) program helps us
    to build these partnerships with the states by providing funds to
    support state participation in Defense restoration activities. This
    funding ensures the availability of dedicated state and territorial
    personnel to participate in cleanups at active and closing
    installations as well as Formerly Used Defense Sites (FUDS). Our
    investment resulted in cost avoidances, expedited cleanups, and
    improved community relations. The DSMOA program supported the
    partnership between the former Tarheel Army Missile Plant and the State
    of Tennessee. Through this partnership the plant was able to reduce
    requirements to repeat field activities, maximize the use of
    environmental data, and move the project into the active remediation
    phase.
        Restoration Advisory Boards (RAB's) and Technological Review
    Committees (TRC's) continue to demonstrate the Army's active pursuit of
    public participation in our cleanup program. They serve as a forum for
    partnering among Army, federal and state regulators, and the community.
    The RAB's are successful because they provide an opportunity for all
    stakeholders to review cleanup progress, participate in decision
    making, acquire understanding of cleanup issues and progress, and build
    trust and credibility. As of January 1, 1997, 48 Army installations
    have established RAB's. This past year, I issued a new RAB policy that
    implemented the recommendations of the Federal Facilities Environmental
    Restoration Dialogue Committee. The Army Staff also published more
    specific guidance incorporating this new policy.
                                   conclusion
        Mr. Chairman and Members of the Committee, it has been a pleasure
    to discuss with you and the distinguished members of this committee the
    accomplishments of the Army's environmental program. Our focus is on
    reducing costs and increasing efficiencies. We are committed to the
    Army mission of providing our soldiers with realistic training that
    ensures readiness. At the same time, we recognize our responsibility to
    protect the health and safety of our soldiers and the environment of
    the communities in which they live. Our program is mature. Our funding
    levels are stable. Our challenge is to fully integrate environmental
    management into all aspects of Army operations and decision-making.
        In conclusion, I want to emphasize the commitment of the Army
    leadership to the Army's environmental program. The Army environmental
    program enjoys full endorsement and support by both the Secretary of
    the Army and the Chief of Staff of the Army. Both of these key senior
    leaders, together with field commanders at all levels, continue to
    reinforce the importance of integrating environmental considerations
    into all aspects of mission accomplishment. The Honorable Togo D. West,
    Jr., the Secretary of the Army, views the environment as one of the
    Army's most valuable resources, ``America's Army is constantly
    challenged as we approach the 21st century. How the Army meets the
    challenges and protects our most valuable resources--our soldiers and
    the environment--will determine the nation's future.''
        General Dennis J. Reimer, the Chief of Staff of the Army, has
    specifically expressed his commitment to environmental responsibility:
    ``Environmental responsibility involves all of us. The Environmental
    ethic must be part of how we live and how we train. We must seize the
    opportunities to do things smarter and better. By working together, we
    can forge a premiere environmental stewardship program. Protection of
    the environmental is the key to ensuring we can continue to conduct
    tough, realistic training and keep the Army trained and ready in the
    future.''
        As we move forward with our new vision and strategy it is important
    to acknowledge the solid accomplishments of the Army during the past
    year. The success of the Army's environmental program is due to the
    dedication and hard work of our soldiers and our civilians. Their
    commitment to wise environmental stewardship is the reason that we have
    been able to achieve so much in the areas of compliance, pollution
    prevention, restoration, and conservation. Their commitment is the
    reason we all continue to achieve new management and technical
    innovations for gaining even greater effectiveness.
    STATEMENT OF HON. ROBERT B. PIRIE, JR., ASSISTANT
                SECRETARY OF THE NAVY (INSTALLATIONS AND
                ENVIRONMENT)

        Senator Stevens. Thank you very much. Mr. Pirie.
        Mr. Pirie. Thank you, Mr. Chairman, Senator Inouye. I
    appreciate the opportunity to speak to you today about the
    Department of the Navy's environmental program. The main
    message of my written statement is that our environmental
    programs have settled down into a regime of fairly stable
    funding. We are proceeding with them in ways that we believe
    will address the highest risk areas first.
        Our overall environmental budget has stabilized at a level
    of about $1.6 to $1.7 billion per year. Stabilization is a
    significant change from the annual growth of the past. And I
    might say, Mr. Chairman, that for the Defense Department
    overall we are perhaps talking about four Army divisions, and
    from the Navy's perspective that looks like a nuclear aircraft
    carrier to us.
        Congress devolved the environmental cleanup program to the
    military departments in fiscal year 1997, and we have
    stabilized cleanup funding in the Navy at about the $300
    million level throughout the 5-year defense program.
    Devolvement has increased management attention to this program
    at all levels within the Department of the Navy. Cleanup at
    bases being closed because of action in one of our four earlier
    rounds of BRAC is accomplished with funding from the BRAC
    account, not the ``Environmental restoration, Navy'' account.
        Our guiding principles for this cleanup are that we are
    obligated to clean up existing contamination at these bases,
    and we will do so. We will accord priority to those bases
    having near-term reuse plans, and we will avoid having cleanup
    interfere with ultimate closure, conveyance of the property,
    and reuse by the community.
        We must prioritize in this way, because we do not have the
    money to do all of the cleanup at once. Some communities have
    expressed concern that cleanup actions may not be funded in
    time. However, to date no base reuse has been delayed or
    impeded because cleanup was not complete.
        Environmental quality is comprised of compliance, pollution
    prevention, and conservation programs. We have added a total of
    $51 million in our fiscal year 1998 program for environmental
    quality above the fiscal year 1997 level.
        Growth is primarily driven by one-time compliance projects
    to meet existing clean air standards; procure and install
    pulpers and shredders to manage nonplastic solid waste aboard
    surface ships; install crossconnection controls and backflow
    prevention devices for the Safe Drinking Water Act; and
    eliminate electrical transformers with more than 50 parts per
    million of PCB's by 1998, as required by the Toxic Substances
    Control Act regulations.
        The Fiscal Year 1997 Defense Authorization Act approved
    Navy plans to install solid waste pulpers and shredders in
    surface ships of frigate size and larger and to use these
    devices in special areas and elsewhere to process and discharge
    waste paper, cardboard, metal and glass, and the like.
        Under the act to prevent pollution from ships, pulpers, and
    shredders must be installed and in use aboard surface ships by
    the end of the year 2000 except for those ships being
    decommissioned on or before the year 2005.
        A total of 205 surface ships will receive pulpers and
    shredders by the time we complete the program in December 2000.

                               prepared statement

        Mr. Chairman, there is much other material about Navy and
    Marine Corps programs in my formal statement, and I would be
    glad to answer any questions you may have about them.
        Thank you.
        [The statement follows:]
                Prepared Statement of Hon. Robert B. Pirie, Jr.
        Good day, Mr. Chairman and members of the Committee. I am Robert B.
    Pirie, Jr., Assistant Secretary of the Navy (Installations and
    Environment). I appreciate the opportunity to speak to you today on the
    Department of the Navy's environmental program.
        My statement covers a number of areas: How our environmental
    program supports military readiness; an overview of our fiscal year
    1998 environmental budget request; a more detailed discussion of our
    environmental cleanup, compliance, pollution prevention, conservation,
    technology development, and base realignment and closure (BRAC)
    environmental efforts; and an fiscal year 1998 legislative proposal.
        We in the Department of the Navy understand that the Nation's
    agenda includes both a strong Navy and Marine Corps and a protected
    environment. As I will discuss, our environmental expenditures are
    constrained to compliance with enforceable requirements, using the most
    cost-effective strategies to achieve results. Timely compliance
    supports the Department's primary mission of national defense.
             environmental program in support of military readiness
    Complying With The Law
        Our environmental program, like that of corporate industry, mirrors
    the greater attention environmental issues have had at the national,
    state, and local levels over the past two plus decades. Congress has
    enacted over 40 environmental laws since 1970 that impact private
    industry and the Federal Government. These laws can be substantially
    revised and new requirements added during periodic reauthorizations.
    Federal agencies such as the Environmental Protection Agency, the U.S.
    Fish and Wildlife Service, and the National Marine Fisheries Service,
    then must issue implementing regulations for each of these statutes.
    Further, each state enacts its own environmental statutes and
    implementing regulations which can be even more stringent than federal
    requirements. This legislative growth has created an increasing need
    for people, management attention, and financial investments to meet
    tighter environmental standards. Failure to comply with environmental
    statutes and regulations can result in fines, penalties, criminal and
    civil suits, administrative proceedings, court orders, cease and desist
    orders against the Department of the Navy or our people. In short,
    environmental compliance is the law of the land and the sea, and we
    must obey.
    Ensuring Access
        The Department of the Navy is the steward for 3.5 million acres of
    land in the United States. By maintaining compliance with all
    environmental standards, we ensure our access to training and operating
    ranges on land, in the air, and at sea. We recognize that many of our
    actions, whether it is to train new Sailors or Marines, maintain
    readiness of combat forces, or test new weapon systems have an impact
    on the natural environment. We need to understand those impacts, and
    take appropriate actions to minimize them. Beyond the strict
    interpretation of the law, we have an ethical responsibility to
    conserve the natural resources entrusted to us.
    Taking a Business Approach
        While we must and will comply with environmental standards, we want
    to do so in a businesslike manner. We want to identify, evaluate and
    select the most cost-effective alternatives for achieving compliance.
    We need to establish benchmarks, set goals, and track progress toward
    meeting these goals.
        We strongly support the need to balance environmental costs and
    benefits and to use risk, where appropriate, to set priorities with
    regulators and other stakeholders. We are working very closely with the
    Deputy Under Secretary of Defense (Environmental Security), the other
    military Services, private industry, regulators, environmental
    organizations, and community groups to use this approach. We must
    understand the scientific basis for actions and carefully weigh short
    and long term investment requirements against the expected benefits to
    be derived. We need to be flexible to change our operating practices
    when necessary, yet also identify and seek relief from those situations
    which would compromise our operational ability and national security
    mission. As I will point out in this statement, we have often found
    that environmental investments prove to be a win-win situation for the
    environment and for our operations.

        ----------------------------------------------------------------

        Environmental investments can shorten maintenance cycles, reduce
    costs, improve reliability, reduce air emissions, reduce hazardous
    waste, and improve safety in the workplace.

        ----------------------------------------------------------------

    Innovation and Analysis
        My statement will discuss a number of innovative prospects we are
    pursuing. Some cross wide boundaries. The Chief of Naval Operations
    established the Navy Environmental Leadership Program (NELP) in 1993 to
    test innovative technologies and management practices; and to export
    successful experiences throughout the naval shore establishment. Naval
    Air Station North Island, California and Naval Station Mayport, Florida
    were selected because of the wide scope of operations conducted at
    these two locations. Numerous technologies and management techniques in
    environmental cleanup, compliance, conservation and pollution
    prevention have been tried and perfected, and are now being spread to
    other bases. NELP initiatives support our business approach to meeting
    environmental standards by helping us do more, faster, and at less cost
    than by using current practices.
        We have also engaged the considerable talents of the Center for
    Naval Analysis (CNA) and the Naval Audit Services (NAS) to evaluate
    current practices and alternative approaches.
               fiscal year 1998/99 environmental budget overview
        The Department of the Navy's fiscal year 1998 environmental budget
    will allow us to cleanup contamination at active and reserve bases,
    comply with current environmental standards, invest in pollution
    prevention, conserve our natural and cultural resources, develop new
    environmental technologies, and perform the necessary environmental
    actions at base realignment and closure (BRAC) locations.

        ----------------------------------------------------------------

                                                [In millions of dollars]
    ----------------------------------------------------------------------------------------------------------------
                                                                                       Fiscal year--
                                                                     -----------------------------------------------
                                                                         1996        1997        1998        1999
    ----------------------------------------------------------------------------------------------------------------
    Cleanup.........................................................         362         287         277         287
    Compliance......................................................         895         763         820         823
    Pollution Prevention............................................          88         140         126         124
    Conservation....................................................          24          21          29          26
    Technology......................................................          67          55          65          71
    BRAC............................................................         291         354         374         289
                                                                     -----------------------------------------------
          Total.....................................................       1,727       1,620       1,691       1,620
    ----------------------------------------------------------------------------------------------------------------

        ----------------------------------------------------------------

        Our overall environmental budget has stabilized at the level of
    $1.6 billion to $1.7 billion per year. This is a very significant
    change from the past. The environmental budget had nearly doubled in
    size since we first identified it as a part of the Department of the
    Navy top line budget. As this committee recognizes, this growth in the
    environmental program had come at a time when the overall Department of
    the Navy budget had been cut by more than 16 percent over the same
    period of time. I believe that our ability to contain the growth of
    environmental funding is a direct result of our business approach to
    meeting environmental needs.
    Stabilized Cleanup Funding
        The Congress devolved the environmental cleanup program to the
    Military Departments in fiscal year 1997. I am very pleased with our
    efforts under devolvement. The Department of the Navy's cleanup funding
    for active (i.e., non-BRAC) bases is in the Environmental Restoration,
    Navy (ER,N) account.
        We have stabilized cleanup funding at about the $300 million level
    through fiscal year 2001. This funding level reflects the Department of
    the Navy's share of the Defense Environmental Restoration Account
    funding as it was devolved to us by the Secretary of Defense in 1995.
    We have neither added money nor taken any out. We have, however, taken
    numerous steps which I will describe later to live within this level of
    funding. We believe that this level of funding will protect human
    health and the environment, allow us to better focus funding on actual
    cleanup of contaminated sites using risk management, and ensure
    consistent and predictable funding levels in the future.
    Funded Environmental Quality
        Environmental quality (EQ) is comprised of compliance, pollution
    prevention, and conservation programs. We have added a total of $51
    million in fiscal year 1998 for environmental quality above the fiscal
    year 1997 level. Growth in the EQ program is primarily driven by one-
    time compliance projects to: meet existing Clean Air Act standards,
    particularly for Title V permits, hazardous air pollutant (HAP's)
    control, and volatile organic compound (VOC) emissions; procure and
    install pulpers and shredders to manage non-plastic solid waste aboard
    surface ships; install cross connection controls and backflow
    prevention devices for the Safe Drinking Water Act; and eliminate
    electrical transformers with more than 500 parts per million of PCB's
    by 1998 as required by the Toxic Substances Control Act. We have also
    added funds for conservation to meet natural resource management
    obligations under a number of protective statutes.
        These program increases have been partially offset by funding
    declines in other areas of the EQ budget, particularly those dealing
    with the Resource Conservation and Recovery Act (RCRA), Clean Water Act
    (CWA), and pollution prevention. These budget reductions were possible
    due to: the completion of one-time projects; savings achieved from past
    investments; and reduced requirements due to base closure. Some
    individuals may be alarmed when they see the reduction in pollution
    prevention funding. Let me assure you that we have not diminished our
    efforts in this area. To the contrary, the reduction is due to BRAC
    closures of our shipyards, depots and other industrial facilities that
    are part of the Navy Working Capital Fund (NWCF), previously known as
    the Defense Business Operations Fund (DBOF). We have actually added
    pollution prevention funds in our Operations and Maintenance (O&M)
    accounts in fiscal year 1998 to meet compliance standards.
    Added Technology Development Funds
        We have added $10 million for technology development in fiscal year
    1998 to initiate the development of a pulper for submarines; to begin
    development of technologies to reduce nitrous oxide emissions from Navy
    gas turbine engines; to continue shipboard hazardous material
    substitution; and to evaluate pollution prevention equipment on our
    ships.
    Advanced BRAC Funding
        We have advanced fiscal year 1999 BRAC funding into fiscal year
    1998 to support priority cleanup needs at closure locations with firm
    community reuse plans. This funding also supports the removal or
    closing of underground storage tanks; closing hazardous waste
    accumulation areas and storage facilities; performing radon, asbestos,
    lead-paint assessments; and conducting cultural and historic
    preservation surveys.
    Other Sources of Environmental Funds
        The environmental program benefits from several other sources of
    funds. The Strategic Environmental Research and Development Program and
    the Defense Environmental Security Technology Certification Program
    enhance our technology development efforts. Revenues generated from
    agricultural leasing and timber harvesting support natural resource
    management programs on our bases. Recycling revenues from the sale of
    cans, bottles, and newsprint sustain recycling programs on our bases
    and reduce solid waste disposal costs, while recycling profits can fund
    recreational and environmental projects.
        I will now discuss specific aspects of our program.
                                    cleanup
    Program Overview
        The installation restoration program, more commonly called cleanup,
    is designed to discover, investigate, characterize, and clean up
    contaminated sites on Navy and Marine Corps installations. Two federal
    laws are the primary drivers: the Comprehensive Environmental Response,
    Compensation, and Liability Act (CERCLA), and RCRA, which includes
    cleanup from leaking underground storage tanks (UST's). Since the
    Department of the Navy cleanup program began in 1980, we have examined
    nearly 270 Navy and Marine Corps bases and identified over 3,398
    potentially contaminated sites. The primary contaminants found on our
    bases are, in order of frequency: petroleum products, solvents, heavy
    metals, and PCB's.

                      Site Status as of September 30, 1996

                                                                Active Bases

    Response Complete................................................. 1,198
    Remedy in Place...................................................    41
    Study Underway.................................................... 1,201
    Cleanup Underway..................................................   228
    No Current Action.................................................   730
                            -----------------------------------------------------------------
                            ________________________________________________
          Total....................................................... 3,398

        Through preliminary studies, investigations and cleanups, we have
    been able to ``close out'' 36 percent of our sites as being Response
    Complete, or Remedy in Place by the end of fiscal year 1996. Due to
    funding constraints, execution concerns, relative risk priorities, and
    other reasons, a total of 730 sites are awaiting future studies or
    cleanup actions. Based on current funding, we expect to be able to
    close out 42 percent of our sites at active bases by the end of fiscal
    year 1997, and 57 percent of our sites by the year fiscal year 2002.
    Department of the Navy Cleanup Policy
        Devolvement of the cleanup program by Congress has increased
    management attention to this program at all levels within the
    Department of the Navy. Last year I established a number of cleanup
    principles under which we would conduct our cleanup efforts. These
    principles continue to guide our efforts. Under this policy, we will
    invest funds in cleanups that bring us the most relative risk
    reduction. We want to have an open dialogue with regulators and the
    communities through our partnering efforts. We support the continued
    use of negotiated legal agreements, but new agreements must reflect
    relative risk evaluations and must fit within our existing budget.
    Existing legal agreements are to be revisited with regulatory agencies
    and amended to reflect funding controls and risk management factors
    wherever possible.

        ----------------------------------------------------------------

                             DON Cleanup Principles
        Evaluate and close-out all sites;
        Use risk to prioritize cleanup;
        Maintain a stable funded program;
        Plan and execute program in open dialogue with regulators and
    public stakeholders;
        Use partnering to expedite cleanups.

        ----------------------------------------------------------------

        This year, I have added 3 areas of emphasis:
        Site close-outs.--We will use site close-outs and installation
    close-outs as a cleanup performance indicator.
        Cost control.--We have established a Cost-to-Complete Index to
    measure progress in controlling changes in the total estimated cleanup
    costs. This will allow us to see how our actions and policies affect
    our cleanup bill over the long-term. At the start of fiscal year 1996,
    the baseline, we had invested $2 billion for cleanup and our cost to
    complete estimate was $5.1 billion. At the start of fiscal year 1997,
    our cost to complete estimate is $4.6 billion, the result of $362
    million of work budgeted and performed in fiscal year 1996 and $200
    million in cost avoidance.
        Defense State Memorandums of Agreement (DSMOA).--We are taking
    steps to ensure that DSMOA funds are directly tied to the projected
    workload included in our budget. DSMOA's provide ER,N funds to state
    regulators to assist them in reviewing technical documents and
    monitoring our field work.
                                 ``partnering''
        Open and cooperative decision-making with regulators and
    communities is an important tool for success in our environmental
    programs. We recently negotiated language for a model Federal Facility
    Agreement with EPA headquarters. This new language incorporates the
    recommendations from the Federal Facilities Environmental Restoration
    Dialogue and consideration for the Department of the Navy funding
    controls. The model language is expected to greatly speed up
    negotiation of site specific FFA's.
        Restoration Advisory Boards (RAB's) are an important part of our
    partnering effort. RAB's are jointly chaired by a Navy official and a
    citizen selected by the community. They are open forums for citizens to
    better understand the nature and severity of contamination on our
    bases, and to have a voice in the decision-making process. RAB input
    had added valuable common sense to the cleanup process, and has
    contributed to cost avoidances at some locations. We now have 88 RAB's
    in place covering 110 active and BRAC installations. We spent a total
    of $2 million in ER,N and BRAC funds last year for RAB's, and plan to
    spend the same amount this year.

        ----------------------------------------------------------------

                         Successful Partnering Examples
        Agreement to use natural attenuation as the remedy for a
    contaminated aquifer at NAS Jacksonville, Florida will take 15 years
    and cost $116,000. The previous plan was to pump and treat for 6 years
    at a cost of $1.6 million.
        Agreement at Marine Corps Base Camp Lejeune, North Carolina to
    change the cleanup standard in a signed Record of Decision from
    residential to industrial use will not endanger health or safety and
    save $800,000.
        Agreement to use Global Positioning System (GPS) to locate wells
    instead of using survey crews at NAS Cecil Field, Florida saved
    $100,000 in one year. GPS meets accuracy needs.

        ----------------------------------------------------------------

    More Cleanup, Less Study
        We continue to execute a larger portion of our ER,N budget on
    actual ``shovel in the ground'' cleanups. We are limiting the amount of
    money spent for management to 11 percent. In fiscal year 1998, we plan
    to spend 76 percent on actual cleanup and 13 percent on studies. We
    have accomplished this by early identification of cleanup
    opportunities, wise use of our cleanup contracts, and the cooperation
    and support of regulators and the community. That is not to say that we
    can do without studies.

                Cleanup percent increasing, fiscal year 1991-1998

                    [Cleanups as a percent of total program]

            Fiscal year                                              Percent

    1991..............................................................    13
    1992..............................................................    14
    1993..............................................................    30
    1994..............................................................    48
    1995..............................................................    59
    1996..............................................................    64
    1997..............................................................    87
    1998..............................................................    76

        Studies are an integral part of the cleanup effort, not just some
    paperwork shuffling. We must first understand the types, locations,
    severity, and geophysical characteristics of the contamination before
    we can decide what we should do, if anything. Thorough preliminary
    investigations can prevent unnecessary cleanup expenses. We are at the
    top end of how much we can reasonably limit investments on studies
    versus cleanup. The bottom line is that our goal is the safe close-out
    of sites, not necessarily just spending money on cleanup. Our goal is
    to make cost-effective decisions about the need for analysis, and
    proceed to immediate active remediation only where protection of human
    health and the environment require it.
    Risk Management
        The Department of Defense adopted a new prioritization scheme in
    1995 based on risk management and the relative risk of sites. Relative
    risk considers the relationship between the contaminant(s), the
    pathways(s) that the contaminant may travel, and the receptor(s), i.e.,
    human, animal and plant, that can be adversely affected. Sites are then
    grouped in categories of ``high,'' ``medium,'' and ``low'' to assist in
    establishing priorities. Since we cannot reasonably and financially do
    everything first, relative risk seeks to identify for first action
    those sites that pose a greater health and safety risk.

        ----------------------------------------------------------------

    ------------------------------------------------------------------------
                                                                  Percent of
                    Fiscal year 1998                  No. Sites     Funds
    ------------------------------------------------------------------------
    High............................................        501         90.7
    Medium..........................................         49          2.7
    Low.............................................         32          3.4
    Not Evaluated...................................         31          3.2
                                                     -----------------------
          Total.....................................        613        100
    ------------------------------------------------------------------------

        ----------------------------------------------------------------

        While we give priority to high-risk sites, we remain flexible
    within a stable funded program to cleanup selected medium and even low-
    risk sites when it makes sense to do so. For example, the marginal cost
    of having the remediation contractor take care of a low-risk site
    adjacent to a similarly contaminated high-risk site may make better
    business sense than bringing a contractor back years later.
    Tiger Teams
        Last year, the Naval Facilities Engineering Service Center
    established a Cleanup Review Tiger Team to find ways to better manage
    risk, minimize cost, accelerate cleanup, and still protect human health
    and the environment. The team, comprised of technical experts from the
    Naval Facilities Engineering Command, the U.S. Army Corps of Engineers,
    the U.S. Geological Survey, the Western Governors Association, and
    private sector consultants met with 150 remedial project managers and
    reviewed data on 460 sites over a 9-month period of time. The Tiger
    Team report, issued last month, highlighted the need to improve skills,
    strengthen technical support, increase peer review, and expand
    technology dissemination.
        Perhaps more importantly, the Tiger Teams helped to focus attention
    on where the greatest opportunities are for cost control. Conventional
    wisdom has looked at cost saving alternatives during remedy selection,
    i.e., choosing whether to use innovative technologies in place of more
    conventional cleanup solutions. In reality, the opportunity for cost
    avoidance is far greater in the earliest phases of investigation, where
    geostatistics, sampling plans, data quality objectives, exposure
    values, land use assumptions, health risk assessments, and ecological
    risk assessments can drive cleanup standards. These factors frame the
    level of cleanup that is required to maintain human health and the
    environment, and what cleanup remedies can be considered to meet those
    needs.
        For example, we asked CNA to evaluate the utility of ecological
    risk assessments (ERA's). ERA's are used to determine the risk that
    contaminants pose to the environment. Conducting an ERA can be costly,
    and can stretch out the cleanup process. CNA reviewed ERA's at 80 sites
    on 17 Navy and Marine Corps installations. They concluded that ERA's
    had a minimal impact on remedy selection, and that expanding the scope
    of ERA's would not likely lead to more precisely quantified risk. CNA
    also noted unique problems associated with ERA's conducted in
    estuaries. Such ERA's cannot distinguish between Navy and non-Navy
    contaminants (a particular concern given that many Navy bases are
    located in heavily industrialized estuaries with significant levels of
    non-Navy contamination), and that there are few active remedial options
    available for contaminated sediments. We are sharing the results of
    this analysis with regulators. We are also developing Department of the
    Navy guidance on ERA's.
                                   compliance
    Program Overview
        The compliance program supports our efforts to meet existing
    environmental requirements for our current operations and industrial
    processes. The principal challenges here are under: the Clean Water
    Act, which regulates wastewater treatment and other discharges into
    waterways; the amended Clean Air Act, which regulates air emissions
    from most of our operations; the Toxic Substances Control Act, which
    regulates the management and disposal of PCB's; and RCRA, which
    regulates hazardous waste, solid waste and underground storage tanks.
    Compliance programs are implemented at every major Navy and Marine
    Corps activity.
        We have implemented new environmental quality budget exhibits which
    distinguish annual recurring costs from one-time project costs.
    Recurring costs, which we call Class ``0,'' cover salaries and benefits
    for the base's environmental staff; operating permits and fees;
    sampling, analysis and testing; and hazardous waste handling and
    disposal.

               Department of the Navy Recurring vs. One-time Costs

                                                                     Percent

    One-time..........................................................    59
    Recurring.........................................................    41

    Note.--Fiscal year 1998 O&M accounts equal $550 million.
    ---------------------------------------------------------------------------

        The remainder of the compliance budget consists of one-time
    projects that must be done to meet an existing environmental standard.
    Class I projects are those required to meet a compliance deadline that
    has already passed; Class II projects are required to meet a specific
    future deadline; Class III projects provide an environmental benefit,
    but are not required by law or regulation. Our policy is to fund all
    Class I projects as soon as they can be accomplished, and to fund all
    Class II projects ``just-in-time'' to meet regulatory standards. Due to
    funding constraints, we do not budget for Class II projects that can be
    deferred and still meet the deadline, nor any Class III projects. We
    now track all one-time compliance projects greater than $300,000.
    Examples of compliance projects in our fiscal year 1998 budget include:
    $998,000 to close a landfill at Marine Corps Combat Development Center,
    Quantico, Virginia; $340,000 to remove underground storage tanks at
    Naval Shipyard Pearl Harbor, Hawaii; and $25 million to construct an
    oily waste collection, processing, and treatment facility at Naval
    Station, Pearl Harbor, Hawaii to provide dedicated collection,
    transmission, and processing facilities for bilge and other oily waste
    and correct a Class I environmental violation.
    Maintaining Compliance
        Funding for the compliance program represents nearly one-half of
    our entire environmental budget. There is an enormous effort taken to
    ensure that we properly identify requirements. Our decentralized
    management approach places the primary responsibility for maintaining
    environmental compliance with the commanding officers of our bases.
    They must identify the requirements and execute the program.
        There are a number of tools available to assist them. Both Navy and
    Marine Corps use 3-tiered environmental compliance evaluations to find
    and fix compliance problems before a regulator does. Headquarters'
    staffs monitor compliance trends to spot installations with problems
    and help them improve their performance. Both Navy and Marine Corps
    also use a Navy developed ``Environmental Cookbook'' to help the base
    commander recognize all environmental standards. The cookbook approach
    fosters greater awareness of specific compliance standards, and
    provides typical solutions and their expected cost, which must then be
    tailored to local conditions.

        ----------------------------------------------------------------

                               No Cost Compliance
        Some environmental compliance efforts just need a bit of common
    sense. Marine Corps Mountain Warfare Training Center Bridgeport,
    California reduced waste oil disposal costs by simply changing to the
    manufacturer's recommended oil change interval of 7,500 miles instead
    of government schedule of 3,000 miles.

        ----------------------------------------------------------------

        We fully understand that environmental requirements compete in the
    budget process with direct operational requirements such as weapons
    system maintenance and modernization. Our careful scrub of all
    requirements, environmental and otherwise, ensures that appropriate
    priority is given to each.
        To ensure that funds are being used properly, we asked the Naval
    Audit Service (NAS) to review environmental compliance expenditures to
    ensure that they were used to meet documented, existing regulatory
    standards, and that funding could not have been deferred. NAS reviewed
    fiscal year 1994 and fiscal year 1995 expenditures at 11 Navy and
    Marine Corps bases and found that, with only a few minor exceptions,
    all expenditures were needed to meet existing environmental
    requirements and could not have been deferred.

        ----------------------------------------------------------------

                             NEW ENFORCEMENT ACTIONS
    ------------------------------------------------------------------------
                                                 Fiscal year--
                                 -------------------------------------------
                                     1993       1994       1995       1996
    ------------------------------------------------------------------------
    Navy........................        278        188        161        146
    Marine Corps................        142         13         22         13
                                 -------------------------------------------
          Total.................        420        201        183        159
    ------------------------------------------------------------------------

        ----------------------------------------------------------------

        One measure of the success of our environmental effort is reflected
    in the significant decline in the number of new enforcement actions
    issued by regulators.
    Training
        Environmental training is a critical ingredient to maintaining
    compliance. The training must be timed to meet the individual's
    environmental duties, and provide both compliance standards and the
    range of technological and management solutions to achieve compliance.
    Both Navy and Marine Corps have taken steps to identify training needs
    and strengthen opportunities to receive the necessary instruction. The
    Chief of Naval Operations implemented a Navy Training System Plan last
    year that established minimum training requirements for military and
    civilian personnel, and approved 31 courses of instruction. The
    training plan was coordinated with the Inter Service Environmental
    Education Review Board to maximize joint training opportunities.
        The Marine Corps continues to fully implement the Comprehensive
    Environmental Training and Education Program which ties together public
    outreach initiatives with integrated environmental training
    requirements into Marines' basic military occupational training.
    Shipboard Compliance
        The Congress has passed several pieces of legislation in the last
    few years concerning environmental issues on Navy ships.
        The Fiscal Year 1994 Defense Authorization Act prohibited the
    discharge of all plastic waste from surface ships by 31 December 1998
    and codified an installation schedule for Plastic Waste Processors
    (PWP's). The PWP was developed by the Navy and reduces plastic waste
    volume 30:1. It shreds the plastic into small chips, melts, sanitizes
    and compresses the plastic into sterile round discs weighing about 15
    pounds. These discs can be safely stored aboard ship for recycling or
    disposal when the ship returns to port.
        The PWP program is fully funded and on track. Production contracts
    were awarded in 1995 to two manufacturers. Two hundred and one surface
    ships will receive the PWP. We have met all legislative milestones to
    date, including completing 25 percent of all PWP installations by 1
    March 1997. We are on track to meet the remaining legislative dates of
    50 percent completed by 1 July 1997, 75 percent completed by 1 July
    1998, and 100 percent completed by 31 December 1998. The total cost for
    research, development, procurement and installation of PWP's is $259
    million.
        The Fiscal Year 1996 Defense Authorization Act approved a process
    for developing uniform national discharge standards for effluents from
    military vessels. The Navy and EPA are currently developing joint
    regulations identifying the military vessel discharges for which some
    control is necessary. Once this process is complete, we anticipate by
    early in 1998, Navy and EPA will jointly promulgate standards for such
    discharges. A multi-agency executive steering committee is overseeing
    this effort. A representative from the Environmental Council of States
    is also on the Committee. The end result of this effort will be to
    establish clear and uniform U.S. discharge standards for Armed Forces
    vessels that apply at all military and commercial port facilities
    across the United States. With such standards in place, we can design,
    develop, and install effective control technologies aboard Navy ships
    to meet these standards.

        ----------------------------------------------------------------

        Last month, the U.S.S. John C. Stennis (CVN 74) became the first
    Navy ship to receive all the equipment necessary to manage its solid
    waste stream at sea.

        ----------------------------------------------------------------

        The Fiscal Year 1997 Defense Authorization Act approved Navy plans
    to install solid waste pulpers and shredders (P&S) in surface ships of
    frigate size and larger, and to use these devices in special areas and
    elsewhere to process and discharge waste paper, cardboard, metal and
    glass. Under the Act to Prevent Pollution from Ships, P&S must be
    installed and in use aboard surface ships by the end of the year 2000,
    except for those ships being decommissioned in or before the year 2005.
    A total of 205 surface ships will receive the P&S. The total cost for
    research, development, procurement and installation of these devices is
    $318 million. The Navy announced its intention to contract for the
    manufacture of P&S in the Commerce Business Daily last summer, and
    plans to award a contract this fall. We plan to complete P&S
    installation by the December 2000 deadline.
        Because of unique space limitations, atmospheric concerns, and
    other issues, the Fiscal Year 1994 Defense Authorization Act set a
    compliance deadline of 2008 for submarines to meet plastic waste and
    non-plastic waste discharge restrictions. Under the direction of an
    Executive Steering Committee chaired by the Deputy Assistant Secretary
    for Environment and Safety, the Navy is analyzing alternatives for
    solid waste management aboard submarines. I expect to submit a report
    to Congress by the end of this calendar year that will describe our
    preferred alternative for submarine solid waste management.
        The Navy is working with EPA and the Association of Metropolitan
    Sewerage Agencies (AMSA) to establish nationwide guidance for Vessel
    Collection, Holding, Transfer (CHT) system discharges to Sewage Plants.
    CHT's store a ship's sewage and gray water (showers, laundry, galleys).
    Some municipalities wanted to treat CHT effluents as hazardous waste
    because of the presence of traces of heavy metals. Doing so would have
    dramatically escalated our treatment and disposal cost. Navy studies
    provided conclusive evidence that the metals were the result of normal
    corrosion in pipes and would not harm normal sewage plant operations.
    AMSA and EPA have supported our findings and conclusions.
    Clean Air Act
        As the designated Department of Defense lead for Clean Air Act
    (CAA) issues, the Navy has participated in numerous working groups with
    EPA and OMB. Our objective is to ensure that EPA recognizes and
    considers unique military concerns before establishing compliance
    standards.

        ----------------------------------------------------------------

              Navy as the DOD Lead on EPA Clean Air Act Committees

        EPA Subcommittee for Ozone, Particulate Matter and Regional Haze
    Implementation Programs;
        Mobile and Area Source work group on the Ozone Transport Assessment
    Group;
        EPA Steering Committee on Prescribed Burning;
        Industrial Combustors Coordinated Rule Making Committee.

        ----------------------------------------------------------------

        The Navy led Department of Defense negotiations with EPA on the
    development of Major Source Determination Guidance for military
    installations under CAA programs for Air Toxics, New Source Review, and
    Title V Operating Permits. The guidance identifies what sources must be
    aggregated to determine emission control and permitting requirements.
    Compared to most industrial sources, military installations include a
    wider variety of functions and activities including residential
    housing, schools, churches, shopping centers, hospitals, and fire
    stations. The guidance assures that military installations are treated
    consistently under regulations that are applied to nonmilitary
    stationary sources.
        EPA has recently proposed new National Ambient Air Quality
    Standards (NAAQS) rules for ozone and particulate matter. If new
    standards are set, states will have up to 3 years to prepare
    implementation plans, and EPA will consider new rules for mobile
    sources. The substance and extent of these implementation plans will
    determine how our operational practices will be affected. Our concerns
    with this proposed regulation centers on its potential impact on
    training. Smoke generators are used to simulate combat conditions, and
    tracked vehicles used on training ranges produce significant quantities
    of particulates. Both of these operational practices could be
    dramatically affected by the proposed particulate matter standard. We
    are also concerned about the cost of acquiring and maintaining permits,
    and the cost and complexity of equipment upgrades. We need to ensure
    that emissions and operating limits on military tactical equipment will
    not impede military readiness and operations. We are engaged with EPA
    on implementation issues, and are represented by our Regional
    Environmental Coordinators as the states do their work.
    Munitions Rule/Range Rule
        Section 107 of the Federal Facilities Compliance Act (FFCA) of 1992
    required EPA, in consultation with the Department of Defense (DOD) and
    State governments, to issue regulations on when conventional and
    chemical military munitions become hazardous waste subject to
    regulation under RCRA. Section 107 also requires that these regulations
    provide for the safe transportation and storage of waste military
    munitions.
        DOD has worked extensively with EPA on this issue. The Military
    Munitions Rule (MMR) was published as a final rule on February 12,
    1997. It takes effect on August 12, 1997. We are generally satisfied
    with this new rule. It clearly defines when military munitions become a
    hazardous waste under RCRA, provides regulatory control and oversight
    of these munitions, and properly reflects safety concerns during
    transportation and storage.
        States may still adopt more stringent rules than that contained in
    the MMR. We are working with the states to try to maintain a level of
    MMR uniformity. As this is a new rule, and it is not yet clear what
    action the states will take, we have not identified an implementation
    cost; there is no funding included in our budget for MMR.
        The MMR also allows the Department of Defense to use existing
    statutory authority to develop a process for cleaning up Unexploded
    Ordnance (UXO) on ranges that were once used by DOD. This process,
    called the DOD Range Rule, identifies appropriate response actions for
    UXO that will address safety, human health, and the environment. The
    development of the Range Rule has incorporated the input of state
    regulators, community activists, tribal leaders, the EPA, and OMB. We
    hope to publish a proposed rule in the Federal Register during the
    summer of 1997. DOD will be holding public meetings throughout the U.S.
    to educate the public about the rule, listen to stakeholder concerns,
    and answer any questions.
                              pollution prevention
    Program Overview
        P\2\ program requirements are primarily driven by Executive Orders
    12856, 12813, the CAA, the Montreal Protocol banning production and
    import of ozone depleting substances into the U.S., and the hazardous
    waste minimization aspects of RCRA.
        P\2\ is also good business decision-making, and the principal tool
    for cost-effective compliance. Instead of using traditional ``end-of-
    the-pipe'' waste management collection and treatment, P\2\ seeks to
    eliminate the contaminant ``at the source'' through process changes,
    recycling, and substitution of non-hazardous or less hazardous
    materials. Money invested in this effort can avoid costs for
    permitting, sampling, testing to ensure that permit standards are met,
    and hazardous waste disposal. It can also improve safety and
    occupational health in the workplace and still maintain weapon system
    capabilities.
        We continue to make progress in shifting from a compliance mode to
    a P\2\ mode. One of our greatest challenges is to ensure that program
    managers and decision makers think about P\2\ up-front--not as an after
    thought--in acquisition, facilities management, and operations. We
    issued a comprehensive Department of the Navy pollution prevention
    strategy in 1995 to reinforce the paradigm shift from compliance to
    P\2\.

        ----------------------------------------------------------------

                       A ``Rags to Riches'' P\2\ Success

        Ships at Naval Station San Diego, California and Naval Station
    Everett, WA have begun using recycled rags instead of baled rags. The
    recycled rags cost 50 percent less to buy, have no disposal costs, are
    5 times as absorbent, and will divert 75 tons of HW disposal per year.
    NAVSUP is expanding the use of recycled rags to other fleet locations.

        ----------------------------------------------------------------

    CHRIMP
        The Navy's Consolidated Hazardous Material Reutilization and
    Inventory Management Program (CHRIMP) provides centralized life cycle
    control and management of all hazardous material (HM) and hazardous
    waste (HW). It establishes a chain of authorized ownership for each use
    of HM from procurement, receipt, distribution, use, return,
    redistribution, to any final disposal. The Navy has developed software,
    which has now been designated as the joint Service HM/HW management
    system, to facilitate CHRIMP program management on ships and at shore
    installations. The Naval Supply Systems Command is implementing CHRIMP
    and the associated software. Implementation began in 1994. It has now
    been fielded at 92 shore activities and 145 ships, with implementation
    to continue through 1999. The Navy tested a regional CHRIMP model in
    the Seattle area last year and will now begin similar efforts in
    Norfolk, Virginia and Pearl Harbor, Hawaii this year. We estimate that
    CHRIMP has cut HM procurement and reduced HW disposal costs by $23
    million in fiscal year 1996.
    P\2\ Information Sources
        One of the major hurdles we have had to overcome is how best to
    advise willing program managers on what P\2\ alternatives exist to meet
    their specific applications. The Naval Facilities Engineering Service
    Center (NFESC), working with the Air Force Center for Environmental
    Excellence and the Army Environmental Center, developed a joint Service
    P\2\ Opportunity Handbook that identifies off-the-shelf P\2\
    technologies and management practices. It is accessible via the
    Internet.

        ----------------------------------------------------------------

                               P\2\ Success Story

        Naval Surface Warfare Center Crane, Indiana adopted digital photo
    processing (DPP) instead of conventional means. DPP has eliminated 5
    chemical processes and 28 HM's. It is 3 times faster than conventional
    photo developing, and allows for digital storage and electronic
    transmission. The equipment cost $190,000 and is expected to save
    $210,000 per year in labor, material and disposal costs.

        ----------------------------------------------------------------

        Naval Air Warfare Center, Aircraft Division, Lakehurst, New Jersey
    developed a P\2\ equipment book that identifies commercially available
    equipment that is being purchased or evaluated by the Navy. It includes
    equipment summaries, operating characteristics, implementation
    requirements, a list of benefits and costs, and a point-of-contact for
    further assistance.
        The Navy and Marine Corps have published P\2\ planning guides and
    model P\2\ plans to help installations assemble their own P\2\ plans.
    All major Navy and Marine installations now have P\2\ plans that they
    are working to implement.
    Centralized P\2\ Procurement
        The Navy created a centrally managed Pollution Prevention Equipment
    Program (PPEP) to purchase and install P\2\ equipment for non-DBOF Navy
    Activities. The program provides commercial off-the-shelf technologies,
    but also allows for the demonstration and evaluation of promising new
    equipment. Centralized procurement provides economy of scale for
    purchasing and simplifies logistics support. The Navy budget includes
    $21 million in fiscal year 1998 and fiscal year 1999 in the Other
    Procurement, Navy appropriation for this effort.

        ----------------------------------------------------------------

                     Centralized P\2\ Procurement Examples

        Isopropyl Alcohol/Cyclohexane Vapor Degreaser is a self-contained
    system to degrease, clean, and dry precision instrument bearings
    without the use of ozone-depleting substances. The return on investment
    is 0.6 years.
        High Pressure Water Jet System removes paint, corrosion, and marine
    growth from underwater mines. The return on investment is 0.9 years.
        Aviation Fuel Recycler recycles JP-5 aviation fuel samples for
    reuse in aircraft and support equipment. The return on investment is 2
    years.

        ----------------------------------------------------------------

    PACE
        The Marine Corps is implementing a new program called Pollution
    Prevention Approach to Compliance Efforts (PACE) to prioritize
    compliance projects which use pollution prevention solutions. PACE
    allows the Marine Corps to identify those P\2\ projects that contribute
    the most to meeting current compliance standards, and that promise to
    alleviate future compliance costs. The Marine Corps has shifted fiscal
    year 1998 compliance funds to fund P\2\ investments practices and one-
    time projects.
    Toxic Release Inventories
        Congress passed the Emergency Planning and Community Right-to-Know
    Act (EPCRA) in 1986. EPCRA requires facilities that handle significant
    quantities of HM to make available to the public the types of HM being
    used and to conduct annual toxic release inventories (TRI). Although
    federal facilities were not originally included under EPCRA, Executive
    Order 12856, signed by President Clinton in 1993, directed federal
    agencies to comply with EPCRA. It also established a goal to reduce the
    release and off-site transfer of toxic chemicals by 50 percent over a
    five year period, using 1994 as the baseline.
        Both the Navy and Marine Corps have now completed 1994 and 1995 TRI
    reports. A total of 35 Navy and 9 Marine Corps facilities reported in
    1994, yielding a total baseline of 2.3 million pounds for Navy and 1.3
    million pounds for Marine Corps. To ensure the accuracy of the data,
    the Chief of Naval Operations asked CNA to analyze 1994 Navy data and
    confirm its validity as a baseline. According to CNA:
      --Ninety-eight percent of the releases were to the air.
      --The leading Navy facilities release about 1/100 as much as the
            leading commercial facilities.
      --The 10 leading Navy facilities account for 84 percent of the Navy
            total. Three of these facilities are government-owned,
            contractor-operated facilities.
      --Navy releases are overwhelmingly associated with aircraft
            maintenance activities such as painting, paint stripping, and
            degreasing.
        CNA validated the 1994 Navy baseline data, and recommended that the
    Navy take steps to standardize some reporting practices.
        We are optimistic about meeting the 50 percent reduction by fiscal
    year 1999. Two major contributors which account for one-third of the
    1994 baseline (1,1,1-trichloroethane and freon-113) are Class I ozone-
    depleting chemicals that are being phased out. Commercially available
    substitutes are being tested at Navy facilities for Dichloromethane,
    which is primarily used as a paint stripper and accounts for 15 percent
    of the baseline. We have been pursuing efforts to reduce methyl ethyl
    keytone, which is used as a paint thinner and wipe solvent and accounts
    for 12 percent of the baseline.

        ----------------------------------------------------------------

                         Toxic Release Inventory Update

        The 1995 TRI data shows a reduction of 41 percent for Navy and 31
    percent for Marine Corps from the 1994 baseline.

        ----------------------------------------------------------------

    P\2\ Afloat
        The Navy has embarked on a major effort to bring P\2\ to sea. The
    P\2\ Afloat Program will reduce HM procurement costs for ships, improve
    safety and health aboard ship, improve quality of life and reduce
    operation and support costs. Since HW is off-loaded in port, it will
    help shore installations meet the Executive Order 12856 goal of a 50
    percent reduction in HW by 1999.
        Efforts are underway to document waste streams and HM usage on
    different classes of ships. Some waste streams, such as oily rags,
    solvents, and paints, are common among all ships, although their usage
    will vary. Other waste streams are unique to ship missions, i.e.,
    aircraft carriers. We want be able to tie each waste stream back to the
    ship's work center that generates it, and then apply P\2\ solutions at
    the work centers to reduce or eliminate the use of HM. We are initially
    focusing on low cost investments that yield large savings.
        The U.S.S. Carl Vinson (CVN 70); U.S.S. WASP (LHD 1); U.S.S. John
    Hancock (DD 981); U.S.S. George Washington (CVN 73) are serving as test
    beds for the P\2\ afloat program. The Carl Vinson recently completed a
    6 month deployment with a suite of 19 pieces of P\2\ equipment,
    alternate materials, and process improvements. The Navy is now
    evaluating the results of this first test. The U.S.S. Hancock (DD 981),
    U.S.S. Kearsarge (LHD 3), and the U.S.S. Arctic (AOE 8) are set to
    deploy this month with similar suites of P\2\ equipment.
        The Smart Ship Project is an effort by the Surface Warfare
    Community to reduce crew workload, and thus reduce manning requirements
    for the future. The U.S.S. Yorktown (CG 48) is the designated test bed
    for this effort. P\2\ afloat principles are being included as part of
    the Smart Ship project. The Yorktown deployed in December with a suite
    of P\2\ initiatives and will undergo test and evaluations at sea
    through this month. The Smart Ship Project motto of ``working smarter,
    not harder'' fits right in with the P\2\ afloat program.
    P\2\ in Acquisition
        There is no better way to control future environmental costs than
    through effective planning for pollution prevention in the acquisition
    process. We can save significant time, money, and future effort if we
    factor in environmental considerations now for the weapons systems and
    platforms of the future.

        ----------------------------------------------------------------

        The Joint Strike Fighter being developed jointly by the Navy and
    the Air Force is testing a fluorinated polymer applique that would
    eliminate the need for painting and paint stripping; reduce weight; and
    eliminate paint HM and HW. Potential savings of up to $4 billion in
    life cycle costs are projected.

        ----------------------------------------------------------------

        The Assistant Secretary of the Navy (Research, Development and
    Acquisition) is working closely with us to instill within the
    acquisition community the need to consider life cycle environmental
    factors. Acquisition program managers are now far better versed on how
    P\2\ investments can reduce or eliminate future environmental
    compliance problems and improve weapon system performance, simplify
    maintenance processes, and improve operator safety. All acquisition
    program milestone reviews specifically address environmental issues and
    the status of National Environmental Policy Act documentation.
        Nowhere is the P\2\ philosophy better embraced than in the Navy New
    Attack Submarine NSSN, the Navy's next generation of nuclear-powered
    attack submarine. NSSN will begin sea trials in the year 2005 and is
    expected to become operational in 2007. The NSSN Team, comprised of
    Navy program managers, Electric Boat Corporation, Newport News
    Shipbuilding, Lockheed-Martin, and a multitude of subcontractors, have
    scored numerous environmental successes so far. For example, NSSN will:
      --Use recycled lead and recycled chromated water from inactivated
            submarines, reducing current disposal costs;
      --Reduce the number of paint products and solvents used in
            manufacturing and maintenance by 30 percent and 75 percent,
            respectively;
      --Not use any Class I ODS's for cooling or refrigeration;
      --Use zero PCB's, which will result in a 90 percent reduction in the
            amount of HW to be disposed;
      --Be designed not to discharge plastics waste, in compliance with the
            Act to Prevent Pollution from Ships;
      --Include an HM map to identify the location and type of HM that
            could not be eliminated from the submarine design; and
      --Include dismantling procedures to efficiently recycle and dispose
            of the submarine at the end of its 30+ years of duty.
    Ozone Depleting Substances (ODS's)
        As a result of the 1987 Montreal Protocol, a ban on the production
    of ODS's went into effect for industrialized nations in January 1996.
    At that time, ODS's were used in virtually every weapon system and
    facility operated by the Navy. We were very concerned that the
    elimination of ODS's could compromise Navy readiness in the future. We
    use ODS's in three primary applications: air conditioning and
    refrigeration (CFC-11, -12, -114); fire fighting agents (Halon 1211,
    Halon 1301); and solvents (CFC-113, methyl chloroform). We have taken a
    number of steps to manage this situation.

        ----------------------------------------------------------------

        The Navy CFC and Halon Clearinghouse lists ODS alternatives,
    military specs and revisions, Navy ODS elimination programs, and other
    ODS news. It is accessible via the Internet, and through a quarterly
    newsletter. Technical inquiries are routinely received from
    international militaries and environmental organizations.

        ----------------------------------------------------------------

        We have now converted a total of 168 CFC-12 based air conditioning
    plants and 177 CFC-12 based refrigeration plants on 82 Navy ships to
    ozone friendly HFC-134a. We plan to complete the conversion on
    remaining ships by the year 2000 at a cost of approximately $90
    million. Conversion of existing CFC-114 air conditioning plants on
    surface ships to non-ODS HFC-236fa is currently scheduled from 1999-
    2010.
        Last September, the Specification Review Board approved the use of
    the Navy Oxygen Cleaner (NOC) for precision cleaning and testing of
    oxygen life support systems. NOC is a jointly patented industry/Navy
    product that will eliminate 95 percent of the CFC-113 used by the Navy
    for cleaning oxygen systems.
        We are also looking to remove ODS's from future weapon systems. The
    F/A-18E/F and V-22 aircraft programs were awarded a 1996 EPA
    Stratospheric Ozone Protection Award for their pioneering work in ODS
    alternatives for fire suppression. The amphibious transport dock ship
    LPD-17, the aircraft carrier CVN 76, and the New Attack Submarine NSSN,
    and the Marine Corps' Advanced Amphibious Assault Vehicle (AAAV) will
    all be ODS-free systems.
        The Defense Logistics agency is maintaining a strategic reserve of
    ODS compounds for mission critical needs on ships and aircraft that
    will not be converted to non-ODS substances.
                                  conservation
        We are committed to protecting the natural and cultural resources
    on our bases. We want to comply with both the letter and the spirit of
    all conservation statutes, including the Endangered Species Act, the
    Marine Mammal Protection Act, The Migratory Bird Treaty Act, the
    National Historic Preservation Act, the Sikes Act, and the
    Archeological Resource Protection Act.
        The Navy and Marine Corps manage some of the nation's most
    ecologically important sites. There are federally designated critical
    habitats on four Navy and two Marine Corps installations. There are 160
    endangered and threatened species on Navy bases, and 47 on Marine Corps
    bases. Our natural resources professionals routinely work with private,
    state, and federal conservation organizations to coordinate efforts in
    forest management, cultural resources management, soil and water
    conservation, fish and wildlife management, and outdoor recreation
    opportunities for our Sailors, Marines, and their neighbors in the
    community.
        While we have a legal and moral obligation to conserve the natural
    resources entrusted to us by the American people, we also have a
    military need to ensure continued access to and use of these resources.
    Our goal is to make every acre support our national defense mission,
    while still taking the protective measures that the law requires.
        We are preparing integrated natural and cultural resource plans for
    all our installations. Since some training and testing activities can
    affect protected natural and cultural resources, we need to inventory
    these resources and understand the applicable requirements. Creative
    solutions, arrived at in partnership with regulators and conservation
    advocates, make win-win situations for the national defense and the
    environment.
        A few examples of our recent conservation efforts:
      --Last year, the Navy's Atlantic Fleet initiated a special program to
            monitor and protect North Atlantic right whales, one of the
            most endangered of the whale species. Less than 350 remain in
            the Atlantic Ocean. It's preference to use the waters off the
            southeastern U.S. as its calving area during late winter and
            early spring required military and commercial vessels operating
            in the same vicinity to exercise particular care to avoid
            harming these animals. We are working with the Coast Guard, the
            Army Corps of Engineers, the National Marine Fisheries Service,
            state wildlife agencies and private conservation groups to
            protect the calving areas off the coast of Florida and Georgia.
            Naval aviators and bridge lookouts aboard ships report whale
            sightings. This information is relayed to ship traffic in the
            area to minimize the chance of a collision.
      --The Department of the Navy last year adopted new policies in
            implementing the requirements of the National Environmental
            Policy Act (NEPA). The focus of this effort was to more fully
            integrate environmental planning into the earliest stages of
            decision-making, particularly in the operations and weapon
            system acquisition area, and to use the NEPA process to make
            environmentally informed decisions, not merely to confirm or
            defend decisions already made. As an example, the Navy has been
            working with the National Marine Fisheries Service to prepare
            an Environmental Impact Statement for ship shock trials of the
            New Attack Submarine.
      --The Marine Corps is finalizing a programmatic consultation with the
            U.S. Fish and Wildlife Service for protection of the threatened
            desert tortoise at Marine Corps Air Ground Combat Center
            Twentynine Palms, California. MCAGCC supports an increasing
            population of this species. To highlight our commitment and
            celebrate our successes, the Marine Corps and USFWS jointly
            produced an endangered species poster featuring the desert
            tortoise and M-1A1 tank at MCAGCC. The poster was unveiled at
            MCAGCC by Mr. Bruce Babbitt, Secretary of the Interior, on 24
            Mar 97 its slogan was ``Armored Threat and Threatened Armor,
            the Marines, We're Saving a Few Good Species.''
        An article in the Washington Post last month recognized that our
    bases are often a Mecca for wildlife and plants in a sea of urban,
    commercial, and industrial sprawl. We are justifiably proud of our
    conservation efforts.
                                   technology
        The environmental technology program supports our cleanup,
    compliance, conservation and pollution prevention efforts. Our
    technology development efforts focus on satisfying technology needs for
    the military applications of today and tomorrow. We first look to the
    marketplace to supply us with our technology needs. When there is no
    off-the-shelf technology available, we try to adapt existing
    technologies, perform the necessary research and development in our
    laboratories, or contract with universities or commercial labs. Some
    technologies we develop also have commercial applications--so-called
    dual use technologies.
        I have already mentioned several prominent environmental technology
    efforts--the development of PWP's, P&S, and our efforts with chemical
    manufacturers to find ODS alternatives. Another example of a technology
    that has successfully transitioned to the fleet is the SCAPS-LIF (Site
    Characterization and Analysis penetrometer System-Laser-Induced
    Fluorescence), a truck mounted technology designed to obtain real-time,
    in situ subsurface data on petroleum contamination. Cost and time
    savings can exceed 40 percent compared to drilling wells. SCAPS-LF was
    developed jointly by the Navy and Army. Last year, EPA, California, and
    the Western Governors Association agreed that SCAPS-LF was a proven
    technology suitable for use at sites within their jurisdiction. This
    certification is an important step toward nationwide use of this cost
    saving technique.
        We recently asked the Naval Audit Service (NAS) to assess how well
    our technology investments translate into real applications being used
    in the field. The NAS found some evidence that our investments had
    resulted in technology transfers that benefited the Navy, and that
    there was evidence that benefits outweighed costs. However, they cited
    the need for better management controls to document and quantify all
    technology transfer projects. The Navy is implementing the NAS
    recommendations.
                           brac environmental program
    BRAC Implementation
        The base closure process is a challenging one for the Department of
    the Navy and for the many communities who have hosted our ships,
    aircraft, Sailors and Marines for so many years. Yet it is one we must
    pursue if we are to properly size our shore infrastructure to reflect
    the smaller force structure of the Post Cold War era. As you know,
    excess capacity in our shore facilities creates a significant financial
    drain on the Department of the Navy's budget.
        We are implementing four rounds of base closure as directed by law,
    the first was in 1988 under the Defense Authorization Amendments and
    Base Closure and Realignment Act of 1988 (Public Law 100-526), and
    three additional rounds in 1991, 1993, and 1995, under the Defense Base
    Closure and Realignment Act of 1990 (Public Law 101-510). As a result
    of these decisions, we are implementing a total of 178 actions
    consisting of 46 major closures, 89 minor closures, and 43
    realignments.
    BRAC Implementation Strategy
        Our implementation strategy focuses first on achieving operational
    closure at each military installation selected for closure as quickly
    as possible. By that, I mean all mission equipment and military
    personnel (with the exception of a small caretaker cadre) have been
    disbanded or relocated to the ``receiving'' location and the military
    mission has ceased. Second, we seek to expeditiously cleanup and
    dispose of BRAC property to support local communities in their
    conversion and redevelopment efforts.
        Rapid operational closure also provides base closure communities
    with early opportunities for economic redevelopment. Effective
    community involvement and planning are central to conversion and
    redevelopment of our bases and to the retention of a skilled labor
    force in the base closure communities. Our conversion and redevelopment
    efforts are guided by President Clinton's Five-Point Plan for
    Revitalizing Base Closure Communities: Job-centered property disposal
    as an economic incentive; Fast track environmental cleanup to
    facilitate reuse; Base Transition Coordinators to reduce red-tape;
    Ready access to redevelopment assistance; and Larger redevelopment
    planning grants.
    BRAC Implementation Status
        The Department of the Navy has completed two-thirds (118 of the
    total 178) of the closures and realignments required under the 4 BRAC
    rounds. We plan to complete 31 more BRAC actions this year, 14 in
    fiscal year 1998, 12 in fiscal year 1999, two in fiscal year 2000, and
    one in fiscal year 2001. Major closures planned in fiscal year 1997 are
    Naval Air Facility Adak, Alaska; Naval Air Station Alameda, California;
    Long Beach Naval Shipyard, California; Naval Training Center San Diego,
    California; and Naval Station Treasure Island, California.
        Fiscal year 1996 was the Navy's single largest year for the
    construction and O&M funds that were required to relocate forces.
    Fiscal year 1996 and fiscal year 1997 are our largest years for
    completing major closures and realignments. Our emphasis is now
    shifting from closure and realignment to environmental cleanup and
    property disposal.
    Supporting Economic Redevelopment
        In implementing BRAC closures, we want to convey property to
    communities expeditiously to advance their economic recovery--but not
    so quickly that we fail to protect the public from contaminated soil,
    air and water, lead-based paint, and friable asbestos. We are also
    required by law to consider the impact of property disposal on the
    protection of wetlands, the coastal zone, endangered species, and
    archeological and historic sites. A final, approved reuse plan from the
    Local Redevelopment Authority (LRA) is critical to the process.
        This process takes time, and in many ways, is far more challenging
    than the closure and relocation actions. We can provide interim leases
    of base closure property to promote redevelopment, but as stewards of
    Federal land, we are required first to prepare an environmental
    document known as the ``Finding of Suitability to Lease'' (FOSL). To
    accelerate this process, we have been working with LRA's to identify
    the most attractive leasing prospects and to prepare the required
    documentation ahead of time. We also prepare the required ``Finding of
    Suitability to Transfer'' (FOST) as soon as the property is
    environmentally suitable to convey title. We have conveyed 7,835 acres
    of land to local LRA's and other federal agencies at 27 activities to
    date.

        ----------------------------------------------------------------

    ------------------------------------------------------------------------
                                                           FOST       FOSL
    ------------------------------------------------------------------------
    Number Completed..................................         25        533
    Number Acres Covered..............................      7,234      4,696
    Projected in fiscal year 1997:
        Number Completed..............................        134        332
        Number Acres Covered..........................      5,417      5,038
    ------------------------------------------------------------------------

        ----------------------------------------------------------------

    Proceeding with Environmental Cleanup
        Several communities have expressed concerns about the pace at which
    the Navy is able to cleanup contamination on closing bases. Navy has
    occupied these Bases for 50 to 100 years or more, many of them as
    industrial areas. We now know that disposal practices that were
    acceptable in the past are no longer practiced because of the
    environmental contamination they leave behind. However, environmental
    problems posing an imminent risk to health and human life are rare, and
    in fact, we give these problems immediate priority in our cleanup
    efforts. Cleaning up these sites will be expensive--an estimated cost
    of $2.5 billion--and time consuming.
        We have established BRAC cleanup teams comprised of Navy personnel
    and environmental regulators to assess, prioritize, and expeditiously
    perform the necessary cleanup. We are working with regulators to tie
    cleanup standards to the nature of the reuse. This will speed cleanup,
    save money, and still protect human health and the environment. We have
    established detachments of former shipyard workers and trained them to
    do the necessary cleanup work. We have put into place both national and
    local contracting authority to perform the work.
        Nevertheless, budget constraints limit our ability to accomplish
    the cleanups which do not pose an imminent threat but still must be
    performed before the property can be conveyed. There is simply not
    enough money to clean up every base at once. Our goal is to target
    cleanup dollars on those sites that have the most immediate and
    definitive prospect for reuse. Those sites that are supported by
    approved reuse plans with feasible reuse will get top priority for
    cleanup funds. Our intent is to not let cleanup get in the way of
    reuse. We are also working with EPA and state regulators to use the new
    Section 334 Amendments to CERCLA, which permits the conveyance of
    property before the cleanup has been completed, unless such a
    conveyance would harm human health or the environment.
        The Department of Defense has categorized the environmental
    condition of property under the Comprehensive Environmental Response
    Facilitation Act (CERFA) to provide a convenient breakout of the
    current status of our BRAC property. CERFA categories 1-4 properties
    are environmentally suitable for transfer. CERFA category 5 indicates
    analysis is underway. CERFA category 6 includes property where the
    actual cleanup is underway. CERFA category 7 property has not yet been
    completely evaluated.

                                                                       Acres
            As of 30 Sept 1996                                    (All BRAC)
    CERFA Cat 1-4.................................................   107,833
    CERFA Cat 5...................................................    11,260
    CERFA Cat 6...................................................     7,572
    CERFA Cat 7...................................................    39,194
                        --------------------------------------------------------------
                        ____________________________________________________

          Total...................................................   165,859

                     fiscal year 1998 legislative proposal
        Before concluding, I would like to ask your support for a
    legislative proposal on air emission credits.
    Retention of Proceeds from CAA Emission Reductions
        The 1990 amendments to the CAA encouraged the states to create
    economic incentive programs to meet air quality standards. The
    objective was to create a market for buying and selling emission
    credits to help drive compliance with CAA standards. Many states have
    already done so. The military Services, however, presently lack clear
    authority to sell CAA economic incentives in non-BRAC situations and,
    if such incentives were sold, would have to remit the proceeds to the
    U.S. Treasury. (The BRAC legislation provides that all proceeds from
    the sale of assets be deposited into the BRAC account.)
        Our proposal would put the Department of Defense on the same
    footing as private industry. It would allow the sale and transfer of
    CAA emission credits and permit the installation or Service to retain
    the proceeds. For example, we could trade an excess of VOC credits for
    NOx credits to meet air quality standards. The proposed
    legislation is patterned after Public Law 97-214, 10 U.S.C. Section
    2257, Disposal of Recyclable Materials, which created an economic
    incentive for military installations to recycle by allowing them to
    keep the proceeds for use in pollution abatement, energy conservation,
    or morale and welfare programs.
                                   conclusion
        Our environmental program supports readiness, satisfies our legal
    obligations, and sustains our civic role to protect the Nation's health
    and welfare. We must approach environmental issues from a business
    perspective. We are finding ways to identify, analyze, and select the
    most cost-effective solutions. Across the cleanup, compliance,
    pollution prevention, conservation, and technology programs, we are
    taking both small steps and large ones to reduce operating costs while
    still meeting environmental standards.
        It is important to recognize that often our environmental
    investments, particularly those for P\2\, yield cost avoidances or true
    savings outside the environmental accounts, but in the base operations
    and mission accounts. Regardless of where they occur, these savings are
    real, and help the Navy and Marine Corps modernize weapons systems and
    other priority needs.
        That concludes my statement. I would welcome any questions.
    STATEMENT OF HON. RODNEY A. COLEMAN, ASSISTANT
                SECRETARY OF THE AIR FORCE (MANPOWER,
                RESERVE AFFAIRS, INSTALLATIONS, AND
                ENVIRONMENT)

        Senator Stevens. Thank you very much. Mr. Coleman.
        Mr. Coleman. Thank you very much, Mr. Chairman, Senator
    Inouye.
        About 3 years ago when I appeared before the committee just
    after being sworn in I pledged to help build on the Air Force's
    outstanding record of environmental programs, and today I can
    say to you, Senators, that our record on the environment is
    better than ever.
        Three years ago we had 236 notices of violation [NOV], and
    in the second quarter of fiscal year 1997 our NOV's were down
    to 28. Our goal is to have zero violations, and we intend to
    drive to that goal.
        Three years ago we had no long-term plan for completing the
    environmental cleanup of our installations, and today more than
    about 45 percent of the restoration of our sites on active
    installations has been addressed.
        Seventy-five percent of our program funding goes to actual
    cleanup activity, and given stable funding for our restoration
    account we have a plan to remediate all but two of our active
    installations by the year 2007, and we plan to have those two
    remediated by the year 2014.

                           Base closure cleanup costs

        At our closing bases environmental cleanup costs are down
    by nearly 25 percent, and remedies will be in place for all but
    the Sacramento Air Logistics Center by the year 2001.
        Three years ago it seemed that we were measuring our
    programs on how many documents we could generate. Today we are
    focusing on innovation and results, with programs that measure
    performance. At Vandenberg and Elmendorf Air Force Bases the
    Air Force is building partnerships with regulators and the
    community to invest dollars in pollution prevention rather than
    in costly and time-consuming administrative processes.
        Three years ago we were just learning about the impacts of
    our use of hazardous materials. Today, I can report that by
    using different materials, and changing some of our processes,
    we have avoided approximately $36 million in operations and
    maintenance costs and reduced our toxic release inventory by
    more than about 900,000 pounds.
        Three years ago our use of airspace needed for training
    pilots in Alaska and Idaho, for instance, was being challenged.
    Today we have reached agreement with the State of Alaska,
    Native Alaskan leaders, and the community, to use more than
    60,000 square miles, about the size of Kansas, to keep our
    pilots and navigators ready to fly and to fight.

                         Air Force partnership programs

        We are investing in a new high tech range in the State of
    Idaho. That range requires that only 300 acres of land be set
    aside as a target area, and will eventually save millions of
    dollars in reduced O&M cost. In Nevada and Arizona we are
    building partnerships with the community to find a balanced
    approach to keep training at the Nellis and Goldwater ranges.
        These examples all demonstrate that the success of our
    environmental programs lies in partnerships with our regulators
    and our communities. Three years ago we were just beginning to
    understand the significance of actively involving regulators
    and the community in our programs.
        Today we have 87 restoration advisory boards at 106
    installations, providing advice in pragmatic, commonsense
    solutions to environmental issues in their communities.
        Partnerships save time. A joint venture between the Air
    Force's 611 Civil Engineering Squadron at Elmendorf and two
    Alaskan Native-owned businesses saved the Federal Government
    $500,000, sped the cleanup at King Salmon, and provided great
    benefit to the local economy. Fifty percent of the labor force
    were Native shareholders and another 15 percent were other
    local residents. Thirty percent of the project purchases were
    made locally, and 69 percent were made within the State of
    Alaska.
        Mr. Chairman and members of the committee, the Air Force is
    walking the talk in environment. In the past 3 years, because
    of your support, our programs have matured beyond expectation.
    We can see the light at the end of that long tunnel in our
    environmental cleanup program.
        Our compliance violations have virtually disappeared. We
    are building pollution prevention into every aspect of our
    operations. We are building partnerships with our regulators
    and our communities to ensure our ability to train while
    protecting the health and safety of our forces and our
    neighbors.
        We intend to keep marching to this new environmental
    drummer into the next century. I pledge that we will keep a
    tight rein on our environmental programs now so that we can all
    reap rewards in the future.
        I think that in the next 10 years, with stable funding we
    will see our environmental cleanup program virtually completed.
    We will see pollution prevention as the keystone to compliance.
    We will see training ranges that allow us to maintain our
    readiness while also allowing recreational access and
    preservation of natural and historical resources.

                               prepared statement

        Mr. Chairman, Senator Inouye, together we have met the
    challenges in the last 3 years, and with your sustained support
    we will leave our legacy for tomorrow, an environmental program
    that has helped build a better Air Force and a cleaner, more
    beautiful America.
        Thank you very much, and we will respond to any of your
    questions.
        [The statement follows:]
                  Prepared Statement of Hon. Rodney A. Coleman
        Mr. Chairman and members of the Committee, I appreciate this
    opportunity to talk with you today about a subject crucial to
    maintaining our ability to respond to major regional conflicts and
    protecting America's interests globally. The Air Force's Environment,
    Safety and Occupational Health (ESOH) program elements are essential to
    meeting the Air Force's operational requirements by improving
    performance, reducing costs, sustaining combat readiness and protecting
    the health and safety of both the Air Force community and the American
    public.
        ESOH is more than a series of specific programs. ESOH is a
    mindset--a corporate ethic focused on giving our Air Force personnel
    the wherewithal to maximize the capability of weapons systems and to be
    the captains of their workplaces. Our mindset focuses on making the
    best possible organizational decisions, chooses to spend resources on
    pollution prevention now to avoid unnecessary compliance expenses
    later, relies on continuous dialogue with all stakeholders to reach
    higher levels of understanding, and instills sound science into all
    environmental practices that maintain readiness.
        I want to take a few moments to explain how ESOH is integral to the
    Air Force's ability to protect American interests globally, while
    protecting this nation's precious natural resources and the health and
    safety of her citizens. And I want to ask this Committee's support in
    continuing the sound organizational practice that ESOH provides to
    prepare our Air Force for the challenges of the next century.
                                 air force esoh
        The core purpose of the Air Force ESOH program is to develop and
    implement innovative, integrated, comprehensive ESOH solutions that
    protect and enhance the Air Force's ability to project air power
    globally at levels of affordability previously not imagined or
    achievable.
        Our commitment is to explore new technologies, processes, methods,
    relationships and paradigms, while anticipating and supporting the
    change necessary to meet our operational requirements into the next
    century. We believe that teamwork--within the Air Force, with
    regulators, with our neighbors, and with the Congress--is essential to
    meet our environmental, safety and occupational health commitments,
    while enhancing the Air Force's ability to maximize readiness for every
    dollar spent.
        The Air Force ESOH program is already improving our performance and
    minimizing costs by reducing pollution from our operations, initiating
    innovative approaches to protect the health and safety of our people
    and our neighbors, and establishing partnerships enabling the use of
    resources from other sectors in support of the Air Force mission. In
    addition, the Air Force has made significant strides in recent years to
    enhance trust and credibility with our partners by providing an open
    and inclusive process in planning and implementing our ESOH programs.
        However, we in the Air Force, and we in this nation, have just
    scratched the surface. By using our ESOH knowledge and skills in new
    ways specifically designed to assist our other functional areas meet
    their requirements more effectively, we enter a new universe of
    possibilities. The possibilities include pilots capable of performing
    beyond current physical limits, and dramatic improvements in
    productivity. The extension of physical capability will pay off in the
    context of pilots having skills and physical endurance sufficient to
    master the full lethality of new aircraft. Integration of ESOH into our
    processes will lead to significant cost and performance improvements.
                             meeting the challenge
        Our guiding principles in meeting the challenge before us continue
    to be those set by the Secretary of the Air Force and the Chief of
    Staff in March of 1995 Sustaining Readiness, Leveraging Resources, and
    Being a Good Neighbor:
    Sustain Readiness
        The Air Force maintains its combat edge through intensive and
    realistic training. As we relocate more of our forces to the
    continental United States, it is imperative that we clearly define
    requirements for air and land space to provide realistic training
    opportunities for our flying forces. We must remain cognizant of and
    responsive to our civilian neighbors' need for safety and quiet, we
    must clean up contamination from past practices, and we must protect
    the cultural and natural resources entrusted to us. Without the ESOH
    approach, these opportunities, so very critical to mission readiness,
    will be significantly reduced, if not lost altogether.
    Leverage Resources
        In the current constrained fiscal environment, the Air Force is
    challenged to meet the increasingly difficult goal of providing the
    world's best air and space force with reduced resources. We are
    redesigning our ESOH program to be an essential element of productivity
    improvement and cost reduction efforts in the Air Force. I am asking
    the Air Force to formally integrate ESOH into our processes to improve
    productivity. We will measure our productivity improvements in terms of
    reduced cost. We intend to accomplish this by offering the Air Force a
    suite of ESOH skills and professionals to assist all functional areas
    in meeting their goals more effectively. The special skills our ESOH
    professionals have to offer include pollution prevention and
    environmental stewardship, ``process-task analysis'' used by our
    uniformed occupational health specialists, and operational risk
    management which is the province of our safety specialists. I am asking
    the functional areas such as operations, logistics, acquisition and
    installation management to let our ESOH specialists join them to
    improve performance and reduce costs through new efficiencies.
    Be A Good Neighbor
        In order to ensure that we are fully protective of human health and
    the environment, it is essential that we institute a comprehensive risk
    management approach to our ESOH programs. Key to this approach are
    community-based environmental programs based on sound science and
    informed stakeholders. Our 87 Restoration Advisory Boards serve as very
    effective forums for the dialogue that is essential to make pragmatic,
    common-sense decisions in our cleanup program. This year we intend to
    begin discussions with our stakeholders on the benefits of using an
    enhanced site-specific risk assessment process to determine common-
    sense approaches to environmental cleanup levels. Enhanced site-
    specific risk assessment is a tool that will allow our bases and our
    RAB's to more accurately establish cleanup levels that are fully
    protective of public health and the environment, while not breaking the
    bank.
        Our primary goal in the Air Force restoration program is to protect
    human health and the environment by completing the cleanups at all of
    our installations. Installation cleanup completion will also allow us
    to reinvest resources now needed for restoration into maintaining our
    readiness to protect American interests globally. We believe that the
    partnerships we form with our regulators and our communities will lead
    to faster, more cost-effective cleanup completion, which, in turn, will
    lead to strong public support for the Air Force's mission. For example,
    close partnering at Eielson AFB in Alaska among the installation, the
    RAB, state and federal regulatory agencies, and industry saved time and
    reduced cleanup costs because the team agreed to eliminate requirements
    for an expensive and ineffective groundwater pump and treatment system
    at two sites, while still protecting public health and the environment.
        I will now describe in more detail the status and promise of,
    first, our environmental programs and, second, our safety and
    occupational health programs as we meet our mandate to sustain
    readiness, leverage resources, and be a good neighbor.
                                the environment
        The viability of and continued access to training ranges and
    supporting bases depend upon: conservation through enhancement of
    biodiversity and sound ecosystem management; completing cleanup of
    contaminated sites through the Installation Restoration Program (IRP);
    full compliance with environmental regulations; and emphasis on
    pollution prevention to enhance productivity while eliminating future
    cleanup and compliance problems.
        We will continue to integrate environmental, safety and
    occupational health considerations into our planning process to assure
    they maximize mission readiness and safety.
                                  conservation
        The Air Force has nine million acres of land, most of which
    consists of ranges providing a wide spectrum of environments. Two-
    thirds of these lands are encompassed in the Goldwater Range, Arizona,
    and Nellis Range, Nevada. Stewardship of Air Force lands is essential
    to maintaining the integrity of military training areas and preserving
    environmental quality for future generations. The Air Force is
    providing leadership through fostering biodiversity and application of
    ecosystem management on its ranges. Included in our nine million acres
    of land are over one-half million acres of forests and 1,100 miles of
    streams and rivers. Air Force land, used to fulfill our training needs,
    provides habitat for endangered and threatened species and other
    species of great value.
        The Air Force, in partnership with The Nature Conservancy, has
    issued a comprehensive biodiversity guide for natural resource
    managers. This effort embodies the community-based environmental
    program teamwork necessary to achieve common understanding and mutually
    acceptable solutions that maintain the airspace and ranges we need,
    while minimizing adverse impacts on our neighbors, the wildlife and the
    environment.
        Land Withdrawal.--Particularly critical to Air Force readiness are
    the land withdrawal actions for the Goldwater and Nellis ranges. Many
    of the air combat tactics so successfully used in Operation Desert
    Storm were developed at Nellis. The ranges are withdrawn under Public
    Law 99-606 which limits our withdrawal to 15 years and requires costly
    paperwork before we can extend our tenure on these ranges. The Air
    Force is presently conducting an extensive environmental analysis
    process in preparation for renewing the withdrawal of these six million
    acres which expires in 2001. We estimate the cost to complete this
    study to be $20 to $30 million; money that could be used to accomplish
    significant conservation and management projects on the ranges. To
    reduce the costs of this expensive study, we are working with other
    agencies to see how we can integrate biodiversity and ecosystem
    management as day-to-day functions of our ranges in the hopes of
    eliminating unnecessary studies to support land withdrawals.
        We believe there is a smarter way to preserve nature and protect
    national security at the Nellis and Goldwater Ranges. We have embarked
    on a thorough dialogue with our stakeholders to develop bi-partisan,
    multi-interest support for a longer tenure, with enhanced management
    and accountability of our activities on these ranges. The dialogue we
    are engaged in is another example of how our community-based
    environmental program supports readiness, nature, and the community,
    simultaneously.
        Budget.--In 1998, we are requesting $33 million to invest in our
    ability to sustain readiness while protecting this nation's cultural
    and natural resources.
                                    cleanup
        The Air Force is on the Superhighway to Installation Restoration
    Program (IRP) completion. Of the 4,074 restoration sites in the Air
    Force management inventory, more than 45 percent have been remediated
    or assessed to require no further action. Of these, the regulators
    concur with almost half of our assessments. We are well on our way to
    completing action on our remaining sites. Our primary IRP investment is
    in construction of cleanup systems. Seventy-five percent of program
    funding is now used directly for actual cleanup activity. We believe
    getting the job done and completing cleanup at our installations in the
    near-term is the right focus. By completing our cleanup program, we can
    permanently return funds to the Air Force for readiness and
    modernization in the long-term.
        Along with our regulatory and community partners, we have developed
    a schedule to complete the cleanup program (Figure 1). This chart
    indicates when we estimate remedial systems commencing operation as the
    final cleanup action at each of our installations. Although operations,
    maintenance, and monitoring of the remedies will continue for some
    time, it is important to understand that this milestone represents a
    significant step in the cleanup process. At that point, we have
    fulfilled the major investment of manpower, management, DSMOA funding,
    and remedy construction.

     Figure 1.--Final Cleanup Systems in Place Non Closure Facilities as of
                                  May 17, 1997

                                                                   Number of
                                                               Installations

    Fiscal year:
        1996..........................................................     1
        1997..........................................................     5
        1998..........................................................     7
        1999..........................................................    15
        2000..........................................................     7
        2001..........................................................     6
        2002..........................................................     9
        2003..........................................................    11
        2004..........................................................     6
        2005..........................................................     7
        2006..........................................................     3
        2007..........................................................     4
        2010..........................................................     1
        2014..........................................................     1

        The key to completing cleanup is stable funding of our restoration
    account over the Future Year Defense Plan (FYDP). Stable funding allows
    us to plan, make commitments, and most importantly, meet those
    commitments. Stable funding builds confidence with our regulator and
    community partners and allows the Air Force to practice sound program
    management through long-term and rational, risk-based schedules.
        With our community and regulatory partners on the Restoration
    Advisory Boards, we intend to establish a mutual commitment to support
    our schedule goals and to execute performance-based actions leading to
    final cleanup. With that commitment and shared accountability, we can
    work together to effectively allocate the finite amount provided in
    stable funding. This, coupled with ensuring we accomplish our scheduled
    activities, provides confidence that we will complete our cleanup
    program. We can manage the inevitable changes that are inherent in the
    cleanup program and communicate impacts to you. The tools we have
    developed over the past year will allow us to assure you, as well as
    our regulatory and community partners, that our cleanup program is
    managed toward timely, cost-effective and final solutions.
        Budget.--In 1998, we are requesting $379 million, a figure
    representing the stable funding that will allow us to continue down the
    Superhighway to completing our restoration program.
                          base realignment and closure
        The Air Force is making impressive progress in cleaning up our BRAC
    closure bases. We've been pursuing accelerated cleanups at our earliest
    BRAC sites since 1990. In the short span of seven years, we have
    completed nearly all the studies at BRAC 1988, 1991, and 1993 bases. On
    our current schedule, we plan to have all remedial actions in place at
    24 of the 26 installations by the end of fiscal year 1999 as shown in
    Figure 2. McClellan AFB is scheduled to construct its final remedies in
    fiscal year 2016. As with the cleanup of active bases, a period of
    Operation and Maintenance (O&M) follows the construction of a remedy.
    We are currently working with our regulator and community partners to
    reduce this O&M ``tail'' to the absolute minimum. This plan reflects
    the past investments that we have made in the protection of our
    neighbors and the environment, while allowing the Air Force to
    permanently transfer property, which is a primary objective of the
    President's Five-Part Plan for rapid conversion of these closing
    military installations.

               Figure 2.--Final Remedy in Place Closure Facilities

                                                                   Number of
                                                               Installations

    Fiscal year:
        1996..........................................................     1
        1997..........................................................     3
        1998..........................................................    11
        1999..........................................................     7
        2000..........................................................     4
        2001..........................................................     1
        2016..........................................................     1

        By working with our regulatory partners and communities through the
    RAB's, we are finding better solutions and economies in the cleanup
    program. By fiscal year 2000, the majority of our BRAC cleanup
    investment will be in long-term monitoring and maintenance of our
    remedial systems. Our efforts in BRAC are proof that by focusing on
    cost reductions through productivity improvements based on performance-
    oriented partnerships, we save significant funds for the U.S. taxpayer.
        Shortly after my arrival in 1994, we initiated a concerted effort
    to streamline and improve our BRAC cleanup process. By 1995, we had
    devised a series of improvements designed to reduce costs by 25 percent
    while reducing the time needed to complete our cleanups. Between 1995
    and today, the results are $50 million in savings and $120 million in
    cost avoidance.
        The figures speak for themselves. In fiscal year 1998, we project
    our environmental bill for cleanup and compliance at $263.5 million.
    The bill drops to $140.6 million in fiscal year 1999. Our cleanup costs
    drop even more dramatically by fiscal year 2001. When BRAC authority
    expires, our cleanup costs will be near $50 million annually,
    exclusively for long-term monitoring and operations, except at
    McClellan AFB, California. McClellan is a special case with an
    estimated cleanup bill and program so extensive that it will have to be
    reabsorbed into our Environmental Restoration Account program for
    completion. The good news is that at McClellan, we have reduced the
    time to cleanup from 2034 to 2016 and the cost is now under a billion
    dollars, at an estimated $750 million.
                                   compliance
        Full environmental compliance is an important factor in sustaining
    the readiness of our fighting force. Our compliance with environmental
    laws is important to Americans. We earn their trust and vote of
    confidence for our continued membership in the American community. With
    that membership comes the use of and access to training and support
    facilities, maintenance of operational flexibility, and productive use
    of resources. The Air Force's Environmental Compliance, Assessment, and
    Management Program (ECAMP) proactively identifies where potential
    violations exist and allows the Air Force to take corrective action
    immediately, avoiding fines and penalties that might be levied if the
    situation is left untended. This program is paying off. Open
    enforcement actions have dropped markedly from 236 in the first quarter
    of fiscal year 1993 to 35 in the first quarter of fiscal year 1997. The
    Air Force's goal is to have no open enforcement actions or notices of
    violation.
        The Air Force fully supports innovative programs like the
    environmental investment initiative (ENVVEST) at Vandenberg AFB,
    California, which is built on community-based partnerships that allow
    scarce environmental funds to be used for real pollution reduction
    projects rather than costly administrative procedures associated with
    traditional environmental compliance. These innovations will lead to a
    better environment, and sound program management for Air Force
    compliance programs in the future.
        Budget.--In fiscal year 1998, we are requesting $407 million to
    continue our outstanding compliance programs that keep our forces,
    their families, and the American people safe and healthy.
                              pollution prevention
        Pollution prevention (P\2\) is the cornerstone of our ESOH
    paradigm. P\2\ is the key to an Air Force investment strategy that
    focuses on avoiding pollution, eliminating hazards, and reducing costs.
    It provides the tools to empower our work force to make environmentally
    sound, technically solid, and financially responsible decisions. P\2\
    is a key to increasing productivity.
        We are institutionalizing pollution prevention into all phases of
    the weapon system life cycle, as well as incorporating P\2\ concepts
    into all aspects of installation operations. We are doing this by
    providing our work force with the education and tools to recognize and
    implement pollution prevention measures in their every day work.
    Further, we are upgrading our ability to develop and transition
    innovative pollution prevention technologies to the field. Finally, we
    are in the early stages of developing and implementing a quality-based
    management system that allows Air Force workers and managers to plan,
    implement, check, review and improve how we execute our ESOH
    stewardship.
        Institutionalize Pollution Prevention into All Phases of Weapon
    System Life Cycle.--Weapon systems production, operation, and
    maintenance drive approximately 80 percent of DOD's generation of
    hazardous wastes. Consequently, we are focusing our P\2\ effort in the
    weapon system area. Our goal is to institutionalize pollution
    prevention into the weapon systems life cycle so that P\2\ measures
    become an integral aspect of weapons development. We want every weapon
    system program manager to consider the cost of pollution as part of
    their normal decision making process.
        Incorporate Pollution Prevention into all Aspects of Installation
    Operations.--Probably the most significant move we are currently making
    is to refocus programs from compliance to pollution prevention. This is
    being done by teaching workers how to identify better ways to prevent
    pollution in their processes and providing incentives for installations
    to modify those processes. The Air Force is working closely with our
    EPA and state partners to seek common sense ways to encourage this
    approach. Our ENVVEST project at Vandenberg AFB, CA will soon become
    the first installation to develop a Final Project Agreement that will
    move administrative compliance costs to pollution prevention projects.
    The result will be a cleaner environment, a safer, healthier community,
    and protection for our civilian neighbors, at a reduced cost. Our
    corporate Air Force has taken cooperative leadership for cradle-to-
    grave management of hazardous materials with a goal of ensuring worker
    protection, reducing costs, and reducing emissions.
        Improved Education, Training and Awareness.--We will empower our
    workers to take ownership of the processes where they work. We will
    train our people on the pollution prevention ethic, how processes
    create pollution, and how the workers can bring about changes to those
    processes to prevent pollution in the future.
        Develop and Transition Innovative Pollution Prevention Technologies
    to the Field.--The Air Force is facilitating improved communication
    between those organizations requiring new or off-the-shelf technology
    and those organizations who develop and understand technology. With
    other federal agencies, we are compiling a directory of our
    requirements and a second directory of the available technologies. This
    effort will significantly reduce costs and improve productivity by
    eliminating duplication of effort and bringing innovative technical
    solutions to difficult problems.
        Systematic, Quality-based Management System.--We plan to examine
    how the International Organization for Standardization's standard, ISO
    14001, might be used to help improve how we provide ESOH services. This
    standard is a systematic, quality-based management system for how to
    plan, implement, check and review our programs. We believe better
    management practices exemplified by ISO 14001 will further improve our
    ability to make the best possible industrial process and life-cycle
    decisions that will lead to cost savings, cost avoidance and improved
    productivity.
        Budget.--In fiscal year 1998, we are requesting $49 million to
    invest in pollution prevention.
        I want to talk to you now about an area that is crucial to our
    national security and to the health and safety of the American people.
                         occupational safety and health
        The USAF Occupational Safety and Health Program is oriented
    directly towards enhancing the productivity of the war fighter. The
    program consists of four primary thrusts: prevention of disease and
    injury, prevention of loss or damage to equipment, sustained
    enhancement of human performance, and integration of humans into
    weapons systems. Each of these thrusts are integral to the occupational
    safety and health of aircraft crew members and ground personnel. With
    programs aligned with these thrusts, we strive, with noted success, to
    provide Air Force commanders with fit and healthy people capable of
    highly effective performance both during peacetime and wartime.
        At the same time, we strive to eliminate threats to the safety and
    health of our forces. Such threats can be environmental, physiologic,
    toxic exposures, infectious disease, chemical/biologic warfare agents,
    conventional weapons, and intentional, unintentional, or accidental,
    injuries. These are also direct threats to the productivity and
    performance of our forces. We counter these threats with: safety and
    health standards in our weapons systems, facilities, and processes;
    risk management programs designed to identify, assess, and minimize
    hazards; sound operational procedures; training personnel on proper use
    of the systems and equipment entrusted to them; engineering changes in
    the work environment; improved life support and personal protective
    equipment; altered work/rest cycles; medical intelligence; health
    education and surveillance; vaccines; health promotion and fitness
    programs; and protected food and water sources.
        Our efforts are paying off. Our civilian occupational injury and
    illness program continues to be the best among the Services. In fiscal
    year 1996, Air Force expenditures for workmen compensation claims
    decreased by 2 percent, the largest percentage in DOD. This alone
    represents a cost avoidance of over $2 million.
        On July 1, 1995 The USAF School of Aerospace Medicine received
    provisional approval from the American Council on Graduate Medical
    Education (ACGME) for a practicum year in occupational medicine. This
    approval will allow residents trained in aerospace medicine to also
    receive the full scope of training required of an occupational
    physician. The additional training will allow aerospace medicine
    physicians to manage the full range of occupational medicine needs at
    the Air Force bases to which they are assigned upon completion of their
    training. Currently, the Air Force is the largest provider of
    occupational medicine training in the United States, a fact that
    demonstrates our commitment to this core competency.
        Several initiatives were introduced in the Air Force in fiscal year
    1996 to enhance prevention of accidents. An Operational Risk Management
    (ORM) program is being implemented throughout the Air Force. The ORM
    program provides commanders, supervisors, and individuals with a
    process for assessing risk and making well-informed decisions to ensure
    mission success.
        The Air Force Safety Center is developing a robust capability to
    better understand and analyze the root cause of injuries. Through an
    epidemiological approach, the Air Force can better target and implement
    intervention strategies.
        The Advanced Tactical Anti-G Suit (ATAGS) developed at the Human
    Systems Center at Brooks Air Force Base is another example of the Air
    Force's commitment to protect its forces while maintaining productivity
    and performance. ATAGS is the most significant improvement in the anti-
    G suit since World War II. Anti-G suits are garments worn like trousers
    that contain inflatable bladders.
        With ATAG's, when a fighter pilot experiences high G forces,
    compression from the aircraft systems inflates the bladders, which
    squeeze the legs and lower abdomen, keeping the pilot from losing
    consciousness. This reduces the strain required by the pilot to avoid
    losing consciousness, thus reducing the risk of fatigue-induced injury
    and increasing the war fighter's ability to perform in combat.
        We are further assuring the safety and health of USAF aircraft crew
    members through Crew Resource Management Training. Crew members of all
    types of USAF aircraft are given this initial and refresher training to
    enhance team skills in the cockpit, diminish lapses in concentration,
    increase ability to prioritize and manage multiple tasks while flying,
    and improve communications. This training undoubtedly contributed to
    our excellent flying safety record in fiscal year 1996, which produced
    the second lowest flight mishap rate in Air Force history.
        The Air Force safety staff has revitalized the Bird Aircraft Strike
    Hazard (BASH) program, revised the mishap investigation process, and
    increased safety education. The Weapons Safety Program developed and
    fielded the Base Explosive Exceptions Matrix (BEEM) software program.
    This program allows commanders to more accurately assess the hazards
    that stored weapons pose to the surrounding community, both Air Force
    and civilian. This allows us to prioritize and build investment
    strategies for the implementation of any additional safety measures
    that are necessary. It also identifies where risks are negligible, and
    where waivers may be appropriate to prevent unnecessary spending.
        The Air Force's stellar flight mishap rate of fiscal year 1996 was
    matched by the outstanding performance in the Ground Safety Program
    with a staggering 53 percent decline in on-duty Class-A mishaps during
    the period fiscal year 1994-1996. Equally impressive was a decline of
    30 percent in our off-duty mishap rate. Records such as these
    contribute significantly toward mission accomplishment by preserving
    the health of our personnel and by protecting other Air Force
    resources.
        As we move towards replacing the T-37 Primary Jet Trainer with the
    Joint Primary Aircraft Training System (JPATS) in fiscal year 2000, we
    are anticipating the ability to accommodate students of shorter
    stature, primarily women. In preparation for this change, we will
    perform detailed studies of Air Force cockpits using clearly defined
    upper and lower limits of body size required to safely and effectively
    operate the aircraft. By ensuring the pilots we train are matched to an
    aircraft that is most compatible with their physical size, we are
    enhancing the pilot's effectiveness, lessening the risk of mishap and
    better assuring that the Air Force peacetime and wartime missions will
    be accomplished.
        Occupational health and safety efforts extend to deployed
    operations also. The Air Force Aerospace Medicine Program holds
    occupational medicine as a core competency. The Program operates to
    protect the force and provide our commanders the performance their
    units need to meet their mission. The Headquarters Air Combat Command
    Surgeon developed a state-of-the-art health and injury surveillance
    system which is currently being pilot tested in Southwest Asia. By
    analyzing the theater-wide health surveillance data early and
    regularly, we enhance our ability to detect trends and counter the
    factors leading to disease and injury before they have a significant
    impact on our readiness. Furthermore, deployed aerospace medicine
    personnel perform ongoing monitoring of potential environmental threats
    and working conditions which could increase the risk of deployed
    operations.
                                   conclusion
        In conclusion, I want to leave you with the assurance that the Air
    Force is moving in new directions that protect American interests
    around the world by integrating ESOH concepts and principles into our
    processes and management approaches. Through ESOH, we are building a
    stronger, more flexible Air Force. Our success lies in partnerships
    within the Air Force, with you, and with all of our stakeholders.
    Together, we can and will meet the challenges of the next century.

        Senator Stevens. Thank you very much. One of our goals,
    obviously, is to find some way to have the total amount of
    these programs decline annually rather than increase. We are
    now up, as you mentioned, with the $2 billion that is in the
    BRAC account annually to $6.87 billion a year. That is too
    much. We are going to have to decline it in this period. It has
    to be trend-lined down in this period of 5 years when we are
    trying to get to a balanced budget.
        One of the reasons for the devolvement to take the
    Department out of it and put it to the services was, at least
    in our judgment, that the Department was tending toward very
    large contracts which had enormous overhead and devolvement
    gave us a chance to get down to the services. We would like to
    get it down even further.
        Some people think we are being political and that we are
    looking to just employ local people around the bases because of
    politics. It has nothing to do with it.
        I can tell you time and time again that before I came to
    the Senate, when I knew what the cost was of moving into the
    State of Alaska contractors that were going to do various types
    of work for the private sector as opposed to employing the
    local contractors--there were no moving costs, there were no
    termination costs, no travel time to go out and visit families.
    The concept of cost reduction was to use the people that were
    there to do the job.
        Now, have these advisory groups given you any ability to
    even reduce down further from the command level down to the
    base level the administration of some of these contracts?
        Mr. Walker. Mr. Chairman, we took advantage of devolvement
    in the Army to take it one further step. We actually
    decentralized the restoration program and pushed it down to the
    major command level and the installation level, so this is our
    first year of doing it that way, and we believe that certainly
    over time it will have that effect.
        Senator Stevens. Well, certainly I have seen it at the
    bases we have visited not just in my State but around the
    country.
        The people that are the current occupants of these bases
    have a real desire to be part of the community, and when they
    are involved particularly on the prevention side--now, I
    particularly enjoyed what you were saying, Secretary Walker,
    and the other gentleman, too, about the concept of prevention.
        We are both going to be here for a while yet. I would hate
    to think that 3 or 4 years from now we are going to be talking
    about new sites that will have to be remediated. I think there
    ought to be some sort of a penalty involved somehow for any
    service that brings us a new site on that Superfund list.
        Those ought to soon be a thing of the past, and I do not
    see any reason why we should ever have a site that needs
    remediation except in the event of some terrible disaster on a
    military base. I think you all agree with that.
        But are you putting enough of this money into prevention?
    The money we are talking about here is environmental
    restoration, but is part of that going into prevention and
    training, teaching people how to avoid these costs for the
    future?
        Mr. Walker. Yes, sir, Mr. Chairman. As you know, we did
    have an increase in our overall environmental budget this year.
    One reason is because we increased by 40 percent our amount of
    funding for pollution prevention activities. We will spend
    around $110 million this coming year, which is considerably
    more than we have been spending in past years.
        Senator Stevens. Are you getting the manpower to do these
    jobs? Is there any shift in the utilization of manpower within
    the services to be involved in these?
        Mr. Coleman. No, sir; we are steady with our environmental
    folks at base and at MAJCOM level.
        Senator Stevens. What about compliance? By the way, what do
    you include in the concept of compliance? The compliance sector
    of the budget is $2.1 billion. What is included in that? What
    do you look at, Mr. Pirie?

                                   Compliance

        Mr. Pirie. Well, it includes such things as compliance with
    the Clean Air Act. That is, putting scrubbers to remove
    emissions from furnaces, boilers, things of that kind;
    wastewater treatment compliance; all manner of things that have
    to do with the Clean Water Act, Clean Air Act, the Safe
    Drinking Water Act, and things of that kind. Generally they are
    projects involving the infrastructure of the base, the water
    supply treatment and that kind of thing.
        Senator Stevens. Well, that, too should be a declining
    account, should it not be? I mean, assuming we are putting in
    new facilities, they are going to be designed to comply to
    begin with, right?
        Mr. Pirie. Very much so, and, in fact, that is the thrust
    of the pollution prevention business, is to put in things that
    just do not create the kind of waste stream that we have had in
    the past.
        Senator Stevens. I have been very critical of the amount
    that has not gone into actual remediation. You have all
    mentioned how you have come from the old days, and in the old
    days we found that $2 out of $3 were going to architects,
    planners, lawyers, and various court costs. I just cannot
    believe that we should allow that to continue to happen.
        Has devolvement reduced the potential for future costs of
    that kind?

                       Air Force work with the regulators

        Mr. Coleman. In the Air Force not only has devolvement
    helped but also our push to work with the regulators. As I
    said, we have evolved a very aggressive approach to working
    with the regulators to reduce the burden that we have to spend
    on compliance.
        What the rule says in the States and by the USEPA that we
    have to remediate to x level. We are working with the regulator
    to try to get to a level that makes sense, in our opinion, as
    to what is going to be the reuse of that property or the
    constant use of that property. We do not want to have to dig up
    all of this material that may be on a fuel spill when the land
    is not going to be used for anything but an airplane apron, or
    out at the back 40 of some Air Force base.
        As I say to my staff, let God be our helper on this and let
    it naturally bubble up and work out, and we have to work with
    the regulators in the States to do that, and in the Air Force I
    think as well as in the other services we are very aggressively
    approaching that, working with the RAB's also to help us go to
    the State EPA's and to the USEPA to get us to do it at less
    cost, and in quicker time and less cost.
        Mr. Pirie. Devolvement helps us in at least two major ways,
    Mr. Chairman. First, it allows us to get our hands on each
    fiscal year's money early in the process, and we know what we
    have to spend so we can make appropriate plans for that fiscal
    year rather than waiting for it to trickle down through the
    Office of the Secretary of Defense.
        Second, we have a stable funding line. As I said, it is
    about $300 million for the Navy, and having stability in the
    program is really important because you can make plans for the
    longer run and make much better use of the money over time than
    if it goes up and down constantly and you have to change the
    plans.
        Senator Stevens. What about the requirement that we put in
    last year's log requiring notification to State and local
    officials in terms of the draft solicitations and requests for
    proposals to deal with these environmental restoration
    accounts. Is that working? Are you doing that?

                       Environmental restoration accounts

        Mr. Pirie. I believe we have made these notifications, Mr.
    Chairman. I am not certain the degree to which--you know, what
    the measures of merit are.
        Senator Stevens. We did that because we had the impression
    that at times solicitations were actually being put out on a
    five, six State basis and the local people did not even know
    that these programs were going to go forward and that the State
    and local governments are also involved in remediation, and
    many times that you can join together various operations.
        Particularly that is true with regard to the FUD sites. We
    believe there ought to be notification, and if you have proper
    notification you will have more local interest in participating
    and achieving the objective, but the reports I have had are not
    too good about notification.
        Mr. Walker. Well, Mr. Chairman, I must tell you that your
    reports are correct as it relates to reports directly submitted
    by the Corps directly to State and local communities and to the
    Congress for that matter.
        The Corps puts together, puts all the information together,
    but it routinely has not been getting out. It is on the World
    Wide Web now, so it will be getting out better.
        Your report language last year, when we started looking
    into it as we were preparing for this hearing we found out that
    our lawyers had said, well, you do not have to comply with it
    because the threshold is $5 million, not $1 million, so I hope
    our lawyers and the Corps read my testimony and understand we
    will comply with this requirement.
        Senator Stevens. Well, I hope you do, because I really
    think that the people who have a long-term interest on what
    happens on these lands are the people in the area. We are
    closing down more bases. We are reducing the size of
    operations, and clearly it is the local people that are going
    to have to live with whatever is permanent that we cannot deal
    with.
        I think it is particularly a problem with regard to the
    overall compliance process. I have been thinking we ought to
    get involved in that, too.
        Tell me about that, Mr. Coleman. You mentioned the
    cooperation between regulators.

                     Air Force cooperation with regulators

        Mr. Coleman. Yes, sir, working with the State EPA's.
        Senator Stevens. Do the States have a higher standard than
    the Federal Government?
        Mr. Coleman. Some. Not necessarily all. Wherever we find
    that there is, we approach that issue sometimes with the RAB,
    sometimes going out and making a foray to the statehouse and
    working with the people to show that here in some other base we
    did it this way and expedited the process.
        It takes a long time when you are talking about
    approximately 106 installations in the United States and about
    40 or so States that you have work with them all. Again, this
    approach is new in the Air Force. We just used to comply, and
    now we are complying but we are aggressively trying to comply
    in the most cost-effective manner.
        Senator Stevens. You mentioned 2007, Mr. Coleman.
        Mr. Coleman. Yes; for Sacramento Air Logistics Center.
        Senator Stevens. Do you expect to have all your sites
    cleaned up by then?
        Mr. Coleman. Underway. Those are the BRAC sites, sir.
        Senator Stevens. Do you have a projection of costs over the
    period between now and 2007?
        Mr. Coleman. For the BRAC sites we have already spent
    approximately $1.2 billion. We have about $900 million to go on
    BRAC sites in the last four rounds.
        Senator Stevens. Senator Inouye.
        Senator Inouye. Thank you very much, Mr. Chairman. As I sit
    here listening I could not help but do a little recollection.
    Twelve years ago when the services and this committee began
    walking into this strange, new area of environmental cleanup,
    we actually knew very little. The technology of prevention was
    still in its infancy.
        In fact, we had no idea as to how to determine what a
    pollutant was, and, in fact, Mr. Chairman, I think you may
    recall that about 10 years ago when we suggested $300 million
    to the Department for this purpose, the Department said maybe
    that is too much.
        Senator Stevens. Would the Senator yield? As a matter of
    fact, I requested the first $50 million to take the ordnance
    from the Aleutian Islands that was shot at the islands by the
    Japanese but was still there and was impeding our occupancy of
    those lands, and it was still--40 years after World War II we
    still had unexpended ordnance there, and we were trying to get
    it removed. That was the beginning of DERA.
        Senator Inouye. Since then, Mr. Chairman, I think we have
    come a long way.
        At that time, I must confess rather facetiously, I made a
    wild estimate that when the dust settles we may have spent in
    excess of $30 billion for the cleanup process. God forbid, I
    now think it may exceed that. But I would still like to commend
    all of you.
        Secretary Walker, you were saying before we started the
    hearing that you have not been back to Hawaii. I think the time
    is ripe for that.
        Mr. Walker. It has been about 6 months, and I need to go
    back to Hawaii, sir.
        Senator Inouye. Especially Schofield Barracks. The officers
    and men there are absolutely delighted with your leadership,
    because it was a stain on them to have the barracks on the EPA
    national priority list. They are happy to see that they are
    going to be cleared of that contaminant list.
        Second, the Pacific Ocean Division is obviously delighted
    to work under your command, and they are looking forward to
    your visit. I hope you will make it.
        The Navy is also a recipient of many accolades in the State
    of Hawaii. You may not be aware of this, but when Midway was
    turned over to the Fish and Wildlife Service, the Fish and
    Wildlife Service, who can be real nit-pickers, as you know,
    came back and just sang songs of praise about what the Navy has
    done in the cleanup process there to the point where I felt
    that I should write to Secretary Dalton and point out that
    there was another agency who thinks highly of you people.
        In fact, I singled out Mr. Randolph Hoffman, your
    conversion manager. I want the record to show that he has done
    an extraordinary job.
        We are also pleased with Kaho'olawe. I do not know if you
    are aware of this, but a few weeks ago Kaho'olawe received the
    No. 1 national award for its cleanup plan. I am no expert in
    this area, but apparently the Navy has done an excellent job in
    laying out a plan of cleaning up this island. So why do you not
    visit Hawaii--I think you have a few friends down there.
        Mr. Pirie. I am very happy to accept your kind invitation,
    Senator Inouye. I will put it right on the schedule.
        Senator Inouye. Are you going to come out to Hawaii?
        Senator Stevens. I will be happy to visit you, but I think
    I have other things to do this summer.
        Senator Inouye. In the Air Force, Secretary Coleman, we are
    absolutely delighted, because I think you have been leading the
    pack recently in the number of sites that have been cleaned up.
        A question I have for you is, you suggested in your
    prepared remarks that some of the regulators do not agree with
    your assessments on restored sites. Do they feel that you are
    too tough or too soft on your assessments?

                           Air Force risk assessment

        Mr. Coleman. They feel that we are too aggressive. To
    naturally allow the material to dissipate sometimes does not
    meet with approval at the higher reaches of the State
    environmental protection agencies. Pump-and-treats, the way
    that we want to do some other things, does not necessarily meet
    with their approval because they have never seen it before.
    They have never allowed it before.
        But we want to do risk assessment throughout our
    environmental programs and make sure that the taxpayer's
    dollars are being spent very wisely on what we know can happen
    and is not going to impair the health, safety, and welfare of
    people. So there is no need to engage in a big contract to dig
    it up immediately. We can just let it percolate out.
        To get a State to understand that oftentimes it has taken
    more than one trip to the statehouse.
        Senator Inouye. As the chairman pointed out, it would
    appear that the most promising aspect of the work we are
    involved in here is prevention. In fact, a few years ago I
    questioned the Navy about pulp shredding. I thought it had
    great promise. Now I learn that it is planned for installation
    on over 200 ships. Is that correct, sir?

                              Pollution prevention

        Mr. Pirie. We plan to have 205 ships done by December of
    the year 2000, Senator Inouye. This will allow us to operate in
    special areas and not have to collect the trash on board. It
    will be basically very beneficial to the ships, even when they
    are operating outside of the special areas, since they will be
    able to get rid of the glass and metal waste and the paper
    waste rather than just throwing it over the side. We will be
    able to just pulp and shred it and have it sink to the bottom
    and become essentially neutral.
        Senator Inouye. We have been trying to convince the
    Merchant Marine to study this themselves because of ocean
    pollution. Do you have any other prevention-type technology
    under consideration at this time?
        Mr. Pirie. There are a variety of things going on. One of
    the things we are trying to encourage the acquisition community
    is to think ahead in the acquisition of new systems, new
    vehicles, about what they might do, and the new attack
    submarine, in fact, won the Department of Defense environmental
    prize for pollution prevention for plans for recycling of lead,
    for use of non-PCB-containing materials and insulations and
    paints and things of that kind.
        This will be a ship that, in fact, is designed to create a
    very small waste stream in its manufacture, and then at the end
    of its service life there are actually plans of how to put it
    out of commission and reduce the amount of waste that is
    created by that process, too.
        Senator Inouye. Mr. Coleman, you have a whole array of
    prevention programs. Can you tell us about them?

                         Air Force prevention programs

        Mr. Coleman. Yes, sir; much like the Army and the Navy we
    changed the way that people on an installation conduct
    themselves with the use of paints and solvents. We have
    Hazmart's, a pharmacy that would dispense the solvents and
    paints that any unit may want, as opposed to each unit having
    their own supply of paints and solvents and varnishes.
        We are changing our depots, our depot maintenance on our
    aircraft. We were using new technology, bead-blasting by means
    of dry ice as opposed to a solid bead to take the paint off,
    new collection methods--everybody is more aware of their
    surroundings now because the command level has just inculcated
    everybody with this attitude of recycling, prevention, and then
    if you prevent and recycle you will not have as much to clean
    up.
        But we are starting after about 50 years or so of disregard
    for the environment as we have been in the past few years, so
    it is going to take some time, but we hope that we will
    aggressively change our processes, change our thinking, and
    ultimately change the amount of money that we have to come up
    here and ask for for environmental programs.
        Senator Inouye. Before I call upon Secretary Walker to tell
    us about the Army's prevention program, I forgot to tell you
    that thanks to your command in Hawaii, I think we will have a
    major joint project of wastewater management that includes
    Schofield Barracks. We are very pleased with that.
        Secretary Walker, what is your section doing on prevention?
        Mr. Walker. Well, Mr. Chairman, in the last 3 years we have
    increased the pollution prevention budget from about $30 to
    $110 million, and we are projecting in the current program,
    remaining years of the program through the year 2003 to spend
    about $500 million for prevention. That is a big investment,
    but we believe it is the correct investment for us to make.
        The Assistant Secretary of the Army for Research
    Development and Acquisition and I recently signed a joint
    letter to the field indicating that we have got to do better in
    the acquisition process, in particular because probably 80
    percent of pollution comes through the acquisition process, so
    we need to do a better job in that arena, and we are going to
    be focusing on that more in the future.

                       Environmental Management Committee

        Senator Inouye. Mr. Chairman, I have one more question now
    if I may, and I would like to submit the rest to all of you for
    the record. The inspector general reported recently that it
    would improve the whole operation if a DOD-wide environmental
    management system of some sort was established, and in response
    to that DOD came up with this Environmental Management
    Committee. Is this working, or is it a waste of time? Secretary
    Pirie.
        Mr. Pirie. Well, I think it is useful for us to get
    together and exchange ideas about how to get a grip both on the
    costs but also the kinds of problems, and to have a forum in
    which to discuss kind of emerging issues. For example, uniform
    national discharge standards for wastewater and things of that
    kind. So from that point of view I think it is working.
        I think we have an opportunity to comment on emerging
    departmental policy in environmental matters and discuss things
    amongst ourselves. I do not view it as necessarily another
    layer of management. I think it is more a council in which we
    can exchange views and opinions. I do not know how my
    colleagues feel about it.
        Mr. Coleman. I feel the same way. We get together and share
    what we are doing in the Air Force and also transferring that
    information to our MAJCOM. For instance, the Pacific Group at
    all the bases, the engineers, the commanders are looking at
    doing an environmental management group like that to talk about
    Pacific issues. Then we will have one for European and so forth
    and so on, because there is commonality between what it is that
    is going on within that command: proper utilization of funding,
    transferring the issues that we were able to do in Alaska, for
    instance, the same methodologies over to Hawaii, Japan,
    Okinawa, wherever they could apply.
        So that transference of understanding is very valuable, and
    when we get together and talk about what is going on among our
    respective services, it is a great aid to us all.
        Mr. Walker. Senator, I would add a perfect example of that
    is in the Army we have adopted a peer review process which is
    identical to the peer review process in the Air Force. They
    actually showed us the way to do that.
        But I will also add the environmental programs of the three
    services are very different from each other. We all have three
    different unique challenges, and it is important that we
    continue to manage those challenges in our services.
        Senator Inouye. For a long time you have already been
    carrying on collaborative programs. You confer with each other
    all the time. So is this just a new level of bureaucracy?
        Mr. Coleman. It is formalized. It is important that we have
    a defined medium in which we are discussing this as opposed to
    me just calling Robert and saying, hi, let us have lunch and
    discuss something.
        Mr. Pirie. In some ways our programs are quite different. I
    mean, I am concerned primarily about water. My colleagues are
    concerned about the air and the land, primarily.
        In some ways we share some pretty important issues, and the
    issues of ranges and waste munitions are particularly important
    to all three of us, and there is a place where we really have
    to coordinate and have our act together because we are quite
    interested in the rules under which we will have to, for
    example, dispose of waste munitions.
        Senator Inouye. Finally, Secretary Walker, you pointed out
    very correctly that all services have different problems. You
    have mines, and none of the other two services have mines.
        In recent years Members of Congress have become exceedingly
    concerned about the danger of undiscovered mines throughout the
    world, and apparently the Army has now come forth with some
    technology that can detect the location of these mines. Are we
    sharing this information with other countries like Bosnia?
        Mr. Walker. I believe that yes, sir, we are, and I think
    more is going to be done in that regard in the future. For
    instance, in the environmental program we actually have a
    demonstration program at Jefferson Proving Ground on unexploded
    ordnance. This year will be the fourth phase. We are spending
    about $3 million just to work on that technology using
    environmental technology funds.
        Senator Inouye. Well, gentlemen, I am very pleased with
    what you have been doing. I think we are on the right track,
    but as the chairman pointed out very wisely, we are at a time
    in our history when money is not too plentiful so if we can
    carry on our mission without spending too much it would please
    my chairman from Alaska.
        Thank you very much, Mr. Chairman.
        Senator Stevens. It is my Scots heritage he is talking
    about.
        I was just thinking about the cost, you know, the total
    cost of the Department of the Interior's $3.6 billion. The
    accounting cost for this program and the Department is $6.8
    billion. I think it is a lot more than that. You are not
    putting in the cost of the people in uniform doing maintenance
    of the bases.
        Mr. Walker. No; just cleanup.
        Senator Stevens. And all the other things that are involved
    in environmental protection and control, it is a sizable amount
    of money we are looking at now.
        Mr. Walker. Just in the 6-year program for the Army we will
    spend $10 billion, for all the program.

                         Air Force program saved money

        Senator Stevens. I am reminded of old Everett Dirksen. You
    talk about $1 billion here, $1 billion there, pretty soon you
    are talking about real money, right? What is being done to set
    up some basic incentives to save money.
        Next year when you come I would like you to tell me how
    many people in these programs received awards or recognition
    for saving money. I will still tell you, Mr. Coleman, I think
    that Sam Johnson up in Alaska ought to be the pin-up boy of
    this program because of the way he saved money. He really went
    at that project at King Salmon and put his mind to it. I think
    he reduced the cost down to less than 25 percent of the
    original cost.
        Do you all still have that concept of rewarding people if
    they accomplish the job for less money? Has it been applied to
    this program?
        Mr. Pirie. I do not know of specifics, Mr. Chairman. We
    need to look into that.
        Mr. Walker. It is an intriguing idea. I think it deserves
    merit, for sure.
        Senator Stevens. I have to tell you, an annual cost of $6.8
    billion in this budget, the difference between the President
    and the Congress over 6 years now in defense is $7 billion.
        Senator Inouye. If the chairman would yield, there is a
    program ongoing in just about every Department of the U.S.
    Government that is called the suggestion box. If someone makes
    a suggestion that results in the saving of money, I think he or
    she should get a bonus or something akin to that.
        Senator Stevens. I am prepared to defend a few million
    prizes to reduce contracts that would cost $200 or $300 million
    down to $100 million. I should think the incentive for really
    saving ought to be involved in this program. It is getting out
    of hand.
        Mr. Walker. Well, I will tell you that devolvement is
    helping us as an incentive for this reason. Now that the
    program has devolved down to the services these costs have to
    compete with everything else that we buy, every tank that we
    buy, every aircraft that we buy, every ship that we buy, and
    all of our training.
        That is the best incentive that we have had in a long time,
    because by forcing these dollars to compete in the Army we are
    seeing our overall cost go down from about $1.7 billion to
    about $1.5 billion, $1.6 billion this year. It is going to go
    on down to about $1.2 billion by the end of the program period,
    so we think that kind of competition for resources is helping
    us as well.

                        Air Force award-winning program

        Mr. Coleman. I was just reminded, Senator, that we have a
    number of what we call award-winning bases and instances where
    we have saved money.
        Davis-Monthan, for instance, I was just handed this
    restoration program line item with a $12.5 million cost and
    time-saving program with about 98 percent of the sites on the
    base finished. We implemented a $2 million cleanup project
    which included the treatment and disposal of 27,000 tons of
    solid waste, and saved $19 million in design and construction
    cost by using a risk-based approach, which is the risk
    assessment approach I talked about earlier in my remarks.
        The ability to give an individual or a unit a monetary
    award other than a pat on the back, which we do, recognition in
    the base newspaper and recognition for the DOD environmental
    awards and stuff like that, that is what we do now.
        If we were performance based, merit based such as where I
    came from at General Motors, if you save that amount of money
    you are rewarded pretty handsomely in the pocketbook. If there
    was an opportunity to do that, I think it would go a long way
    in spurring others to keep on doing it.
        But we do this on our own anyway because we are charged to
    save the taxpayer's dollars. The pat on the back from the
    Secretary or the Chief means as much, or from you, Senator
    Inouye at Hickam, means as much to those folks as getting that
    check sometimes.
        Senator Stevens. I am belaboring it. While you were talking
    I asked Mr. Cortese to find out the EPA budget--this year is
    $6.8 billion, for all that we do in the whole Nation in terms
    of environmental matters. It is the same as your budget to
    clean up past mistakes.
        I mean, I am not trying to embarrass you or anything else.
    I just think there is something missing in terms of the
    involvement of more people at the local level.
        Now, that is one thing, but I think we ought to institute a
    program. Let us take the personnel from the winning base or
    vessel or airport or Army base, Navy, too, and give them a week
    in Senator Inouye's place in the middle of January.
        I am serious. There has to be some incentives here to bring
    this budget down. We have this amount, and it is really in
    addition to O&M costs, is it not? In O&M costs is compliance
    normally, would it not be, but here it is an additional budget
    to make sure that what is done in the O&M accounts is done
    right.
        There is a redundancy in these expenditures that bothers me
    considerably, and that is primarily because of some of the
    figures we saw a few years ago about how much of that is going
    into these, what I call hand-holding costs. You know, I do not
    see why you need an architect to tell you how to pick up
    contaminated dirt. I do not think we ought to have lawsuits
    over the question of whether we are doing it right or wrong.
        Somehow we have to get down to where this one is under
    control. Of all the places where I can see in the Department
    where the need is greater, this is it. Clearly there were
    mistakes in the past.
        I do not want you to misunderstand me. We are not going to
    cut your budget. We have been increasing your budget to try and
    urge you to get it done quicker, because I think the longer
    they continue, the greater the cost ultimately.
        Let me ask you a little mundane question. Secretary Walker,
    what is the situation with that defense fuel supply center down
    at the Whittier tank facility? Do you know anything about it?
        Mr. Walker. Yes, sir, Mr. Chairman. As you know, I was
    there last year, and as a matter of fact, today the Corps will
    be notifying the district engineer of the notice of
    availability to proceed with a lease there. We believe that
    that will be advertised on June 2, and we hope to award that
    contract on July 2.
        Senator Stevens. That is good. That will turn what was a
    liability into an asset for the Army.
        Well, gentlemen, I do thank you for sharing your progress
    reports with us. I should tell you that we do not have as
    bountiful a supply of sunshine year-round as my friend here
    does, but he cannot match my salmon this year. This is the
    record year of all years for salmon.
        We sample the returns as they are coming in, and we are
    told this will be twice the level of the record year, which was
    about 3 years ago, so if your duties happen to bring you up my
    way I will be happy to point out to you the best places to go.
        You know, we used to have a place there right near King
    Salmon where we took people who were the outstanding performers
    from bases throughout the country and let them have a week on
    that river.
        Senator Inouye. We will also take them to a restaurant
    called Humpy's.
        Senator Stevens. It is time to end the hearing. Thanks very
    much for your help.
        If you have any suggestions of how we provide incentives
    for people to pare down those cleanup costs, because this is
    the place where savings really mean additional money for O&M--
    think of the things we could do with this money if we could
    just channel it in the right way as far as the Armed Services
    are concerned.

                         Additional committee questions

        So we look forward to working with you, gentlemen. Thank
    you very much. We are going to have a hearing this afternoon at
    2 o'clock on counterterrorism.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
                  Questions Submitted to Hon. Robert M. Walker
                Questions Submitted by Senator Daniel K. Inouye
                     pollution prevention--new technologies
        Question. What steps is the Army taking to develop new pollution
    prevention technologies that target high risk or high cost problems on
    Army installations?
        Answer. The Army pollution prevention technology program has been
    based primarily on user-identified requirements since 1993. At that
    point, an initial database of environmentally related operational
    problems was developed from input by both installation and weapon
    system managers. These requirements were then prioritized at the HQDA
    level, with high risk/cost being critical prioritization criteria. The
    database of technology needs is updated by the user community at least
    once per year, to include re-prioritization if necessary. A HQDA level
    pollution prevention technology team comprised of stakeholders from
    installations, major commands, weapon system programs, and research and
    technology transfer communities then jointly develops a recommended
    technology investment strategy targeting the highest priority needs.
    This strategy is ultimately approved by senior leadership, just
    recently institutionalized in the Environmental Technology Technical
    Council.
        Regarding specific technology needs, the research and technology
    transfer representatives on the pollution prevention technology team
    try to identify existing technologies either within the Army, other
    services, or the private sector, thereby minimizing the need for new
    research. The Army is also developing a methodology to quantify costs
    and benefits of pollution prevention technology implementation through
    activity-based and life-cycle costing approaches. Finally, as Executive
    Agent for the National Defense Center for Environmental Excellence, the
    Army demonstrates, validates and transitions technologies addressing
    high risk/cost operations (e.g., ion beam processing targets hexavalent
    chrome, and ultra-high pressure waterjet targets costly stripping of
    turbine engines).
        Question. I understand the Army is considering using phyto-
    remediation, a new technology relying on plant life to absorb and break
    down contaminants, at Schofield Barracks (among others). Can you
    comment on this technology, and what expectations you have?
        Answer. Phyto-remediation is either the use of plant enzymes to
    breakdown a contaminant, or the use of plants to uptake contaminants.
    Phyto-remediation technology is gaining broader application, along with
    other biological remediation approaches. For example, at Milan Army
    Ammunition Plant phyto-remediation is being used to degrade explosive
    contamination in groundwater. Plant enzymes, along with naturally
    occurring microbes in soil, are breaking apart and degrading TNT and
    RDX. The ongoing demonstrations at Milan shows that a combination of
    plants and anaerobic microbes very effectively destroy both TNT and RDX
    contamination.
        The Army is working to exploit phyto-remediation in other
    applications as well. At Schofield Barracks, phyto-remediation is being
    considered to put a final polishing on wastewater effluent. The final
    polishing will bring the present wastewater effluent to an R1 water
    quality. Finally, phyto-remediation is being looked at to remediate
    heavy metal contamination from surface soils. This is the use of plants
    to uptake into themselves metals in the soil. The plants are harvested
    along with the extracted metals and either disposed of in a landfill or
    the metal can be recycled by ashing the plant and extracting the
    metals. The Army is in the process of developing a project to
    demonstrate this metals remediation technology.
        Question. Are any of you finding that the lengthy timeframe for
    environmental technology, demonstration, validation and application has
    become a big bottleneck in the fielding of new technology in your
    services?
        Answer. The Army finds that the actual time required to demonstrate
    a new technology for cost and performance purposes is not a limiting
    function. We find, rather, that the factors limiting new technology
    implementation are (1) funding to conduct field scale demonstrations,
    (2) regulators who require years of data before considering the
    technology as a viable alternative, and (3) lengthy qualification
    testing to prove that a new technology is acceptable for use on a
    weapon system. Field scale demonstrations are necessary since it is not
    always possible to take laboratory data and apply it directly to field
    applications. Also, private sector vendors often have limited data on
    the effectiveness of their products or make claims of effectiveness
    which often have no relationship to how the Army would use the product.
                       military munitions rule/range rule
        Question. Secretary Walker, I understand the Army is executive
    agent for managing Regional Environmental Offices that are directly
    supporting the DOD Range Rule and Munitions Rule partnering initiative
    with the states and Native American Tribal Communities. Have you found
    this situation of involving the community in establishing new policy to
    be beneficial and negotiated with the interests of all respected?
        Answer. Involving states and Native American Tribal Communities in
    the rule making process has been very beneficial and has greatly
    facilitated the identification and consideration of the interests of
    all parties. DOD has undertaken partnering initiatives for both the EPA
    Military Munitions Rule, including the DOD Implementing Policy, and the
    DOD Range Rule. These efforts have enhanced partner understanding of
    DOD munitions management and range operations and identified and
    resolved major issues concerning the rules, resulting in improved rules
    and policies. The Regional Environmental Offices, managed by all the
    Services, have been especially helpful in facilitating DOD efforts to
    work with the states and Native American Tribal Communities in
    implementing the rules once they are promulgated. Thus, partnering
    efforts have not only benefited policy development but also
    implementation.
        Question. Secretary Walker, can you comment on how the process for
    developing the Range Rule is coming along, and what we may expect?
        Answer. In April, a draft of the proposed Range Rule was prepared
    for submittal to OMB. After final DOD internal review, the draft
    proposed rule was submitted to OMB on 12 June 1997 for review. The OMB
    review process takes 30 to 90 days, after which the rule will be
    proposed by publishing it in the Federal Register. The rule provides
    for a 90-day public comment period. DOD plans to hold four Public
    Information Forums throughout the country to allow members of the
    public to obtain detailed information, talk to technical experts, and
    comment on the rule. DOD currently projects that the final rule would
    be published in the Federal Register in the Summer of 1998.
        Question. Secretary Walker, has there been any correlation or push
    to use the technology used with unexploded ordnance in our efforts to
    handle landmines?
        Answer. There are concerted efforts underway which take advantage
    of technology development, demonstration, evaluation and application
    for both unexploded ordnance (UXO) and landmines. Major organizations
    (Army Communications-Electronics Command, Army Environmental Center,
    Naval Explosive Ordnance Disposal Technology Division, Army Corps of
    Engineers' Laboratories, Army Research Laboratory, etc.) involved with
    these efforts meet routinely to share information regarding
    technological application, advancements and lessons learned.
    Additionally, many existing commercial companies are involved in
    supplying and/or utilizing technology and equipment for both subsurface
    UXO detection and landmine detection. For example, many of the
    companies which demonstrated as part of the Congressionally-directed
    UXO Technology Demonstration Program, held at Jefferson Proving Ground,
    IN over the past three years, are also involved in mine detection.
                                   partnering
        Question. Secretary Walker, I understand the Army has recently
    published the ``Partnering Guide for Environmental Missions of the Air
    Force, Army, and Navy.'' Could you briefly highlight the types of
    initiatives that are recommended in this publication?
        Answer. Partnering is cooperation among the DOD Components,
    regulators, contractors, and communities that is characterized by: (1)
    decision through consensus, and (2) a formal process to resolve
    disputes. There is no limit to the types of cooperative initiatives
    that may constitute partnering.
        Real examples of partnering include Restoration Advisory Boards,
    funding and development of training materials, formal committees of
    state agencies and DOD Regional Environmental Offices, local reuse
    committees for installations that are closing, ecosystem management
    such as the Chesapeake Bay Initiative, and advisory committees for
    Chemical Demilitarization.
        Question. Secretary Walker, in your testimony you list many
    successful examples of partnering initiatives, such as Fort Carson, CO
    and Aberdeen, MD. These are shining examples, but can you tell me how
    wide-spread this practice is?
        Answer. Currently, partnering covers many types of cooperative
    undertakings from the local through Headquarters levels. Real examples
    of partnering include Restoration Advisory Boards, funding and
    development of training materials, formal committees of state agencies
    and DOD Regional Environmental Offices, local reuse committees for
    installations that are closing, ecosystem management such as the
    Chesapeake Bay Initiative, and advisory committees for Chemical
    Demilitarization. Through time, less formal cooperative arrangements
    will become true partnering, with more efficient utilization of scarce
    resources, personnel, and time.
                                 legacy funding
        Question. Secretary Walker, several years ago this Committee
    initiated the Legacy program to protect sensitive historical, culture
    and environmental sites on military bases. Last year, Congress provided
    $12.5 million for this program. Is the Army receiving any of these
    funds, and if so, how are they being put into use?
        Answer. In fiscal year 1996 Army received $2.6 million in Legacy
    funds. All of these funds were used to implement the Mojave Desert
    Ecosystem Initiative.
        Question. Secretary Walker, one idea within DOD is to use your
    existing resources to pay for Legacy projects. Does the Army have
    funding within its fiscal year 1998 budget request set aside
    specifically for Legacy projects, and if so how much?
        Answer. Army has not budgeted for Legacy projects. However, Army
    will be using its appropriated funds to conduct Legacy-type planning
    level surveys, which include surveys of wetlands, threatened and
    endangered species, soils, surface waters, flora, plant communities,
    topography, and fauna.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                          restoration advisory boards
        Question. Restoration Advisory Boards have proven to be quite
    successful. When will the technical assistance funds be available for
    community members of RAB's? What steps are the services taking--or will
    take--to ensure that RAB's will be able to hire independent technical
    experts to advise its community members?
        Answer. Assuming publication in the Federal Register of the final
    Technical Assistance for Public Participation Rule (TAPP) in September
    1997, as scheduled, funds will be available for TAPP assistance in
    fiscal year 1998. The Army has already incorporated the principles in
    the TAPP proposed rule in RAB guidance for active and BRAC
    installations published this fiscal year. Army installations must
    identify TAPP requirements as a sub-set of their request for RAB
    administrative funding in their annual work plan submission. Major Army
    Commands allocate RAB administrative funds as a sub-set of the
    installation program management requirement. Installation commanders
    will consider the TAPP requests based on the criteria provided in the
    proposed TAPP rule, and incorporate legitimate requirements into their
    plans.
                              unexploded ordnance
        Question. The DOD is working on the range rule, which is expected
    to call for a national survey of artillery and bombing ranges,
    including those on Formerly Used Defense Sites (FUDS). What kind of
    resources will be necessary to implement the survey phase of the range
    rule? When will the funding need to be in place?
        Answer. The proposed DOD Range Rule requires that within 18 months
    of the effective date of the Rule, each DOD component develop a list of
    all known Closed, Transferred, and Transferring Ranges controlled at
    any time by that DOD component. The Army is already examining available
    data sources to identify ranges including those on Formerly Used
    Defense Sites (FUDS). However, a more in-depth and complete process
    will be necessary to ensure all ranges are identified and to gather
    required data on those ranges. The Army estimates the cost for a
    detailed inventory of Army closed and transferred ranges could be as
    much as $3 million. The cost of inventorying FUDS ranges could be as
    much as $5 million. In order to get an early start on the inventory,
    funding would need to be in place by the summer of 1998.
        Question. Are the Services looking at sustainable management of
    active ranges? Are the Service (sic) planning and implementing
    strategies to minimize range contamination and minimize the risk to
    personnel and other range users?
        Answer. The Army manages its training lands for sustainable use
    through its Integrated Training Area Management (ITAM) program.
    However, ITAM may not always directly affect active firing ranges.
    Other programs do aim to improve the Army's management of active ranges
    for sustained use. The Army's Range XXI initiative is providing a life-
    cycle approach to managing active ranges. The present focus is on small
    arms ranges. The intent is to provide guidelines for range site
    location, design specifications, and maintenance procedures to reduce
    the potential for offsite migration of munitions constituents such as
    heavy metals from entering surface and groundwater resources. In
    addition, a Tri-Service working group has completed studies on several
    configurations of toxic free 5.56 mm ammunition. Field testing and
    certification will have to occur before such ammunition could be
    adopted. These Army pollution prevention strategies can potentially be
    transferred to other Services for implementation. In addition, the
    Army's increasing use of training simulators and simulations has a
    positive effect on sustained management of active ranges. Although
    simulators and simulations cannot ever completely replace ``live''
    training and live firing practice using service ammunition, they do
    reduce some of those activities. When proven effective, simulators and
    simulations can replace the number of rounds required to be fired for
    soldiers to remain qualified on certain weapons systems. They can also
    offset some of the maneuver training which must be carried out to
    sustain readiness standards.
                                  dera budget
        Question. Last year, Congress suggested a cap on studies as a
    percentage of the DERA budget. How does a cap on studies limit the
    ability of the services to use monitoring to define the most
    appropriate and cost-effective remedies? Could this cap negatively
    impact on effectively employing natural attenuation methods for
    cleanup?
        Answer. In general, the Army is winding down its studies and
    therefore a cap on studies should not have a great impact. It may draw
    out the program some, but overall impact to determine appropriate and
    cost effective remedies should not be affected. There would not be a
    negative impact on effectively employing natural attenuation methods
    for cleanup since monitoring in conjunction with natural attenuation is
    considered as cleanup costs, not as study costs.
        Question. It appears that cleanup will not be completed at many of
    the sites before the BRAC funding is scheduled to end. What will the
    service do to ensure adequate budgeting for remediation of these
    facilities? Through DOD accounts?
        Answer. The Army will address requirements for post fiscal year
    2001 BRAC environmental cleanup in POM 99-03. Funds will be programmed
    in the Army's environmental restoration account.
                               ammunition plants
        Question. Currently, the Services use some funds to keep inactive
    ammunition plants ``mothballed?'' A recent GAO report recommended that
    these plants be closed. Couldn't the funds used to maintain these
    plants in ``mothball'' status be used instead for cleanup and reuse of
    the facilities?
        Answer. The Army does not feel that to be prudent. To keep our
    Government Owned/Contractor Operated (GO/CO) active and inactive
    ammunition plants operational, costs vary widely due to size. Inactive
    standby ammunition plants annual costs range from approximately $2.5
    million to $3.7 million per year. The cost to complete cleanup
    estimates for up to 13 AMC inactive ammunition facilities is in excess
    of $1 billion. Any value gained from closure would not produce viable
    savings for many years.
        Our reasons for ``mothballing'' rather, than closing include the
    following:
      --Allows the Army to maintain the production base at reasonable cost.
            In the event of mobilization/war those plants could be at
            production levels within twelve months, whereas to build a
            plant from scratch could take more than five times as long, and
            cost ten times as much, assuming that the necessary production
            line materiel were available.
      --It costs less to keep a plant ``mothballed'' then to clean it up
            since, closing a plant would require it to be cleaned to EPA or
            State standards immediately, thus, incurring additional costs.
        The Army uses Production Base Support (PBS) funds to maintain
    inactive ammunition plants in a ``mothballed'' condition. Mothballing
    includes any necessary rehabilitation and layaway of industrial
    facilities upon release from current production when those facilities
    are required for mobilization or future production. If, after an
    ammunition plant has been in a laid-away status, it is determined that
    the plant should be cleaned up and closed and prepared for reuse, with
    no further mobilization requirement, PBS funds can pay those costs that
    bring the plant to closure. This includes equipment dismantling and
    relocation for mobilization--where required, cleanup efforts that
    relate to production--created contamination, and other efforts to de-
    inactivate the plant. This does not include costs incurred after the
    plant has been sanitized from a mobilization condition. Caretaker costs
    of property leading to future reuse is not a PBS cost. Also some
    residual environmental costs that are not directly linked to production
    would not be PBS funded.
                              pollution prevention
        Question. The Services have complied with the deadlines of
    Executive Order 12856, which requires each federal agency and facility
    to establish a pollution prevention plan. Have individual commands and
    facilities adequately funded the pollution prevention strategies
    established by these plans?
        Answer. Army Major Commands and subordinate installations are
    complying with the requirements established in Executive Order 12856.
    Detailed installation pollution prevention strategies or plans have
    been completed and reviewed by Headquarters, Department of the Army.
    Issues arising from the review have been forwarded back to the Major
    Army Commands for action. Overall, these plans portrayed pollution
    prevention strategies which shift the focus from compliance actions to
    prevention efforts to attain compliance. Numerous pollution prevention
    projects were identified for funding to achieve future savings through
    compliance cost avoidance.
        Army policy requires Major Army Commands to implement pollution
    prevention projects instead of compliance projects where the former can
    be used in lieu of the latter to achieve compliance to a regulatory
    driver. Unfortunately, pollution prevention projects that change how we
    sustain and/or achieve compliance with environmental laws and
    regulations compete directly for funding with ``control and treat''
    projects that address ``out of compliance'' situations. These
    compliance projects typically have a higher priority for funding
    because a regulatory driver with enforcement/penalty provisions often
    accompanies a failure to implement them. Although the pollution
    prevention projects provide a sound alternative, they are not tied to
    an ``out of compliance'' situation, and thus in the current resource-
    constrained budget environment, commands and installations can defer or
    delay these projects until adequate funding is available to address
    these additional investments. The Army is working this issue in
    developing the current Program Objective Memorandum.
        Question. At times, implementing pollution prevention plans
    requires a short term cost increase to an agency or facility in order
    to realize longer-term savings in the costs of complying with
    environmental laws and regulations. In the Services' view, does
    Congress need to clarify budgeting rules or policies in order to
    encourage implementing federal pollution prevention plans?
        Answer. Congress does not need to clarify budgeting rules or
    policies to encourage implementing pollution prevention plans. Army
    policy requires the use of pollution prevention projects to achieve
    compliance if economically feasible. Efforts are ongoing to develop
    pollution prevention plans and better costing models to support this
    effort.
        The challenge facing Army commands and installations is funding
    prevention projects which would achieve future savings through
    compliance cost avoidance but are typically changes in practice/
    procedure not needed to meet immediate or projected noncompliance
    situations. Unless overall BASOPS funding increases, it will be
    difficult to achieve the level of pollution prevention investment
    desired.
                                     ______

                Questions Submitted to Hon. Robert B. Pirie, Jr.
                 Questions Submitted by Senator Mitch McConnell
        Question. Mr. Pirie, I want to thank you for meeting with a
    Kentucky delegation last week to discuss the Navy's commitment to
    privatization-in-place of the work at the Naval Ordnance Station in
    Louisville. I apologize for not being able to attend, but I had to
    chair a hearing at that exact time.
        I want you to know that I am watching these developments closely.
    Specifically, I am worried that the Navy has repeatedly withheld or
    reduced funding for several contracts at Louisville. Frankly, I can't
    understand how this behavior demonstrates the type of commitment
    necessary for privatization to succeed. You can be sure that I will be
    watching closely as the Navy, the contractors and the community
    continue their efforts toward resolving these difficulties.
        I want to follow up on some of the issues discussed at that meeting
    Mr. Pirie.
        Is the Navy committed to the effort to privatize-in-place at
    Louisville? Is the Navy prepared to commit to working with the
    contractors and the Redevelopment Authority in order to solve the
    current problems, and how specifically do you plan to work toward this
    goal?
        Answer. The Navy remains committed to working to make the
    Louisville privatization a success. Success to us has always meant that
    our requirements are met, at acceptable price and quality. Right now
    ``acceptable price'' is being questioned. While we recognize that costs
    are going to be higher initially because of startup costs, learning
    curve, and reconfiguration for more productive operations, it is our
    expectation that costs will come down.
        The Navy is continuing to work with both the contractors and the
    Redevelopment Authority. Since early this calendar year we have
    significantly increased our partnering efforts, focusing on reducing
    costs. VADM Sterner has also recently established an Integrated Process
    Team with participation by all the customers and other Navy
    stakeholders as well as United Defense. We hope that by working
    cooperatively these teams can achieve their goals of increased customer
    satisfaction and improved communication enabling United Defense to make
    prudent business decisions.
        Question. The contractors cannot be expected to reduce costs if
    their volume of work continues to be decimated by Navy decisions. How
    can the Navy expect privatization to succeed if it continues to
    drastically reduce the level of funding for its contracts? In fact,
    these reductions began occurring after only three months of privatized
    operations. Again, this hardly seems like an endorsement of the
    privatization concept.
        Answer. The workload at Louisville had been in decline for several
    years prior to privatization and has always fluctuated, depending upon
    Navy requirements. Louisville workload continues to be a high Navy
    funding priority. We are continuing to send work associated with all
    the product lines previously operating at Louisville to the privatized
    facility.
        One of the factors in our decision to privatize was the private
    sector's ability to rapidly adjust work force to workload. Another
    factor was the ability of the private sector to take on additional work
    from within the competitive market. The majority of the difference
    between the expected level of work and what has materialized is foreign
    country work. United Defense must and is working to try to secure that
    foreign work. Through our partnering efforts and our integrated process
    team, we hope that both United Defense and the Redevelopment Authority
    will have the flexibility to adjust to peaks and valleys in workload
    from individual customers.
                                     ______

                Questions Submitted by Senator Daniel K. Inouye
                     pollution prevention--new technologies
        Question. Secretary Pirie, in your testimony you noted that at NAS
    Cecil Field, Florida, the Global Positioning System is being used to
    locate wells instead of using survey crews, saving over $100,000 in one
    year. Are the Services looking at other DOD technologies like GPS as
    possible environmental solutions?
        Answer. Yes. The Navy is constantly looking for, both within and
    outside the DOD, technology solutions to meet Navy requirements and
    solve environmental problems. Specifically, in the area of Pollution
    Prevention (P\2\), the Navy acknowledges that using more efficient
    technologies and processes in the production, operations, and
    maintenance of Navy systems will reduce the amount of hazardous waste
    generated, toxic chemicals released, and hazardous materials used.
    Additionally, labor reductions and cost avoidances are realized by
    implementing many of these alternative technologies. Successful P\2\
    technology examples include monitoring systems such as the Infrared
    Camera Leak Detector which will identify spills and leaks real time in
    order to mitigate the pollution quickly, and the Hydraulic Fluid
    Electronic Particle Counter which provides a more reliable, faster and
    more objective method to quantify particle contamination in hydraulic
    fluid. Another successful P\2\ area of endeavor is material
    substitution where hazardous materials are replaced with alternative
    solvents and coatings that are more efficient and less hazardous to the
    worker and the environment. Re-engineering existing processes is a
    third means of using technology to prevent pollution. Using water based
    methods for cleaning and coating removal increases productivity,
    decreases labor, and are less hazardous to the environment.
                       military munitions rule/range rule
        Question. Secretary Pirie, in your testimony you state that the
    Navy is ``generally satisfied with the new Military Munitions Rule.''
    Can you highlight what reservations you may have regarding this?
        Answer. We have two concerns. First, we are concerned about the
    extent to which states will adopt the rule in lieu of establishing more
    stringent state standards; and second, the extent to which EPA will
    honor the provisions of the rule which state that our active and
    inactive ranges are not regulated by Resource Conservation and Recovery
    Act (RCRA).
        For the past several months, service representatives around the
    country have been meeting with their state counterparts to explain how
    military munitions are managed within DOD, and how the munitions rule
    will impact munitions activities. From our early discussions, it
    appears that most States are willing to adopt the munitions rule in its
    entirety so that we would have the uniform national standard we need to
    manage all our munitions waste and non-waste. Some states have
    indicated that they will adopt all or part of the federal rule.
    However, in all but three states, DOD would have to wait for the
    States' regulatory adoption process, which could take two or more
    years. Some states have voiced concerns about the munitions rule, and
    are reluctant to let the rule go into effect this August. We will
    continue to work with these states over the next few months, however,
    in the hope of resolving their concerns so that we can have the kind of
    national waste military munitions standard that Congress intended in
    its passage of the Federal Facility Compliance Act of 1992.
        As for our second concern, EPA stated that the use of ordnance at
    active and inactive ranges constitutes use of products for their
    intended purpose, and thus, that use is not regulated by RCRA. EPA said
    this was so even when these products have landed on the ground,
    appropriately recognizing that this is part of the natural life cycle
    of ordnance use. However, in May 1997, at the Massachusetts Military
    Reservation an active range EPA Region I declared that the ordnance
    being used on the range was a matter over which EPA had control under
    RCRA (and the Safe Drinking Water Act) because it was perceived to pose
    an ``imminent and substantial endangerment'' to health and the
    environment. EPA ordered training to cease at the range. When this
    determination was appealed to the Environmental Protection Agency
    Headquarters (HQ EPA), the RCRA allegations were ordered removed. As it
    stands right now, the Military Munitions Rule does not protect the
    vital training that goes on at our ranges from regulatory control under
    either the Safe Drinking Water Act or RCRA. We intend to work hard with
    our regulators to insure that other ranges are not closed down by
    addressing legitimate environmental concerns when they are raised.
                              air emission credits
        Question. Secretary Pirie, in your testimony you discuss in detail
    a legislative proposal that would allow DOD to retain proceeds from CAA
    emission reductions. Can you estimate what level of proceeds we may
    expect should this legislation become part of public law?
        Answer. We have no estimate at this time as we have only limited
    experience to date, primarily in the context of closing bases. We
    understand that the current version of the legislation being considered
    would initiate a pilot program and limit the proceeds retained to a
    maximum of $500,000 for all of DOD.
        Question. Secretary Pirie, do you know why the Department of
    Defense was not included for the receipt of proceeds in the original
    CAA Emission Reductions Act?
        Answer. It is not a question of DOD being left out of the original
    CAA; the Act itself simply authorizes states to implement emission
    trading programs. Whether or not DOD can retain proceeds from the sale
    of emission credits is determined by Federal fiscal and property laws.
    Emission credits are best characterized as intangible personal
    property. As such the proceeds from the sale of personal property are
    currently required to be deposited in the U.S. Treasury rather than
    retained by the Department. This is a limitation DOD shares with all
    other federal agencies. The legislative proposal, modeled after the
    recycling legislation of a few years ago, would allow DOD to retain at
    least some portion of the proceeds as an incentive to further reduce
    air pollutant emissions.
                        partnering agreements/contracts
        Question. Secretary Pirie, do you find that partnering contracts
    established by the Navy are tailored to be site specific--such that the
    contracting mechanism is the most financially frugal?
        Answer. We have not found partnering to be a problem in
    accomplishing our mission in the most cost-efficient manner. Partnering
    has improved relationships among regulators and the Navy, and has
    served to halt the former process of building a ``paper wall'' to
    prepare for potential litigation. Partnering solves problems.
    Partnering usually includes Navy entities, U.S. EPA, State regulators,
    and Navy contractors. Since much of our environmental program is
    accomplished through contractors, there is considerable potential for
    partnering with contractors throughout the environmental mission. We
    maintain our responsibility to choose and enforce efficient contracts,
    which may be cost-plus-award-fee or fixed-price, depending upon the
    site-specific requirements and schedules.
                               kaho'olawe cleanup
        Question. Secretary Pirie, I understand the Navy is reviewing the
    proposals of several contractors for cleaning up the island of
    Kaho'olawe, and expects to award a contract this July. Is everything on
    track for a July contract award?
        Answer. Award in July is still planned. The selection process is
    on-track to make this happen.
        Question. I understand that the Navy is planning to obligate $37.8
    million for Kaho'olawe this year. However, I am told that the Navy is
    basing its work on the amount of funding available. Is it correct that
    more would be done if additional funding were appropriated for the
    project?
        Answer. Yes, it is correct that more could be done if additional
    funding were appropriated.
        Question. Mr. Secretary, Congress provided $60 million to the Navy
    for Kaho'olawe, in addition to the $85 million which has been
    appropriated to date to the Kaho'olawe Trust Fund. The Navy has
    obligated $14.5 million of $60 million. What are the Navy's plans for
    using the balance of this amount?
        Answer. Unexploded military ordnance will remain on Kaho'olawe and
    in the surrounding waters following the effort authorized by Title X of
    the Fiscal Year 1994 Defense Appropriation Act, which is financially
    supported by the Kaho'olawe Island Conveyance, Remediation, and
    Environmental Restoration Trust Fund. The $60 million not in the Trust
    Fund is presently used to cover Navy expenses caused by actions on the
    island not related to the Title X effort. For example, pursuant to a
    Consent Decree in 1980, entered as a final judgment in Noa Emmett
    Aluli, et al. v. Harold Brown, et al., United States District Court for
    the District of Hawaii, Civil Action No. 76-0380, funds are used for
    transportation of Navy staff who provide escort to members of the
    public going to the island for purposes not related to the ordnance
    removal effort, such as those seeking cultural education experiences
    with the Protect Kaho'olawe Ohana. Any funds remaining following the
    Title X effort will support the ordnance response effort when
    previously undetected ordnance is located or unearthed as a result of
    erosion.
                                 legacy funding
        Question. Secretary Pirie, I understand that a portion of the 1997
    Legacy funding was expected to be used for re-burial of remains at
    Kaneohe. Can you tell us whether you have received funding from OSD for
    this project?
        Answer. The Department of the Navy did not request, nor do we
    expect Legacy funding for re-internment of native Hawaiian remains at
    MCAS Kaneohe Bay. A decision by the Commanding General, Marine Corps
    Base Hawaii on who will receive the native Hawaiian remains is
    anticipated in October 1997.
        Question. Secretary Pirie, does the Navy have any Legacy funds
    budgeted for fiscal year 1998?
        Answer. The Legacy Resource Management Program is a Department of
    Defense (DOD) managed program, administered by the Deputy Under
    Secretary for Environmental Security. Since the inception of the
    program, all Navy Legacy funding has been budgeted and allocated
    through DOD. The Navy has not independently submitted a budget request
    for Legacy funds. The DOD did not request any funding for Legacy in the
    fiscal year 1998 President's Budget.
        In preparing the environmental conservation portion of the fiscal
    year 1998 budget request, both the Navy and the Marine Corps assumed
    there would not be any Legacy funds and included critical legacy type
    project requirements within the Operations and Maintenance
    appropriation request.
                                     ______

                 Question Submitted by Senator Patrick J. Leahy
        Question. Please describe the process for Department of Defense
    (DOD) allocation of funding and remediation support for Superfund
    sites, both on and off DOD facilities, where DOD has been named a
    potentially responsible party (PRP). Has DOD contributed funds to
    environmental clean-ups if the Department has not yet been named a PRP?
    Please provide brief descriptions of sites, if any, which have been
    funded in this manner.
        Answer. The Department of the Navy participates in funding and
    remediation of EPA Superfund sites just like any private company or
    individual that has been named a potentially responsible party (PRP) by
    EPA. Once identified as a PRP, the Department does a records search to
    determine if the EPA allegations can be substantiated. If there are
    indications of Navy involvement, we then work to determine a fair Navy
    share and are willing to pay for that share. Funds for our share comes
    from the Environmental Restoration, Navy account.
        The Navy has not contributed to environmental cleanups of Superfund
    sites if we have not been named a PRP by EPA.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                          restoration advisory boards
        Question. Restoration Advisory Boards have proven quite successful.
    When will technical assistance funds be available for the community
    members of RAB's? What steps are the Services taking--or will take--to
    ensure that RAB's will be able to hire independent technical experts to
    advise its community members?
        Answer. DOD is currently proposing a Technical Assistance for
    Public Participation (TAPP) rule that will allow RAB's to seek funding
    to assist them in reviewing and commenting on the cleanup program. The
    funding will come from the installation's RAB support funds and should
    be available starting in fiscal year 1998. If the RAB chooses to use
    its limited support funds for technical experts, the Navy will ensure
    via the implementing policy and guidance that the community will be
    able to hire independent technical experts.
                              unexploded ordnance
        Question. The DOD is working on the range rule, which is expected
    to call for a national survey of artillery and bombing ranges,
    including those on Formerly Used Defense Sites (FUDS). What kind of
    resources will be necessary to implement the survey phase of the range
    rule? When will the funding need to be in place?
        Answer. The resources necessary to implement the survey phase of
    the range rule for the Navy is expected to be minimal. The proposed
    Range Rule is expected to be published in the Federal Register in late
    summer of 1997 for a 90 day public comment period. The rule can take
    effect any time following the comment period, when comments have been
    addressed and the Final Rule published. The date of final publication
    depends on the type of comments received during the public comment
    period. The Navy has 18 months to identify all ranges which fall under
    the jurisdiction of the Range Rule after the rule has been published.
    There is no funding identified in the fiscal year 1998 budget for the
    Range Rule.
        Question. Are the Services looking at sustainable management of
    active ranges? Are the Services planning and implementing strategies to
    minimize range contamination and minimize the risk to personnel and
    other range users?
        Answer. The Services have implemented programs to identify
    potential weapons impact areas around ranges and to work with local and
    state governments, as well as other federal agencies, to minimize
    encroachment and incompatible development in the vicinity of ranges.
    The Department of the Navy has promulgated range planning policy
    guidance for its air-to-ground training ranges which will help range
    commanders formulate plans to quantify safety impacts. The Navy has
    initiated range needs assessments to address long-term range
    requirements.
        The Marine Corps has developed a Site Management Model (SMM) to
    assess risks associated with unexploded ordnance. SMM tracks ordnance
    from deployment to cleanup. It incorporates historical records and site
    data on ordnance types, configurations, densities and locations for
    active ranges. Range clearance assessments developed by SMM are
    uploaded to the Range Facility Management Support System (RFMSS), an
    overarching range management system that considers all environmental
    and safety factors for efficient range use. RFMSS has been adopted by
    the Marine Corps as the single automated information system for ground
    ranges and will be used by all Marine Corps installations by next year.
                                  dera budget
        Question. Last year, Congress suggested a cap on studies as a
    percentage of the DERA budget. How does a cap on studies limit the
    ability of the Services to use monitoring to define the most
    appropriate and cost-effective remedies? Could this cap negatively
    impact on effectively employing natural attenuation methods for
    cleanup?
        Answer. A cap on studies as a percentage of the Environmental
    Restoration, Navy (ER,N) budget limits effective use of the funds.
    While a cap may increase the percentage of budgeted funds dedicated to
    cleanup for a year or two, if sufficient studies are not performed,
    future cleanups would be limited until the prerequisite studies are
    completed. Further, study work can often lead to closing out a site
    without the need for doing a cleanup. If study efforts are curtailed,
    an unnecessary cleanup might proceed just because cleanup funds are the
    only type of funds available. The use of natural attenuation methods
    and new technologies often require a little additional study before the
    regulators and the public are willing to accept the cleanup remedy.
    Thus, a cap on the amount of study funds could curtail employing new,
    less costly solutions.
        Question. It appears that cleanup will not be completed at many of
    the sites before the BRAC funding is scheduled to end. What will the
    Services do to ensure adequate budgeting for remediation of these
    facilities? Through what DOD accounts?
        Answer. The Department of Defense has not yet established a policy
    on this issue. In the absence of specific DOD guidance, the Navy has
    increased the ER,N account starting in fiscal year 2002 to accommodate
    cleanup of BRAC bases that will not be completed by the time BRAC
    funding is scheduled to end.
                               ammunition plants
        Question. Currently, the Services use some funds to keep inactive
    ammunition plants ``moth balled?'' A recent GAO report recommended that
    these plants be closed. Couldn't the funds used to maintain these
    plants in ``moth ball'' status be used instead for clean up and reuse
    of the facilities?
        Answer. The Navy has no inactive ammunition plants.
                              pollution prevention
        Question. The Services have complied with the deadlines of
    Executive Order 12856, which requires each federal agency and facility
    to establish a pollution prevention plan. Have individual commands and
    facilities adequately funded the pollution prevention strategies
    established by these plans?
        Answer. It is Navy policy to fund all legally driven environmental
    requirements, and the Navy considers Executive Order requirements to be
    legally required. As part of Executive Order 12856 and CNO policy, all
    Navy Installations were required to develop Pollution Prevention (P\2\)
    Plans by December 31, 1995. The Navy feels it has budgeted enough
    resources to adequately fund strategies established by the P\2\ Plans.
        Question. At times, implementing pollution prevention plans
    requires a short-term cost increase to an agency or facility in order
    to realize longer-term savings in the costs of complying with
    environmental laws and regulations. In the Services' view, does
    Congress need to clarify budgeting rules or policies in order to
    encourage implementing federal pollution prevention plans?
        Answer. No. Executive Order 12856 provides sufficient latitude for
    testing and implementing pollution prevention initiatives. Other
    opportunities exist to make compelling cases for pollution prevention
    investments which yield future savings during POM and budget
    preparation. The acquisition community has made great strides in
    factoring-in environmental considerations in weapons system life cycle
    analyses.
                                     ______

                 Questions Submitted to Hon. Rodney A. Coleman
                Questions Submitted by Senator Daniel K. Inouye
                              air emission credits
        Question. Secretary Coleman, is the Air Force aware and in support
    of this legislation?
        Answer. The Air Force is aware of and fully supports the Senate
    proposal allowing DOD to retain proceeds from the sale of economic
    incentives for air emission reductions.
                        partnering agreements/contracts
        Question. Secretary Coleman, has the Air Force had success in
    establishing fiscally frugal partnering agreements in its environmental
    cleanup and restoration efforts?
        Answer. Yes, the Air Force has been very successful in partnering
    with state and federal regulators in the environmental cleanup program.
    Partnering has enabled installation personnel and regulators to operate
    in a much more open atmosphere, working towards common goals.
        We made considerable progress at several Florida installations by
    bringing the regulators in early to help develop work plans and review
    reports before the reports were finalized. We reduced the number of
    overall documents needing review and significantly reduced the number
    of review cycles because we understood what the regulators wanted. This
    yields significant savings in time and money, and allows the available
    funds to go towards cleaning up sites instead of preparing documents.
        Partnering is also creating an environment where we can better
    convince regulators and the public that our new technologies are as
    effective, or more effective, than more expensive alternatives. This
    has been critical to gaining acceptance for natural attenuation of
    petroleum products in lieu of expensive pump and treat systems.
        Partnering in environmental cleanup is extended to all stakeholders
    through the Restoration Advisory Boards (RAB's). The investment we made
    in the RAB's allows us to better educate the public so they can
    understand and make informed decisions on environmental issues.
                                 legacy funding
        Question. Secretary Coleman, what are the Air Force's priorities
    for Legacy Funding in 1997?
        Answer. The Air Force received $992,000 for Legacy funding in
    fiscal year 1997 from OSD. The Air Force recommended projects based on
    DOD criteria and DOD approved the following projects:

    Endangered Species Monitoring in support of operations at the
        Goldwater Range, Luke AFB, AZ.............................   $45,000
    Study of disturbance levels for Military Training, Holloman
        AFB, NM...................................................   143,000
    Predicting Turkey Vulture Bird Aircraft Strike Hazard (BASH),
        Kirtland AFB, NM..........................................   100,000
    Archaeological Survey, Maxwell AFB, AL........................    70,000
    Inventory and Monitoring of protected plant species, Elgin
        AFB, FL...................................................   124,000
    Inventory of Rare and Endangered Species, Arnold AFB, TN......   138,000
    Reuse Assessment of Historic Buildings, Wright-Patterson AFB,
        OH........................................................   100,000
    Protecting Biodiversity and Native Habitats, Vandenberg AFB,
        CA........................................................    99,000
    Phase II Archaeological Survey, Andrews AFB, MD...............   100,000
    Biological Inventory and Ecological Study of Pine Barrens, New
        York Air National Guard, Long Island/Suffolk County, NY...    19,000
    Threatened and Endangered Neopaleotropical Bird Inventory,
        Cape Romanzoff, AK........................................    54,000

        Question. Secretary Coleman, does the Air Force have any Legacy
    funds budgeted for fiscal year 1998?
        Answer. No, the Air Force does not budget for Legacy funds. The
    Office of the Secretary of Defense budgets for Legacy funds for all of
    DOD.
                                     ______

                 Question Submitted by Senator Patrick J. Leahy
                                superfund sites
        Question. Please describe the process for Department of Defense
    (DOD) allocation of funding and remediation support for superfund
    sites, both on and off DOD facilities, where DOD has been named a
    potentially responsible party (PRP). Has DOD contributed funds to
    environmental clean-ups if the Department has not yet been named a PRP?
    Please provide brief descriptions of sites, if any, which have been
    funded in this manner.
        Answer. The Air Force allocates most of its resources toward sites
    on, or originally on, installations where we were the only Potentially
    Responsible Party (PRP). The Air Force allocates funds and remediation
    support at Air Force Superfund National Priority List (NPL) sites
    according to risk category and negotiated agreements with regulatory
    agencies. Our clean-up process assesses risk to human health and the
    environment, then allocates funding to the highest risk sites first.
        At non-DOD facilities where the Air Force has been named as a PRP,
    our practice is to negotiate resolution. Resolution is accomplished
    through settlement of actual or threatened litigation or through
    sharing costs for a response action. There is no record the Air Force
    has contributed funds to environmental clean-ups where the DOD has not
    yet been named as a PRP.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                          restoration advisory boards
        Question. Restoration Advisory Boards have proven quite successful.
    When will technical assistance funds be available for the community
    members of RAB's? What steps is the Air Force taking--or will take--to
    ensure that RAB's will be able to hire independent technical experts to
    advise its community members?
        Answer. Technical assistance funds will be available in fiscal year
    1998, providing the Department of Defense's Technical Assistance for
    Public Participation Final Rule is published and requirements are
    identified.
        The Air Force will establish a procedure by which a list of
    eligible technical assistance providers will be identified. The
    procedure will entail the Air Force consulting with, and considering
    advice from, the Restoration Advisory Board community members for
    determining the basic qualifications required of prospective technical
    assistance providers in the areas of biochemistry, toxicology,
    environmental science, engineering, and hazardous and toxic waste
    issues/laws. After basic qualifications are established, a list of
    eligible technical assistance providers will be established in
    accordance with applicable Federal Acquisition Regulations.
                              unexploded ordnance
        Question. The DOD is working on the range rule, which is expected
    to call for a national survey of artillery and bombing ranges,
    including those on Formerly Used Defense Sites (FUDS). What kind of
    resources will be necessary to implement the survey phase of the range
    rule? When will the funding need to be in place?
        Answer. The Army is the lead Service for implementation of the
    Department of Defense Range Rule and has the responsibility to compile
    the range inventory for the Services.
        Question. Is the Air Force looking at sustainable management of
    active ranges? Is the Air Force planning and implementing strategies to
    minimize range contamination and minimize the risk to personnel and
    other range users?
        Answer. The Air Force routinely cleans ordnance from active ranges.
    The frequency of and procedures for clearance activities are
    accomplished to minimize safety concerns for personnel and other range
    users.
                                  dera budget
        Question. Last year, Congress suggested a cap on studies as a
    percentage of the DERA budget. How does a cap on studies limit the
    ability of the services to use monitoring to define the most
    appropriate and cost-effective remedies? Could this cap negatively
    impact on effectively employing natural attenuation methods for
    cleanup?
        Answer. The cap prevents the most efficient execution of the
    cleanup program because it defers sites requiring study. The Air Force
    inventory of sites reflects that 80 percent of our closed sites were
    completed during the study phase. Monitoring costs are not considered a
    study cost by the Air Force. Therefore, the cap on studies does not
    impact the implementation of natural attenuation as a remedy for
    cleanup.
        Question. It appears that cleanup will not be completed at many of
    the sites before the BRAC funding is scheduled to end. What will the
    Air Force do to ensure adequate budgeting for remediation of these
    facilities? Through what DOD accounts?
        Answer. The Air Force has fully funded the environmental cleanup of
    BRAC bases using BRAC funding through fiscal year 2001. The Last
    Remediation In Place is scheduled for fiscal year 2001 for all BRAC
    bases except one. Funding for remediation and long term operations and
    maintenance of environmental systems at BRAC facilities beyond 2001 has
    been planned. Those costs will be covered through Air Force BRAC
    Appropriation and under the Air Force Total Obligation Authority. The
    Air Force has projected future cleanup costs at BRAC bases in the out
    years and will continue to include them in the Defense Resource
    Allocation Process.
                               ammunition plants
        Question. Currently, the Services use some funds to keep inactive
    ammunition plants ``moth balled?'' A recent GAO report recommended that
    these plants be closed. Couldn't the funds used to maintain these
    plants in ``moth ball'' status be used instead for clean up and reuse
    of the facilities?
        Answer. The Air Force does not have any ammunition plants.
                              pollution prevention
        Question. The Services have complied with the deadlines of
    Executive Order 12856, which requires each federal agency and facility
    to establish a pollution prevention plan. Have individual commands and
    facilities adequately funded the pollution prevention strategies
    established by these plans?
        Answer. Yes, the Air Force has adequately funded its pollution
    prevention strategy. The Air Force is on target to meet its waste
    reduction goals (toxic release inventory, hazardous waste disposal and
    solid waste disposal).
        Question. At times, implementing pollution prevention plans
    requires a short term cost increase to an agency or facility in order
    to realize longer-term savings in the costs of complying with
    environmental laws and regulations. In the Air Force's view, does
    Congress need to clarify budgeting rules or policies in order to
    encourage implementing federal pollution prevention plans?
        Answer. No, we do not need Congress to clarify current budgeting
    rules and policies.

                              subcommittee recess

        Senator Stevens. If there is nothing further, the
    subcommittee will stand in recess.
        [Whereupon, at 11:05 a.m., Tuesday, May 13, the
    subcommittee was recessed, to reconvene subject to the call of
    the Chair.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                            WEDNESDAY, MAY 21, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:06 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, Specter, Domenici,
    Bond, Hutchison, Inouye, Bumpers, Harkin, and Dorgan.

                             DEPARTMENT OF DEFENSE

                          Department of the Air Force

    STATEMENT OF SHEILA E. WIDNALL, Ph.D., SECRETARY OF THE
                AIR FORCE
    ACCOMPANIED BY RONALD R. FOGLEMAN, CHIEF OF STAFF

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Thank you very much for being here, Madam
    Secretary and General Fogleman.
        We are going to conclude our hearings on the military
    service budget requests today, and hear from the Secretary of
    the Air Force and the Chief of Staff of the Air Force. Today's
    session also provides us with our first opportunity to hear
    from senior officials of the Department since the publication
    of the ``Quadrennial Defense Review,'' the QDR. I know the
    committee is going to ask for and welcome your thoughts on the
    QDR and what it means to the Air Force.
        The year 1997 is the 50th anniversary of the Air Force.
    Since I was in the Air Corps when it became the Air Force, I
    want you to know I share with pride your anniversary. The next
    50 years will pose a great many challenges, and Strom Thurmond
    and I are looking forward to them. [Laughter.]
        We hope that you will seek to move into new generations of
    tactical aircraft, the F-22 and the Joint Strike fighter [JSF].
    The F-22 has been very much in the news of late, and I am sure
    you are going to have some questions from the committee, and we
    hope to gain a better sense of where the program stands in
    terms of costs and tactical status. Space represents the other
    growing focus of the Air Force, and we will welcome your
    comments on the space system priorities for the Air Force and
    how those programs will help you meet combat requirements.
        Your statements will be entered in the record in full, and
    we appreciate any comments you would like to make.
        Let me first turn to the vice chairman--actually he is the
    committee chairman and he is the boss--Senator Inouye.

                       STATEMENT OF HON. DANIEL K. INOUYE

        Senator Inouye. I thank you very much, Mr. Chairman.
        Madam Secretary, General Fogleman, I join my chairman in
    welcoming you to this hearing.
        As the chairman noted, earlier this week, DOD released its
    report on the ``Quadrennial Defense Review.'' If the QDR
    recommendations are implemented, the Air Force will shrink by
    one active fighter wing, reduce the purchase of F-22's, cut six
    air defense squadrons from the Reserves--albeit changing some
    to new missions--and reduce your bomber force by 7.5 percent.
    In total, according to that review, the Air Force would cut
    nearly 27,000 active military, 18,300 civilians, and 700
    reservists.
        There will be many who will question these reductions,
    while others might contend that not enough has been done. Our
    chairman wants to know what the impact of these decisions will
    be on your fiscal year 1998 budget request and whether the
    subcommittee should adjust your funding to account for these
    proposals. I will admit that I am very skeptical that we should
    cut bombers and air defense squadrons, but perhaps, Madam
    Secretary and General Fogleman, you can convince all of us here
    that your plan represents the best alternative for our Air
    Force.
        So I look forward to listening to your views this morning
    on this and other matters relating to the readiness and morale
    of your forces.
        And I thank you very much, Mr. Chairman.
        Senator Stevens. Does any member have any opening
    statement?
        Senator Bumpers. No opening statement, Mr. Chairman.
        Senator Bond. Yes, Mr. Chairman.
        Senator Stevens. Senator Bond.

                     STATEMENT OF HON. CHRISTOPHER S. BOND

        Senator Bond. Thank you, Mr. Chairman.
        Madam Secretary, General Fogleman, I join with my
    colleagues in welcoming you to address the issues facing the
    Air Force. And we see, as has been indicated, the Air Force is
    being assailed in the press and on television concerning
    Lieutenant Flinn. Madam Secretary, I know I join with my
    colleagues when I say I am sure you have and will continue to
    do the right thing and that you will ensure that the Uniform
    Code of Military Justice is fairly and justly enforced for
    males, females, officers, and enlisted alike.
        That said, we recognize the awesome burden facing our Armed
    Forces, both in terms of increase in mission requirements and
    concurrent defense funding available--decreases in the funding
    available to meet the missions. For many years this committee
    has warned the Department of Defense about the policy of low
    balling funding requirements, which only exacerbates the fiscal
    problems facing all of the services' ability to conduct the
    myriad of operations required of you.
        Over the past 5 years, Congress has increased the defense
    budget a few billion dollars. Critics have attacked us for
    those increases, but the Department and the administration have
    routinely come back to us pleading for more through emergency
    supplementals, primarily because of burgeoning contingency
    operation costs--some of these operations whose contingencies
    we here, quite frankly, have contested.
        As we look to meet your fiscal requirements and your
    operational requirements, we recognize the need to coordinate
    and integrate our combat forces now, more than ever. And, Madam
    Secretary and General, as someone deeply concerned about the
    integration of our Active and Reserve forces, I congratulate
    you for the manner in which the Air Force leadership has
    dedicated itself and been able to integrate the Active,
    Reserve, and Guard components into a unitary fighting force.
        If they were here, I would call upon the leadership of your
    sister services to take note of how you have done it so
    successfully, and to see if they cannot emulate it.
        I do have some concerns regarding the upgrading of National
    Guard general purpose squadrons, to ensure their viability for
    the future force of the 21st century. I draw attention to this
    because of the fact that the St. Louis Air Guard F-15 unit is
    currently conducting front-line deployed operations overseas,
    and many of our Nation's most experienced fighter aviators
    reside in Guard units. This same unit in my home State is, in
    fact, home to the gulf war three-time Mig killer, and I am sure
    the service would benefit from ensuring his continued full
    integration into the fighter force.
        General Fogleman, when it comes time for me to question
    you, I would like you to address how the Air Force intends to
    ensure this and maybe speed up the integration of the F-15C
    into Guard units, or upgrade the electronic suite of the F-
    15A's to keep them front-line viable.
        I congratulate both of you on your dedication to providing
    the Air Force with a program to ensure that the service will
    continue to meet its airlift mission requirements well into the
    future, and I expect to be able to address this, too, during
    the question and answer period.
        And, Mr. Chairman, thank you very much for allowing me this
    chance to express some views.
        Senator Stevens. Yes, sir.
        Senator, do you wish to make a statement?

                       STATEMENT OF HON. BYRON L. DORGAN

        Senator Dorgan. Mr. Chairman, I do not know that I will get
    an opportunity during the question period, but I did want to
    make a statement.
        As you know, our State has gone through a very severe
    disaster of blizzards and floods. And there are two Air Force
    bases in North Dakota, one in Minot, one in Grand Forks.
    Recently, when the floods came and forced the evacuation of the
    city of 50,000 people in North Dakota and 9,000 people across
    the river in Minnesota, the Air Force base nearby became home,
    almost overnight, to 4,000 people. They were sleeping in
    airplane hangars at Grand Forks Air Force Base. And we could
    not have had a better neighbor in the world than to have had an
    Air Force base ready and available to take evacuees from the
    hospital that had to close and the thousands of evacuees from
    the town that had to come and make a temporary home at the
    base.
        And I wanted to say a special thank you. Secretary Widnall
    came to Minot and Grand Forks prior to the last blizzard and
    the flood to thank the servicemen and women, but I wanted to
    especially say thank you. We deeply appreciate what the Air
    Force and what the men and women have done for our State.
        As you know, Mr. Chairman, we have had two air bases in
    North Dakota, one a B-52 base, the other a B-1--now a tanker--
    base, and 300 ICBM's with Mark 12 warheads. We used to say that
    if we were to secede from the Union in North Dakota, we would
    be the third-largest nuclear power in the world, which was
    literally true. We are proud of the Air Force's presence in our
    State.
        I am going to ask some questions, if I get the opportunity
    today, about B-52's and about base closings and some of the
    nervousness I and others have about holding communities hostage
    for a number of years under base closing rounds. But I wanted
    to say a special thank you this morning for the Air Force being
    in our State and playing such a major role in responding to the
    disaster that the people of North Dakota and Minnesota faced.
        Senator Stevens. Senator, that is not new. I remember after
    the 1964 earthquake in Alaska, when it was the Air Force and
    the Army that moved in and brought us not only stability but
    provisions--even fresh water for over 1\1/2\ months, in tanks.
    We had tanks on about every third corner in our major city,
    where people went to get their water that was safe. And the
    military people not only were great neighbors--and they were
    affected also by the earthquake--without them, I do not think
    we would have been able to get through that period as we did.
        So we all welcome you, and I think we have witnessed, on
    the national news, the reporting of the impact of the military
    in this latest disaster area there in the Midwest.
        Thank you, Madam Secretary.
        Oh, pardon me, Senator Hutchison has a statement.

                     STATEMENT OF HON. KAY BAILEY HUTCHISON

        Senator Hutchison. Thank you, Mr. Chairman. I will not take
    long. But I just want to say that I have appreciated the visits
    that both the Secretary and the General have made to my State.
    We do have very important bases. We not only train our own Air
    Force pilots, but we also train NATO pilots. And we are
    appreciative of the Air Force presence in Texas. And I have
    just recently been able to give an award on behalf of the
    Frontiers of Flight Museum to General Fogleman for his work in
    maintaining the history of aviation.
        I am chairman of the history of aviation at the Frontiers
    of Flight Museum in Dallas because of my love of aviation, and
    I just appreciate what you have done. I will have questions on
    some of the Air Force issues, but I thank you for all the work
    you are doing and look forward to working with you in the
    future.
        Thank you, Mr. Chairman.
        Senator Stevens. Madam Secretary.
        Dr. Widnall. Thank you. Well, thank you all for your kind
    and supportive words.
        Mr. Chairman, members of the committee, thank you for the
    opportunity to appear today to discuss our plans and
    priorities. I find the timing of this hearing fortuitous, in
    that it permits us to view the Air Force's program through the
    prism of the recently completed ``Quadrennial Defense Review.''
    The authors of the QDR report deserve high praise for their
    efforts in conducting an effective examination of defense
    options, and our service stands ready to support the strategy
    articulated in the report.
        The written statement we have submitted provides a detailed
    discussion of our programs. I would like to open today with a
    brief summary of its main points. Over the year, since we last
    met, the Air Force has built on its legacy of achievement by
    helping us to shape the international environment and respond
    to crises around the world. The warfighting CINC's have taken
    advantage of our responsiveness and flexibility in a wide
    variety of operations.

                              Worldwide operations

        We have engaged around the globe as we executed the NEO
    effort in Liberia, where Air Force people rescued over 2,400
    citizens of 68 nations. We sustained theater air operations
    over Bosnia and Iraq. We executed the B-52 strike against the
    Iraqi air defenses, exploiting the flexibility of our CALCM
    air-launched cruise missiles. We conducted global airlift
    operations that reached all but seven nations on the face of
    the Earth.
        We deployed air expeditionary forces to three nations. We
    executed 33 space launches, strengthening this Nation's unique
    global awareness and connectivity. These operations, to a
    remarkable degree, capture the core competencies that define
    our contract with the American people--the capabilities that
    our air/space force must provide to the joint team. These core
    competencies--air and space superiority, global attack, rapid
    global mobility, precision engagement, information superiority,
    and agile combat support--are not just concepts, but very real
    requirements for our operational CINC's.
        The program we have submitted reflects a very careful
    balance between sustaining our readiness for such operations
    over the near term and building our forces to ensure that
    future CINC's will have the tools they need to accomplish their
    missions. We have constructed a careful plan to build the next
    air force, and are now executing that plan with your support.
        Our operational commanders have identified strategic lift
    as their most urgent need. And the C-17 that we are now
    fielding to meet that need has proven its worth repeatedly
    since it first entered operations early last year.
        Over the midterm, we continue to upgrade our bomber forces
    and our conventional munitions, focusing on those capabilities
    needed to provide our CINC's a rapid-response capability, the
    tools to join the fight while the other forces are still
    deploying.
        Our B-1 now has a conventional operational capability, and
    we have demonstrated an incredible precision capability with
    our B-2 in testing last summer. We are working to provide our
    commanders those capabilities as rapidly as feasible, and ask
    your support of the accelerated buy-back of the B-1 that is
    aimed at that objective.

                           Air and space superiority

        Over the long term, our most pressing priority is to
    modernize our theater capabilities. Only by doing so can we
    ensure that future CINC's will enjoy the air and space
    superiority they need to maneuver, to attack and to protect
    their forces. Three systems now under development will ensure
    that our commanders have those essential capabilities.
        First, the F-22 is the centerpiece of our theater warfare
    strategy and will be a revolutionary, unmatchable adversary in
    the battle for air dominance that we have come to expect from
    American air forces. Our ability to provide that command of the
    air is the linchpin to success, not just for the air battle,
    but for all theater forces.
        As the F-22 establishes that condition, it will provide the
    secure arena necessary for the range of information platforms--
    the Joint STARS, the AWACS, the RIVET JOINT--to provide our
    commanders the information dominance they rely upon to win. Its
    combination of stealth, supercruise, and integrated avionics
    will ensure air dominance, simplifying the force packaging
    requirements for all theater air forces.
        This key program has progressed steadily over the past
    years and will soon be ready for its first flight. It will
    replace the F-15, which for years has been the world's finest
    fighter, but which will be entering its fourth decade of front-
    line service by the time its replacement appears. Over that
    time, the nations around the world have developed aircraft
    roughly equivalent to the F-15, and parity is not something we
    can tolerate in the contest for air dominance.
        The Joint Strike fighter will complement the F-22, both
    operationally and technologically, just as the F-16 complements
    the F-15, providing a lower cost, multirole partner. So the
    Joint Strike fighter will work in tandem with the F-22.
        The F-16 that the Joint Strike fighter will replace will
    also be entering its fourth decade of active service by the
    time the Joint Strike fighter comes on line in the first decade
    of the next century. The F-16 lacks the JSF's reduced signature
    and advanced avionics needed for mission success in the decades
    ahead.
        Finally, we are developing the airborne laser [ABL] to
    provide protection for our forces against the theater ballistic
    missile threat. That threat has already taken American lives.
    It is proliferating around the world, and it is one we must
    counter. The ABL will provide a key component in the
    architecture necessary to nullify this deadly threat. And in
    doing so, it will usher in a new era of warfare.
        Across this time horizon, we will be upgrading the space-
    based capabilities central to the Air Force's growing
    capabilities in space. The Evolved Expendable Launch Vehicle
    Program will replace the family of ICBM-based launch vehicles
    that we now employ, and in doing so, will dramatically reduce
    launch costs, while improving reliability. This program remains
    on track toward first operational flight for the medium-lift
    vehicle in 2002, and the heavy-lift vehicle following in 2003.
        The low component of our space-based modernization program,
    the space-based infrared system, has been accelerated from a
    planned deployment date in 2006 to 2004, and it remains on
    track toward that date. We are well aware that this is an
    aggressive program and that we will face serious resource
    constraints as we complete it. So we are placing continuous
    emphasis on the management efforts that will be necessary to
    bring us success.
        There are four major components to this effort. First, as I
    discussed a moment ago, we have constructed a time-phase
    modernization plan that smooths the flow among our major
    priorities, and stays within the Air Force top line. Second, we
    must manage our individual programs effectively, with margins
    for error that are vanishingly small when compared with those
    of the past.

                        revolution in Business practices

        Third, we must press ahead aggressively with the ongoing
    revolution in business practices across the range of
    outsourcing and privatization, off-the-shelf technologies, and
    acquisition reform initiatives that are now well underway.
        And finally, we must step up to the tough decisions to pare
    away nonessential capabilities that drain our resources and
    provide little leverage to our commanders.
        In that light, I ask that you support the tough force
    structure decisions that are reflected in this budget. All
    these initiatives aim toward providing the right equipment to
    our people. But we should never forget that unless we recruit
    and retain the right people, all that equipment is just so much
    inert material. We are a technologically based service, and we
    rely heavily on retaining our experienced, highly trained men
    and women.

                                Air Force people

        That, in turn, rests on our ability to provide our
    personnel and their families an acceptable quality of life. We
    have prioritized the various elements that combine to build the
    quality of life. Our strategy defines the following seven key
    priorities: Compensation and benefits, housing, health care,
    balanced personnel tempo and operations tempo, community and
    family programs, retirement, and educational opportunities.
        Over past years, this committee has shown strong support
    for our people, support which is deeply appreciated and which
    has measurably strengthened our force. This year's program
    supports each of these priorities. We are particularly focused
    on continuing to attack the issue of personnel tempo, and on
    the upgrading of our housing, both in the dormitories and for
    families.
        And finally, in closing, I want to point out that the
    program I have just outlined is the result of an extensive
    long-range planning effort that has guided and shaped us as we
    continue to shape our air and space forces for the future. The
    QDR process has been extremely useful in this effort, by
    further clarifying the role that our service will play in the
    21st century as a member of the joint warfighting team. We
    realize that it is just one of many steps on what will likely
    be a long and challenging evolutionary process, the success of
    which depends on an informed dialog and a commitment by
    everyone to remain open to new ideas and new ways of doing
    business.

                               prepared statement

        I promise this committee that the Air Force is anxious to
    participate in this process, to ensure our Nation has the tools
    it needs to deal with the challenges that lie ahead.
        Again, thank you for the opportunity to meet with you
    today, and I am eager to address any questions that you might
    have. Thank you.
        [The statement follows:]
        Prepared Statement of Hon. Sheila E. Widnall and Gen. Ronald R.
                                    Fogleman
                                  introduction
        Mr. Chairman, members of the committee, on September 18, 1996, the
    Air Force entered its 50th Anniversary year, celebrating it with the
    theme ``Golden Legacy--Boundless Future''. Throughout this coming year,
    Air Force members past and present, along with American citizens, young
    and old, will celebrate our five decades of service to this nation.
        As we celebrate our past, we remain focused on building an air and
    space force with the capabilities to meet the nation's needs, now and
    in the future. Since the fall of the Berlin Wall, we have worked to
    reshape the Cold War Air Force from one primarily focused on a single
    adversary, to a balanced force with strong forward presence combined
    with continental United States (CONUS)-based forces able to rapidly
    deploy around the world and conduct operations across the spectrum of
    conflict. In 1990, we devised a map to guide us along that path: our
    strategic vision for the start of the post-Cold War period, Global
    Reach--Global Power.
        Global Reach--Global Power articulated the capabilities the Air
    Force provides for our national security and gave a first look at how
    they would apply in the post-Cold War environment. For the past six
    years, this document has guided the Air Force draw-down,
    reorganization, and modernization and enabled the Air Force to preserve
    its readiness during a major reduction in force. Over the past few
    years, we have built upon the foundation put in place by Global Reach-
    Global Power and accelerated our planning to build the Air Force for
    the twenty-first century.
        In recognition of trends developing in the post-Cold War world, the
    Air Force embarked on an unprecedented 18-month long-range planning
    effort in 1995 to craft a vision to meet the challenges of an uncertain
    future. This vision comes to life in our strategic vision document--
    Global Engagement: A Vision for the 21st Century Air Force. This
    document flows from the National Security Strategy, and the National
    Military Strategy of the United States, and is in concert with the
    chairman of the Joint Chiefs of Staff's vision for future military
    operations--Joint Vision 2010 (JV 2010). It extends across the range of
    Air Force activities--operations, infrastructure, and personnel, and
    provides a comprehensive map for our future growth as defined by the
    expertise and experience from all elements of our force. Over the
    coming year, we will focus on converting this broad vision into an
    actionable plan, and implementing a series of initiatives directed by
    our civilian and military leadership.
        Global Engagement is a blueprint for how the Twenty-first Century
    Air Force will complement the joint warfighting team. It builds on our
    core values--Integrity First, Service Before Self, and Excellence in
    All We Do, and is based on an understanding that each Service provides
    the nation with unique capabilities that stem from specialized core
    competencies. For the Air Force these include: Air and Space
    Superiority, Information Superiority, Global Attack, Precision
    Engagement, Rapid Global Mobility, and Agile Combat Support. Although
    core competencies may be shared by more than one Service, what
    distinguishes the Air Force from the other Services--and provides
    unique leverage for combatant commanders--is our responsiveness and
    global perspective made possible by the air and space mediums in which
    we operate. These characteristics provide the National Command
    Authorities with a wide variety of options to respond to regional
    crises.
        As always, people are at the heart of our military capabilities. As
    such, the Air Force of the twenty-first century will continue to place
    a high priority on recruiting and retaining high quality men and women
    and continue to provide them with the training and quality of life they
    need to fulfill their missions in this new era.
        As we accomplish these missions and consider increasing future
    demands for air and space power, the Air Force must change the way it
    does business. Continuing pressure on resources will make increased
    efficiency and reduced infrastructure costs necessary for success. Our
    Service has long recognized the importance of responsible stewardship
    of taxpayers' dollars, and we will strive to achieve the highest
    standards of efficiency. We understand that the real penalty for
    inefficiency is not just wasted dollars, but unmet demand for military
    capabilities.
                              worldwide operations
    Current Operations
        Over the past year, the unique capabilities offered by Air Force
    core competencies have often made the Air Force the instrument of
    choice in operations around the world. From global attack operations in
    Iraq to humanitarian response in the Caribbean, we have met the needs
    of combatant commanders and our nation. Our impact around the world has
    been spectacular--at times, it's even headline news. Much of the time
    however, our people perform their missions quietly, away from the glare
    of publicity--and it seems clear that this quiet, steady work will, in
    the long run, have as profound an effect on this world as our more
    visible feats. The global engagement we provide is gradually helping to
    transform the world and prevent future conflicts. Because much of what
    we do is away from the eyes of publicity, it is useful to briefly
    discuss the range of operations that we have conducted over the past
    year.
    Long-Range Strike
        On September 3, 1996, the United States military demonstrated its
    ability to operate from the CONUS to the far reaches of the globe
    during Operation Desert Strike, a joint operation against Iraqi air
    defense facilities using both Air Force and Navy assets. In the first
    strike, B-52's from Barksdale AFB, Louisiana, staged out of Guam on a
    34-hour mission and fired 13 Conventional Air-Launched Cruise Missiles
    (CALCM's) while the Navy fired an additional 14 Tomahawk Land Attack
    Missiles (TLAM's) from the U.S.S. Shiloh and the U.S.S. Laboon. During
    this mission, the B-52 and CALCM weapon systems demonstrated their
    capability for rapid en-route retargeting, providing the joint force
    with additional target coverage and strike flexibility that would have
    otherwise been unavailable.
    Sustained Theater Operations
        Beyond global responsiveness, the Air Force offers a unique ability
    to sustain high-tempo air operations over extended periods of time.
    Throughout 1996 for example, we sustained the air occupation of Iraq
    and Bosnia with Operations Southern Watch over southern Iraq, Provide
    Comfort over northern Iraq, and Joint Endeavor over Bosnia. In each
    operation, with superb support from the Air Force Reserve and Air
    National Guard, we worked hand-in-hand with our coalition partners and
    forces from our sister Services.
        The Air Force continued an important role in Bosnia by deploying
    and protecting NATO's implementation force. As of January 31, 1997, we
    have flown more than 5,000 sorties over Bosnia, providing the full
    range of theater air capabilities. At the peak of operations in 1996,
    there were over 4,100 Air Force people deployed to five nations
    supporting NATO-led contingency operations by providing airspace
    control; on-call close air support; command and control; intelligence,
    surveillance and reconnaissance; airlift and special operations.
    Although this in itself was no small task, as 1996 drew to a close, we
    had a total of approximately 80,000 Air Force men and women forward
    stationed and 13,000 deployed in support of operations around the
    world. Of these, over 6,000 were deployed in support of the coalition
    air operation over southern Iraq, Operation Southern Watch. Air Force
    aircraft and crews have flown 68 percent of the total sorties at the
    end of January 1997--amounting to over 28,800 sorties flown in support
    of this coalition effort since 1991. Similarly, the Air Force executed
    the bulk of the missions over northern Iraq in Operation Provide
    Comfort, flying over 4,500 sorties in 1996--about 60 percent of the
    coalition total since 1991.
    Global Mobility
        Our airlift and aerial refueling forces provide us with the
    capability to rapidly deploy, employ, and sustain our nation's armed
    forces in operations around the world. Beginning in December 1995, U.S.
    and allied nations deployed peacekeeping forces to Bosnia in support of
    Operation Joint Endeavor. In just three months, Air Force mobility
    forces flew 3,000 missions; carried over 15,600 troops; and delivered
    more than 30,100 short tons of cargo. While U.S. fighters patrolled the
    skies over northern Iraq enforcing the no-fly zone, Air Force airlift
    and air refueling aircraft transported troops and equipment in support
    of these ongoing operations.
        In June 1996, mobility aircraft demonstrated their flexibility by
    serving in their aeromedical role and flying medical personnel to
    Dhahran, Saudi Arabia to provide timely care, treatment and movement of
    injured personnel after the Khobar Towers bombing. Shortly thereafter,
    our mobility crews were called upon to fly Hurricane Bertha relief
    missions from the U.S. to St. Thomas, Virgin Islands in support of the
    Federal Emergency Management Agency.
        Later, in September 1996, our airlift and air refueling assets were
    vital to the success of Desert Strike, enabling strike aircraft to
    reach targets in Iraq. On top of all this, our mobility crews and
    aircraft continuously supported critical Air Expeditionary Force
    operations in the Southwest Asia theater and sustained NATO operations
    in Bosnia--not just supporting Air Force movements and operations, but
    those of our sister Services, allies, and coalition partners as well.
    Force Protection
        The June 1996 bombing of the Khobar Towers in Saudi Arabia
    accelerated ongoing Air Force efforts to protect its forces operating
    around the globe and gave the entire Department of Defense (DOD) new
    insights into the operating methods of world terrorist organizations.
    Responding to this tragedy, the Air Force, in conjunction with the
    United States Army, assisted in the repatriation of over 900 DOD
    military members, civilian personnel, and their families. At the same
    time, we relocated the majority of our Southern Watch forces to Al
    Kharj Air Base and instituted an aggressive series of force protection
    measures throughout U.S. Central Command's area of responsibility.
        To help us combat this increased terrorist threat, the Air Force
    will stand up a field organization at Lackland AFB, Texas, called the
    820th Air Force Security Forces Group. This organization will integrate
    force protection programs and provide trained and ready forces capable
    of deploying base force protection capabilities. The Group will also
    have a force protection battlelab focused on exploring and integrating
    technology, tactics, and training to increase our force protection
    readiness. We expect this organization to achieve Initial Operational
    Capability (IOC) in July, 1997.
        We are also undertaking a variety of measures to provide clearer
    force protection guidance to commanders in the field, and we are
    reviewing Air Force instructions and doctrine documents to ensure force
    protection guidance is added where appropriate. Recurring assessments
    of risk, mission, and environment are also being instituted, and we are
    developing a staffing plan to augment command staffs with properly
    trained force protection personnel. The bottom line: the Air Force
    values its people and will protect them from all threats.
    The Air Expeditionary Force (AEF)
        As America's military forces become more CONUS-based, we look to
    the AEF to provide a flexible, tailored, quick-response force to fill
    theater needs across the spectrum of conflict. The Air Force exercised
    the AEF with deployments to Bahrain, Qatar, and Jordan in 1996. Each
    AEF flew their first combat sorties with less than 72 hours of
    notification to deploy and provided a balanced capability for air
    superiority, precision attack missions, and suppression of enemy air
    defenses. This rapid response capability is key to winning the air
    battle and ensuring the success of the Joint Task Force. The fourth AEF
    will arrive in Qatar in early 1997.
        In the near-term, we are developing AEF's capable of conducting
    both lethal and non-lethal operations for deployment to areas outside
    the Middle East and will use them during some of our upcoming
    exercises. For the long-term, we expect AEF's to mature into a
    significant component of our global engagement and shaping capability.
    We will adapt our operational and logistics systems to more easily
    accommodate their widespread use, making them a force theater
    commanders can count on for a variety of operations. The key to
    successful AEF operations hinges on the synergistic effect of the
    global reach and global power characteristics of our Air Force.
    Space Launches and Operations
        Space is an essential element of U.S. military operations. A
    combination of military and commercial systems provide our forces with
    the command and control, communications, intelligence, surveillance,
    reconnaissance, weather and navigational capabilities necessary for
    success in all aspects of modern military operations.
        During 1996, our Service supported 33 successful space launches
    using Air Force launch, range, and support facilities. The Eastern
    Range, headquartered at Patrick AFB, Florida, supported 25 space
    launches while the Western Range, headquartered at Vandenberg AFB,
    California, supported another eight. Of particular note, we launched
    five Titan IV heavy-lift vehicles, all on the first attempt; all
    achieved successful orbital entry. Two of these launches were three
    weeks apart, demonstrating improved turn-around capability of the
    launch facility. The Delta II launch vehicle continued its string of
    successful launches with another 10 in 1996. This brings the total
    number of Delta launches from October 1977 to February 1997 to 107,
    with only two failures that destroyed the launch vehicle.
        The Air Force Satellite Control Network (AFSCN) controls over 95
    satellites daily with greater than 400 individual contacts with
    satellites per day, totaling approximately 148,000 contacts per year.
    Aside from routine communications with our satellites, the AFSCN, along
    with Air Force Space Command, have kept our space assets flying while
    providing uninterrupted service to the user.
        The Global Broadcast System recently demonstrated critically
    needed, increased global situational awareness capability during
    operations in Bosnia when direct satellite feeds were used to transmit
    live Unmanned Aerial Vehicle (UAV) images to theater commanders and
    supporting forces via the Joint Broadcast Service. Efforts are
    currently underway to provide a nearly identical capability, globally,
    using military satellites.
        In the area of survivable military satellite communications, we
    increased our on-orbit capability by launching the second MILSTAR
    satellite. This satellite is providing commanders in the East Atlantic
    and European theaters with nuclear survivable, jam-resistant,
    communications connectivity between subordinate combat forces in the
    field, key military leaders, and national-level authorities residing in
    the United States.
        We have also expanded our space support to our allies. The Air
    Force and the DOD began providing missile early warning data to NATO
    and Japan, and we have extended this service to other nations as well.
    Non-combatant Evacuation Operations (NEO)
        During the first week of April, 1996, as a result of intense street
    fighting during the ongoing civil war in Liberia, about 500 people
    sought refuge on American Embassy grounds and another 20,000 in a
    nearby American housing area. On April 6, the President approved the
    U.S. Ambassador's request for security, resupply, and evacuation
    support. Air Force Special Operations Forces led the evacuation effort,
    Operation Assured Response. Air Force KC-135 tankers and C-130
    transports were put on alert in Europe to support 24-hour operations,
    while other mobility aircraft began to deliver critical medical
    supplies, food, water, fuel and communications gear.
        On April 9, less than 72 hours after the decision to deploy U.S.
    forces, the first MH-53 helicopter landed in Monrovia to begin the
    operation. Those evacuated continued on our helicopters through
    Freetown, Sierra Leone, then on MC-130's to Dakar, Senegal, all under
    the cover of AC-130 gunships. Throughout the rest of the week, the
    evacuation continued, as well as airlift of critical supplies to
    sustain the effort. By April 14, the evacuation was essentially
    complete, however, security and sustainment operations continued
    through August 3. In this operation, Air Force Special Operations
    Forces safely evacuated over 2,400 civilians representing 68 countries.
    Domestic Assistance
        The Total Force, active duty, Air National Guard (ANG), and Air
    Force Reserve (AFRES), provides a key service assisting in disaster
    relief operations within the U.S. For example, we responded with
    airlift support following Hurricane Fran and provided food, shelter,
    and clean-up assistance to west coast flood victims. When fires raged
    out of control across the western U.S. last summer, our ANG and AFRES
    crews and aircraft flew over 400 sorties, dropping more than one
    million gallons of water and an additional 10 million pounds of fire
    retardant to help control the blazes.
    Training Programs/Modeling and Simulation (M&S)
        The pace and complexity of air warfare places special demands on
    our people--not just those who operate our air and space systems, but
    on those who plan, command, control, and support our forces as well. It
    is essential that we continue the sort of aggressive, realistic
    training that has been a distinguishing characteristic of the Air Force
    for decades. State-of-the-art modeling and simulation is leveraging
    exercises like never before. We use our exercises not just to train,
    but to develop operational concepts and tactics, adjust to new
    missions, and test new approaches. For example, this year we expect to
    structure some of our training exercises to build expertise in
    employment of the Air Expeditionary Force.
        One of the more exciting war games we've run so far was Strategic
    Force 1996 conducted at Air University's Wargaming Center at Maxwell
    AFB, Alabama. During November 1996, this joint operational war game
    demonstrated the true value of air and space power for the first time
    by modeling air and space power capabilities more realistically. This
    breakthrough was accomplished, in part, by the capabilities of our
    newest wargaming technologies to enable near-real-time analysis of each
    move throughout the game. More importantly though, this war game set
    the stage for future war games to incorporate the real value of air and
    space power throughout the spectrum of future operations.
        Strategic Force 1996 will serve as an integral component in the Air
    Force's continuing long-range planning process. Using JV 2010 and
    Global Engagement as a baseline, Strategic Force allowed us to test
    some of our assumptions about the future in a joint environment, while
    also providing a ``hands-on'' opportunity to employ future weapon
    systems. Through cooperation with our sister Services and the unified
    commands, we were able to test strategies and operational concepts in
    the 2010 time frame. Using advanced modeling and simulation, we
    employed the airborne laser, the F-22 air superiority fighter, as well
    as other advanced systems from all the Services. Ultimately, all
    Services benefit from this structured test of strategies and the
    refinement of operational concepts allowed by vastly improved modeling
    capabilities.
        These same kinds of breakthroughs in modern technology are enabling
    us to move some of our training toward simulator systems. We are
    proceeding with care and with the understanding that there is no
    substitute for field training--but also with the understanding that
    advanced simulation offers enormous potential we can exploit. We are
    employing these systems not just for training, but to help with our
    planning and execution while building a true understanding of the
    capabilities and contributions of air and space forces to the joint
    team.
    Engagement
        The ability of the Air Force to engage globally is vital to
    America's current National Security Strategy and is of growing
    importance at a time when the number of our forward-stationed forces is
    dwindling. We recognize that coalitions are a key strategic feature in
    today's world, and that global access and influence ultimately depend
    on the bonds of alliances and international cooperation.
        Partnership for Peace (PfP) is one of the many initiatives the Air
    Force supports that underscore our commitment--strengthening and
    developing cooperative military relations through joint planning,
    training, and exercises. Thousands of airmen are engaged in military-
    to-military activities around the globe--from the Joint Contact Team
    Program in Central and Eastern Europe to Constructive Engagement with
    China. In 1996, Air Force units from across the Total Force
    participated in 11 PfP exercises with 28 nations.
        Further illustrating our commitment to building strong
    international ties are the efforts of Air Force personnel engaged in
    political-military activities, such as Foreign Military Sales (FMS),
    cooperative research and development, International Military Education
    and Training (IMET) programs, and Euro-NATO Joint Jet Pilot Training
    (ENJJPT). Last year, nearly 4,000 students from 110 countries took part
    in Air Force training through our FMS and IMET programs. Over time, Air
    Force education and training have a significant impact on U.S. access
    and influence, promoting military-to-military relations and exposing
    international military and civilian officials to U.S. values and our
    democratic process.
        At the close of 1996, our FMS picture showed total Air Force sales
    contracts valued at approximately $105 billion. System sales account
    for 78 percent, and support for new and established systems accounts
    for another 21 percent. While training accounts for only 1 percent, or
    $1 billion, it is extremely important to the overall success of the
    other sales--and growing more so as we come to rely on our ability to
    build capable coalition partners.
        Today, the United States uses its military forces in a much broader
    range of operations than ever before. As a matter of fact, United
    States forces are involved in more operations of greater duration than
    at any time in the past 20 years. Air Force assets and personnel have
    conducted Military Operations Other Than War in over 90 countries since
    1989. The scope and scale of these operations demand that we
    continually balance the tempo at which our people and systems operate,
    with the overall readiness we must maintain for our nation's continued
    security.
    Operations and Personnel Tempo (OPTEMPO/PERSTEMPO)
        Since the end of the Cold War, the Air Force has stepped up to an
    operational tempo four times that demanded prior to the fall of the
    Berlin Wall--while reducing force structure by about 40 percent across
    the board and with 32 percent fewer people. That increase in demand for
    Air Force capabilities has, of course, increased demands on our people,
    our units, and our weapon systems. Over and above our permanently
    forward-stationed forces (over 80,000 people on an ``average'' day over
    the past year) about 13,700 Air Force men and women were deployed on
    missions ranging from sustaining combat and humanitarian operations in
    Iraq, peacekeeping in Bosnia, and humanitarian aid in Africa and the
    Caribbean. In a very real sense, this is a direct result of our
    providing the precision and flexibility our nation needs across the
    diplomatic and political spectrum--Air Force capabilities are in demand
    around the world to achieve our national objectives and meet our
    nation's requirements.
        We have taken a series of steps to share the burden of these
    taskings and posture the force to sustain this tempo. We established
    the goal of limiting the time our people spend deployed to no more than
    120 days per year and are refining the system we use to track this
    data. We also structured a strategy to meet that goal: first, share the
    burden of these taskings across the Air Force so that temporary duty
    (TDY) days are more equitable between major commands (MAJCOM); second,
    eliminate or find alternative capabilities where taskings allow; and
    third, adjust our forces where appropriate to meet the need using the
    ANG and AFRES when possible.
        Both the Air Force and the Office of the Secretary of Defense (OSD)
    have made efforts to reduce taskings on our highest demand systems. In
    1995, the Air Force instituted an annual Global Sourcing Conference to
    balance the deployment burden for all our systems throughout the
    MAJCOM's. To help manage the demand for our specialty systems such as
    AWACS, reconnaissance, special operations, and rescue, in July 1996,
    OSD implemented the Global Military Force Policy to prioritize the
    allocation of these assets for crises, contingencies and long-term
    Joint Task Force operations.
        We have also been able to reduce the load on some units by relying
    on our sister Services or our Allies to fill some mission requirements,
    for example, Navy EA-6B's and E-2C's. In some cases, we have reduced
    taskings where the balance of operational requirements in theater,
    versus the long-term health of our force, demanded.
        As we sought to share the wealth between active duty units, we have
    also counted more on the services of the ANG and the AFRES. Their units
    now support a greater share of contingency taskings and have increased
    their participation in joint-sponsored exercises. Our combatant
    commanders long ago ceased to ask whether the Air Force units deployed
    to their theaters are active duty, Guard, or Reserve. Warfighting
    commanders confidently, and rightly, expect that any unit from across
    our Total Force can provide the capabilities they need.
        Finally, we have taken steps to strengthen some portions of our
    force which are facing particularly heavy demands. As an example, we
    established a reserve associate unit for our AWACS wing at Tinker AFB
    to reduce personnel tempo in that highly tasked system. We have also
    begun the procurement of two additional RC-135 RIVET JOINT aircraft
    along with some of the manning for the additional airframes to help
    lessen the worldwide TDY mission load on the current fleet of 14
    airframes. Using AEF's offers the potential to help relieve the heavy
    PERSTEMPO load as well. Through the careful use of AEF's, we will be
    able to provide a rapid response capability anywhere in the world,
    while reducing the need for standing deployments.
        This aggressive range of management actions has already begun to
    have a positive effect. In 1994, personnel operating more than 13 of
    our weapon systems exceeded the 120-day goal for deployed time; in
    1996, that number was down to four. Our specialized systems and
    capabilities are those most stretched--our electronic combat aircraft;
    command, control, communications, computers, intelligence,
    surveillance, and reconnaissance (C\4\ISR) systems; our Special
    Operations Forces; our Special Tactics Teams; and our tactical airlift
    control elements. We will continue to work this issue to enable us to
    provide these capabilities while maintaining reasonable PERSTEMPO into
    the future.
        We also recognize the imperative to take care of the families of
    our deployed personnel. For example, the Family Support Center (FSC)
    Family Readiness Program aided our families impacted by the Khobar
    Towers bombing and arranged for food and lodging for those families
    living in low-lying areas near Pope AFB, North Carolina--getting them
    to a safe shelter before Hurricane Fran hit.
        Our 84 FSC's are doing an excellent job of supporting the families
    of our members. The FSC Career Focus Program provides information on
    career and employment opportunities as well as strategies for job
    searches for our families when they relocate. This helps ease the
    burden on our people and their families as they move from base to base
    during their careers. We remain committed to continuing this kind of
    support for those who serve our nation and for their families.
        Of course, keeping our forces honed, easing the burden of
    deployments, and caring for Air Force families are essential to
    maintaining our overall operational readiness, ensuring we are always
    ready to step up to our role as the world's premier air and space
    power, and to serve in that capacity as part of our nation's joint
    team.
                        air force and joint vision 2010
    Joint Vision 2010
        Perhaps the most exciting movement in today's military is our
    progress toward a joint vision--a vision that will meld the Services'
    contributions in the decades to come in order to meet America's
    security needs. General Shalikashvili's JV 2010 provides exactly that.
    It creates a broad framework for understanding joint warfare in the
    future, and for shaping Service programs and capabilities to fill our
    role within that framework. JV 2010 defines four operational concepts--
    Precision Engagement, Dominant Maneuver, Focused Logistics, and Full
    Dimensional Protection. These combine to ensure American forces can
    secure Full Spectrum Dominance--the capability to dominate an opponent
    across the range of military operations. Furthermore, Full Spectrum
    Dominance requires Information Superiority, the capability to collect,
    process, analyze, and disseminate information while denying an
    adversary the ability to do the same.
        The Air Force has long believed in the concept of operations
    articulated in JV 2010. Over the past fifty years, we have continued to
    optimize the use of air and space mediums which naturally support these
    operational concepts. Our core competencies are based on the unique
    characteristics of air and space power and are essential to the success
    of the goals outlined in JV 2010.
    Air Force Core Competencies
        It is the Air Force's central responsibility to develop, organize,
    train, equip, sustain, and integrate the elements of air and space
    power to maximize the effectiveness of our unique core competencies and
    meet the needs of the Nation. As a result, we have formed a clear
    vision for the future so we can continue to provide the full range of
    air and space capabilities for our combatant commanders. Each Service
    has certain core competencies which naturally flow from the medium in
    which it operates and enable it to execute its missions.
        The Air Force's core competencies--Air and Space Superiority;
    Information Superiority; Global Attack; Precision Engagement; Rapid
    Global Mobility; and Agile Combat Support--stem from the unique
    characteristics associated with operations in the air and space
    mediums. It bears repeating that these core competencies are not
    proprietary. For example, each Service will need to build forces
    capable of providing information superiority for operations within its
    own medium.
    Air and Space Superiority
        Establishing control over the entire vertical dimension--the domain
    of air and space power--provides every member of the joint team the
    freedom to operate, freedom from attack, and freedom to attack. It
    allows friendly forces to take away enemy sanctuaries, strike enemy
    forces wherever they are located, and dictate to the enemy where they
    can and cannot move their forces. This level of control gives our
    military forces air dominance--the same kind of air dominance we
    enjoyed in Desert Storm and that saved so many lives. As General Chuck
    Horner noted about air superiority after the Gulf War in 1991,
    ``Everything is possible if you have it; little is possible if you lose
    it.'' Simply put, air and space superiority enables us to achieve the
    level of air dominance that is the key to winning wars with the fewest
    casualties.
        Air and space superiority is a fundamental requirement for all
    operational concepts in JV 2010 and is a prerequisite to achieving Full
    Spectrum Dominance. It diminishes the risks to all friendly military
    forces and shapes the battlefield so Dominant Maneuver can be used
    effectively by all members of the joint team to achieve war-winning
    advantages. This has always been the case. As Erwin Rommel noted in
    1944, ``Anyone who has to fight, even with the most modern weapons,
    against an enemy in complete command of the air, fights like a savage
    against modern European troops, under the same handicaps and with the
    same chances for success.''
        The JV 2010 requirement for Full Dimensional Protection recognizes
    that our adversaries command capabilities across the entire spectrum of
    military operations that pose a deadly threat to our people. Here
    again, air and space superiority is a prerequisite to secure this
    portion of the JV 2010 tenet.
        The Air Force has executed its responsibility to control the air so
    effectively over the past decades that this superiority is often taken
    for granted as an American birthright. Unfortunately, this is not so.
    We must be prepared to win freedom of action in any arena--against any
    adversary. We have no intention of creating a fair fight.
        We expect to dominate the air and space arena and deny our
    adversaries any sanctuary. We must do exactly that to permit the joint
    force to accomplish its mission. Our next generation of tactical
    fighters will ensure we achieve air dominance in all future conflicts.
    The key component in this effort is our new air superiority fighter,
    the F-22--successor to the F-15. This aircraft will bring a
    revolutionary combination of stealth, supercruise, and integrated
    avionics to the fight. The F-22 provides an overwhelming advantage
    against sophisticated air- and land-based threats. Such threats will
    increasingly proliferate around the world in the years to come.
        The F-22 remains on course for its first flight in the spring of
    1997, and for introduction into service in 2004. The F-22, combined
    with the Joint Strike Fighter (JSF), which will be fielded about 2008,
    will replace the mix of F-15's, F-16's, and A-10's that has served the
    nation so well over the past decades. The JSF, like the F-22, is on
    track toward its initial operational capability. In November 1996, we
    down-selected to two contractors: Lockheed Martin and Boeing.
        In addition to the risk of attacks by advanced enemy aircraft,
    deployed U.S. forces face a dangerous theater missile threat as well--a
    threat that has already taken American lives and is proliferating
    around the world. Attacking and destroying missiles while they are on
    the ground is the best option for defense. Additionally, we have found
    great promise in the prospect of destroying these weapons while they
    are in the boost phase; still vulnerable and predictable. We are
    developing the airborne laser, a truly revolutionary weapon, to meet
    that need.
        The Air Force is pursuing the Airborne Laser (ABL) not only for its
    revolutionary combat potential, but also as part of an overall system
    of theater missile defense capabilities. The most effective way to
    combat missile threats is with a layered capability: offensive counter
    air and attack operations to find, fix, and destroy launchers and their
    support equipment as well as enemy command and control; boost-phase
    interception of missiles in flight; and mid-course and terminal
    interceptors. The layered systems will receive the best intelligence,
    surveillance, and reconnaissance possible and link with an effective
    theater-wide command and control system. The Air Force is working to
    extend this expertise to shape the architecture for counter-missile
    operations by supporting emerging technologies in Cruise Missile
    Defense and National Missile Defense.
        In 1996, the ABL program transitioned from a technology
    demonstrator into a key acquisition program, to counter the theater
    ballistic missile threat. We demonstrated the required laser power and
    chemical efficiency of an ABL laser module while making significant
    strides in maturing the tracking and beam control portions of the ABL.
    In November 1996, Boeing was selected as the contractor to bring this
    revolutionary system into service in the first years of the next
    century. With the ABL, the Air Force steps across a threshold and into
    a new era of directed-energy weapons. More significantly, we will
    provide our forces a boost-phase theater ballistic missile intercept
    capability--a true weapon of deterrence. By attacking theater ballistic
    missiles early in the boost phase, the enemy faces the potential of
    having his own weapon fall back upon his homeland.
        To ensure our domination of the furthest reaches of the vertical
    dimension, the Air Force is now executing a transition of enormous
    importance: the transition from an air force to an air and space force,
    on an evolutionary path toward a space and air force. Space is already
    inextricably linked to military operations on the land, sea and in the
    air, and the capabilities provided by Air Force space-based assets have
    become essential to the success of operations conducted by all elements
    of America's joint forces.
        The Air Force of the twenty-first century must be able to protect
    U.S. and allied space systems and assure their availability to national
    leaders and U.S. warfighters. In addition, we must be able to deny any
    adversary the use of space systems or services when used for hostile
    purposes, while ensuring freedom of action for our space forces. Toward
    that end, we will invest in key research and development technology
    areas that will enable space control capabilities.
        Spacelift is fundamental to our achieving air and space superiority
    in the future. The Air Force is currently taking the necessary steps to
    move beyond the current family of Intercontinental Ballistic Missile-
    based vehicles for our launch capabilities, and we expect to reduce
    launch costs by 25 to 50 percent as a result. In December 1996, the Air
    Force downselected the Evolved Expendable Launch Vehicle (EELV) program
    competitors from four to two, keeping the program on track for a 2001
    first test launch for the medium launch system, and 2003 for the first
    heavy test launch. This program offers clear advantages not just for
    the Air Force, but for other national security users and for the
    commercial sector as well.
        Another major continuing effort over the past year was the Space-
    Based Infrared System, or SBIRS. This system will replace the Defense
    Support Program early warning system and will provide more rapid
    detection and warning to theater forces of strategic launches, improved
    capability to detect and track theater ballistic missile launches, and
    a cueing capability for missile defense systems. Together, these Air
    Force assets are part of our ``system of systems'' that enables us to
    dominate the air and space medium in such a way that the joint team
    will be able to achieve JV 2010's overarching goal of Full Spectrum
    Dominance.
    Information Superiority
        The ability to collect, control, exploit and defend information
    while denying the adversary the same is critical to ensuring successful
    military operations in the future. In no other area is the pace and
    extent of technological change as great as in the realm of information.
    Success on the battlefield demands we use and protect our own
    information as well as disrupt or eliminate the enemy's use of their
    information. While information superiority is not the Air Force's sole
    domain, it is, and will remain, an Air Force core competency. The
    strategic perspective and flexibility gained from operating in the air
    and space medium make airmen uniquely suited for information
    operations.
        Information superiority is a keystone laid in the foundation of JV
    2010's concept of Full Spectrum Dominance. Without it, operations grind
    to a halt, and success turns to failure. The absolute need for
    information superiority is a common thread through all military
    operations--this will remain as true in the future as it has for
    thousands of years. As Sun Tzu observed, ``Know the enemy as you know
    yourself and in one hundred battles you will not be in peril.''
    However, with the revolution in information technologies now in
    progress, the pace of operations has quickened to a point unimaginable
    only a few years ago--offering a huge advantage to the side ready to
    exploit these capabilities.
        Providing Full Spectrum Dominance requires a truly interactive
    common battlespace picture. The Air Force is committed to providing an
    integrated global and theater air, space, surface and subsurface
    picture of the battlespace to the twenty-first century Joint Force
    Commander. We will ensure our systems enable real-time control and
    execution of all air and space missions and are fully interoperable for
    seamless integrated battlespace management.
        The Air Force's contribution to joint force integration will be
    accomplished with the Theater Battle Management Core Systems (TBMCS).
    As the designated C\4\I architecture for Air Operation Centers and
    combat flying units, TBMCS will provide: command and control and Air
    Tasking Order generation (including weather information) through the
    Contingency Theater Air Planning System; situational awareness and
    current intelligence data using the Combat Intelligence System; and a
    common wing-level communication network, the Wing Command and Control
    System. These three pillars of TBMCS will become part of an overall DOD
    common operating environment, and will enhance joint force operations
    well into the next century.
        As the corporate knowledge of the Air Force continues to grow in
    the field of information dominance, we are beginning to exploit some of
    these new technologies in new ways. For decades the Air Force has
    pushed the state of the art in the information arena, with our air- and
    space-based platforms ranging from manned and unmanned aircraft, to
    overhead sensors, to the command and control capabilities that pull all
    this together. Today, the Air Force also plays a significant role in
    our nation's efforts to prevent the spread of weapons of mass
    destruction through the Air Force Technical Applications Center's
    operation of the U.S. National Data Center. This is the focal point for
    U.S. monitoring of the recently signed Comprehensive Test Ban Treaty
    and relies on the center's ability to process large volumes of data
    required by the treaty.
        The Air Force has long fielded some of the heavyweights of the
    information war, systems such as the Airborne Warning and Control
    System (AWACS), U-2, Joint Surveillance Target Attack Radar System
    (Joint STARS), and Rivet Joint. These aircraft are among those most in
    demand around the world today, as our Joint Force Commanders seek to
    gain the information superiority that they need to execute their
    missions. During this past year, the RC-135 Rivet Joint fleet flew its
    1,000th mission supporting operations in Bosnia, while the U-2
    continued to meet theater, national-level, and even United Nations
    requirements around the world.
        The Air Force is exploiting new capabilities to improve the flow of
    timely, useful information to the warfighter. As an example, we
    recently fielded the Rapid Targeting System, which builds on the
    capabilities of our Contingency Airborne Reconnaissance System and
    enables near real-time transmission of U-2 imagery to the cockpit of
    airborne fighters. In the not-too-distant future, we will standardize
    our network of linked systems, command and control and intelligence,
    surveillance, reconnaissance platforms--increasing our commanders
    situational awareness and avoiding any blindspots.
        The Air Force crossed a historic threshold this past year, assuming
    operational control of the Predator Unmanned Aerial Vehicle (UAV). This
    system moved into operation directly from its advanced concept
    technology development phase, which generated problems with support and
    operational flexibility. Despite growing pains, Predator has been a
    workhorse over Bosnia and has provided a wealth of information to our
    joint forces. In 1995, we established our first UAV squadron, the 11th
    Reconnaissance Squadron, at the Nellis AFB complex in Nevada, to speed
    the maturation of our efforts in the employment of UAV's. We expect to
    exploit the technological promise of UAV's across the full range of
    combat missions, including communications relay and suppression of
    enemy air defenses. We are committed to make UAV's a routine
    reconnaissance platform in the Air Force of tomorrow.
        Recognizing the critical need for responsive, daylight, under-the-
    weather imagery support to the combatant commander, the Air Force
    equipped ANG F-16's with reconnaissance pods. These aircraft flew over
    Bosnia and conducted 116 missions against 447 targets, helping to
    provide the essential capabilities of target validation, new target
    identification, and battle damage assessment, especially in a high
    threat environment or adverse weather.
        The Air Force is also committed to fully exploiting our space-based
    information superiority systems. SBIRS will provide more rapid
    detection and warning of strategic launches to theater forces, improved
    capability to detect and track theater missile launches, and a cueing
    capability for theater missile defenses. Eventually, we will move to a
    standard network of linked Information Superiority systems, air-,
    space-, and ground-based.
        Our relationship with the National Reconnaissance Office (NRO) is a
    key enabler to achieving this all-source link up. In addition to our
    space operations forces, the Air Force provides over 1,200 military and
    civilian personnel to the NRO. This past year, the NRO provided
    intelligence support through our range of operations--Joint Endeavor,
    Desert Strike, disaster relief, and other humanitarian missions. In
    addition, the NRO is a key player in Project Strike II, an exercise
    that demonstrates the operational utility of providing real-time
    information to the cockpits of a variety of aircraft including the F-
    15E, F-117, AWACS, and Joint STARS.
        It has become readily apparent that success in the twenty-first
    century requires that we rely more and more on the ability to use and
    protect our information systems and technologies. The pace and volume
    of the flow of information enabled by modern technology provides
    advantages to the nation's military forces. But with these advantages
    come vulnerabilities as well. Information Warfare (IW) in particular
    will grow in importance in the twenty-first century. The Air Force must
    aggressively expand its efforts in defensive IW as it continues to
    develop its operational and tactical offensive IW capabilities. We are
    in the lead in developing IW policy, doctrine, and techniques. In 1993
    for example, we created the Information Warfare Center to work IW
    issues across our Service.
        The top IW priority is to defend our own increasingly information-
    intensive capabilities. On October 1, 1995, we stood up the Air Force's
    first information warfare squadron (IWS), the 609th IWS at Shaw AFB,
    South Carolina. The 609th IWS will help ensure we can protect our own
    information systems, both in garrison and when deployed, as we develop
    the ability to attack those of our adversaries. On the offensive side,
    the Air Force is emphasizing operational and tactical IW and continues,
    in conjunction with other federal agencies, to support strategic
    information operations.
    Global Attack
        The Air Force has the unique ability to project power rapidly,
    precisely, and globally--to quickly find and attack or influence
    targets worldwide from air and space. This capability is essential to
    the JV 2010 tenets of Dominant Maneuver and Precision Engagement. In
    fact, the ability to engage at various places around the globe in
    minimum time describes a flexible Dominant Maneuver force of global
    proportions. We demonstrated this in the B-52/CALCM strikes against
    Iraq in the summer of 1996. The ability to rapidly re-target weapons
    en-route provided the flexibility the Joint Force Commander needed to
    conduct that joint strike.
        During the Cold War, the majority of the Air Force's Global Attack
    assets were dedicated towards the nation's highest priority, deterring
    nuclear war. Although nuclear weapons no longer play as central a role
    in America's national security strategy, we recognize the dangers posed
    by the efforts of rogue states and others to acquire them. As a result,
    we will sustain our efforts in the nuclear arena with two legs of the
    Triad--our long-range bombers and Intercontinental Ballistic Missiles
    (ICBM's). The Air Force will also sustain its commitment to support the
    nuclear requirements of the theater CINC's. We remain determined to
    maintain our record of excellence as the custodian of nuclear weapons,
    ensuring their safe and secure operation.
        Today, we have been able to improve the conventional response
    capability of our bomber force while continuing to maintain our nuclear
    capability. Our B-1 force now has the capability to drop cluster bomb
    munitions, and is undergoing further upgrades to improve combat
    capability. The B-2 has also shown steady progress toward assuming a
    conventional role with the Global Positioning System (GPS) Aided
    Targeting System/GPS Aided Munition (GATS/GAM) giving it a much
    improved capability at low cost, relatively fast. During a test mission
    in Nevada in October 1996, three B-2's destroyed 16 targets with 16
    bombs using this system--vividly demonstrating the ability for
    individual aircraft to engage and destroy multiple targets on a single
    pass. As a result of the resounding success of this mission, the B-2
    achieved limited operational capability and is on track to achieve IOC
    in the spring of 1997.
        As America reduces the number of military forces it permanently
    stations overseas, our power projection capabilities will be even more
    important to the Joint Force Commander and our national leaders. Even
    today, theater commanders increasingly rely on forces from outside
    their area of responsibility to respond to crises. We expect our
    ability to project power globally will become an increasingly prominent
    requirement in the future. As a result, the United States Air Force is
    becoming more expeditionary to improve its rapid global engagement
    capability.
        Over the past year, the Air Force has put together a template for
    this responsive, tailorable force--the AEF. Because it is designed to
    deploy rapidly when needed and provide immediate offensive and
    defensive capabilities in theater, the impact on the host nation is
    less than with permanently based forces and may eventually allow for
    fewer forward-stationed forces. In addition to its operational
    capabilities, the AEF has provided powerful opportunities for working
    with host nations and improving military-to-military relations--
    essential ingredients when laying the foundation for future coalitions.
    As discussed earlier, our forces demonstrated the power of the AEF in
    providing a rapid, tailored capability to fill theater requirements on
    three occasions over the past year. We will refine our ability to
    deploy both lethal and non-lethal forces as we employ it across a wider
    range of missions around the world.
    Precision Engagement
        The ability to reliably and selectively apply the full range of
    precision capabilities to achieve the desired effect with minimal risk
    and collateral damage is the essence of this Air Force core competency.
    Grounded in the JV 2010 definition, Precision Engagement is: ``The
    capability to locate the objective or target, provide responsive
    command and control, generate the desired effect, assess our level of
    success, and retain the flexibility to reengage with precision when
    required.'' Past definitions of ``precision,'' in the context of
    military operations, have focused on the accurate delivery of
    munitions--an integral aim of Air Force planning and procurement
    strategy for many years. But new demands placed on our military forces
    in the post-Cold War environment have broadened our understanding of
    precision. In General Shalikashvili's words, precision employment
    demands a ``system of systems.'' It is much more than just the weapons.
        The ``system of systems'' which supports the Air Force core
    competency of Precision Engagement must be just as capable in precisely
    airdropping humanitarian supplies as it is in delivering a bomb down
    the air vent of an enemy command bunker. Therefore, we are working hard
    to enhance the range of our precision engagement capabilities to meet
    future taskings. For example, the Air Force is moving toward a
    precision delivery system for our airlifters to provide the same
    accuracy in dropping supplies as we now have in dropping weapons. The
    ability to drop cargo from aircraft and steer it to within a few feet
    of the intended landing zone is on the horizon.
        But the requirement for our operational commanders to employ air
    forces as a dominant maneuver force and strike the enemy in times and
    places of our choosing with precise and lethal force remains a critical
    capability. Our ability to conduct asymmetric warfare through air and
    space power demonstrated in Iraq, and most recently in Bosnia,
    preserves American lives and plays a key role in fulfilling America's
    strategic objectives.
        Therefore, we are pressing on with our programs to extend our
    precision capabilities into the night, the all-weather realm, and with
    greater stand-off capabilities. We are well along in our efforts to
    develop an all-weather precision capability with the next generation of
    conventional weapons. For the most part, these are joint munitions
    programs which enable us to effectively leverage resources as budgets
    decline. These weapons, the Joint Direct Attack Munition (JDAM), Joint
    Air-to-Surface Stand-Off Missile (JASSM), and Joint Stand-Off Weapon
    (JSOW), will provide a complementary mix of capabilities and create a
    range of options for joint forces. We are upgrading our bomber force
    with these weapons to strengthen our ability to provide rapid and
    global responsiveness.
        However, the public's growing intolerance for collateral damage in
    military operations makes effective employment of these weapons
    extremely challenging. An excellent example of this is Operation
    Deliberate Force--the air campaign that brought about peace talks among
    the warring factions in Bosnia. Although this air operation was
    militarily robust, it was politically fragile. The first report of
    civilian casualties or collateral damage would have placed extreme
    pressure on the NATO coalition that authorized the strikes--tying the
    operation's success to the precise application of force. Despite the
    high technology of the aircraft and weapons involved, this operation
    would not have been possible without the effective integration of
    intelligence, command and control, weather, and training programs that
    led to our bombs impacting on the right spot.
        Perhaps the most effective illustration of this type of integration
    was our aircrews' use of a revolutionary system known as Power Scene.
    This system translates imagery from various sources along with other
    data into detailed, real-life, computerized, three-dimensional images.
    Our crews used the Power Scene system to practice their missions before
    they ever stepped to the jet--reconfirming the old adage, ``the more
    you sweat in peace, the less you bleed in war.''
        At the Combined Air Operations Center in Vicenza, Italy, where we
    executed the very complex multinational air campaign, there was a real-
    time fusion of operations and intelligence, as well as real-time
    retasking capabilities for our intelligence assets. General Mike Ryan,
    who led the coalition's air operation over Bosnia, was able to watch
    real-time fused pictures of the air operation through our Joint Forces
    Air Component Commander (JFACC) Situational Awareness System (JSAS).
    The real-time interplay of our space-based and air-breathing
    reconnaissance systems could also be seen in the intelligence cell
    behind his command center. The cycle time to capture, analyze, and act
    on information had been reduced from weeks to seconds--a major reason
    for the effectiveness of the air operation in Bosnia. Due to the
    integration of JSAS into the Global Command and Control System (GCCS),
    real-time information is immediately available to anyone with access to
    GCCS.
        Air Force information systems are the assets that our operational
    commanders call on first, making them the cornerstone of our joint
    theater capability. These systems include the Rapid Targeting System
    which provides near-real-time information to the cockpit (sensor-to-
    shooter), and leading edge information platforms such as the AWACS,
    Joint STARS, U-2, Rivet Joint, and Predator.
        In fact, as the NATO force was first establishing a presence in the
    theater, Admiral Smith, the NATO commander, took to slapping pictures
    taken from the Joint STARS down in front of the factions when they met
    as if to say: ``See, there isn't anything you can do without our
    knowing!'' One could see this capability in action at the 1st Armored
    Division in Tuzla. Sitting in the Joint STARS control van were an Air
    Force and an Army NCO sitting side by side watching situations develop,
    ready to respond should the factions violate their commitments.
        Precision Engagement yields operational and strategic effects that
    assure victory for our joint team in all theaters of operations. It
    will enable the Air Force to continue to deliver precision effects to
    meet the nation's future political and military objectives.
    Rapid Global Mobility
        The unique ability to rapidly and flexibly respond to the full
    spectrum of contingencies--from combat operations, to humanitarian
    relief, to peacekeeping, with the right force, at a decisive time and
    place, is a capability no other nation in the world has. Air mobility
    forces enable warfighting commanders to influence operations throughout
    the theater. Our airlift and tanker fleets can build an air bridge to
    move joint and allied forces for combat or peacekeeping operations or
    to airdrop or insert troops and equipment. Our tanker fleet enables
    support forces, such as C\4\ISR aircraft, to remain airborne longer and
    combat forces to strike deeper. Our airlifters sustain operations by
    providing a steady flow of equipment and supplies, as well as ensuring
    short-notice, critical needs are met and life saving emergency
    aeromedical evacuation is available.
        One group of ``silent warriors'' often employed in contingency
    operations is Air Force Special Operations Forces. These forces use
    rotary and fixed wing aircraft armed with technically superior avionics
    suites to provide the specialized mobility capabilities to move into
    and out of denied airspace. This small but potent air arm is capable of
    responding in all types of weather and threat scenarios to deliver
    special operations forces to hot spots anywhere in the world. The CV-22
    will provide these forces long-range combat search and rescue as well
    as deep battle airlift. The CV-22's speed, extended range and
    survivability will significantly increase the Joint Force Commander's
    ability to conduct operations in denied territory.
        Rapid Global Mobility will remain the future Joint Team's most
    reliable combat multiplier. It is a prerequisite for winning future
    conflicts and is a key requirement for the JV 2010 tenet of Dominant
    Maneuver, assuring the timely arrival of forces or supplies needed to
    deter a conflict or allow our forces to engage the enemy. The speed,
    range, and flexibility that are unique to air and space forces, like
    our air mobility fleet, are essential ingredients for military success,
    and we continue to aggressively pursue systems and processes that
    increase our capability to respond anywhere, anytime with decisive
    influence.
        The C-17 will be the backbone of our airlift fleet far into the
    future, and 1996 proved to be a remarkable year for this aircraft. Its
    very existence in doubt a few years ago, it has successfully
    demonstrated its capability in deployments around the world. Perhaps
    its most dramatic exploit was the insertion of 15 Bradley Fighting
    Vehicles and floating bridge sections into Tuzla in late December 1995
    to bolster ground presence and enable the U.S. Army troop crossing at
    the Sava River in Bosnia. Recognizing its maturity, the Air Force
    signed a multi-year procurement contract that will ensure stable
    funding as we bring on this essential system.
        While procuring our newest airlifter is important to the CINC's,
    maintaining our overall lift capability with improvements to the C-141
    and C-5 fleets and reducing lift requirements, are just as critical.
    For example, drastically reducing the numbers of aircraft required to
    move and support our next generation systems, such as the F-22 and
    Joint Strike Fighter, will greatly enhance our capability to
    successfully respond to any crisis around the globe, while dramatically
    increasing the speed of our response. We are also ensuring our tanker
    fleet remains viable with improvements to the KC-135 fleet to improve
    aircraft performance and reduce maintenance time and operating costs.
    Agile Combat Support
        Improving transportation and information systems to allow time-
    definite resupply and total asset visibility, reducing the mobility
    footprint of deployable units to decrease the lift requirement, and
    streamlining the infrastructure providing parts and supplies to reduce
    cycle times are all important aspects of Agile Combat Support.
    Together, they greatly improve the combat capability of all joint
    forces.
        Our current and future rapid, responsive, and flexible forces
    require an agile support system for them to be effective. Improvements
    in information and logistics technologies make this possible. Since
    1994, the Air Force has been developing and refining practices
    supporting our core competency of Agile Combat Support and JV 2010's
    operational concept of Focused Logistics. With time-definite resupply,
    we reduce the mobility footprint of early arriving forces, which not
    only optimizes available lift and reduces cost, but makes it possible
    to reduce the size, and therefore the vulnerability, of our forces,
    contributing to another tenet of JV 2010, Full Dimensional Protection.
    Providing for force protection is not just a matter of air base
    operability and security; it also involves redesigning our power
    projection forces to reduce the size of the force protection needs.
        Historically, the logistics system has ``pushed'' the nation's
    wartime support to forces in the field to compensate for imperfect
    resource information and planning systems, resulting in an expensive
    and wasteful stockpile of materiel in U.S. warehouses and forward
    locations. The Cold War model of globally pre-stocking huge quantities
    of materiel forward and then flowing equally massive quantities from
    home bases is untenable in today's austere environment--politically,
    economically, and operationally.
        Our nation is moving away from deploying masses of materiel to
    support its forces. To compensate for this, the Air Force is now using
    high-velocity, high-reliability transportation and information systems
    to get the right parts to the right place at the right time. Through
    this approach, we increase our operational capability while reducing
    both our mobility footprint and our costs.
        When combatant commanders require an item, integrated information
    systems ``reachback'' to U.S. locations and ``pull'' only the resources
    required. Depot processes--streamlined and incorporating state-of-the-
    art business practices--are able to release materiel in a much more
    timely fashion. Time-definite transportation completes the support
    cycle by rapidly delivering needed resources directly to the user in
    the field. Integrated information systems provide total asset
    visibility throughout this process, tracking resources throughout their
    delivery cycle with the capability to re-direct them as the situation
    dictates. We are extending the concept of ``reachback'' to include
    elements ranging from C\4\I, logistics, and personnel, thus exploiting
    information technology to reduce our footprint in the deployed
    location. Time-definite resupply will be an important part of improving
    this capability in the future. This, coupled with a combined logistical
    architecture of lighter, more reliable equipment designed for support
    from an agile information based logistics system, will yield the
    revolution in combat support envisioned in JV 2010's tenet of Focused
    Logistics.
        Focused Logistics and its forerunner, Lean Logistics, will provide
    the Joint Force Commander with an Air Force that is more mobile,
    responsive, efficient, and significantly more potent. It may never
    completely turn the logistician's art into a pure systems-based
    science, but the future of Air Force logistics will maximize both
    technology and resource management reinvention insights to achieve and
    provide unparalleled combat power to the joint warfighter.
    Foundation for the Future Air Force
        Together, these core competencies outline our contract with the
    joint team--and with the American people. We are responsible to ensure
    we can execute them under any circumstances, and against any adversary.
    In these times of declining budgets, it is essential that we construct
    a solid program that properly prioritizes across these requirements. We
    have built a time-phased modernization program to do so--filling our
    airlift requirements, our CINC's' greatest need, with the C-17 in the
    near-term; upgrading our bomber force to carry a wider range of
    conventional weapons and ``smart'' munitions in the mid-term; and
    upgrading our theater forces with the acquisition of the F-22 and the
    JSF to ensure air dominance, in the long-term. Across this fifteen-year
    horizon, too, we will be bringing on the EELV and SBIRS, the systems
    necessary to ensure space and information superiority. This carefully
    balanced modernization program, coupled with responsible stewardship of
    individual programs, will build the right mix of capabilities into the
    force of tomorrow. We can afford to do no less.
                        revolution in business practices
        If the Air Force is to succeed in its modernization and Quality of
    Life initiatives, we must free up resources through a revolution in
    business practices. The Air Force cannot afford to continue traditional
    means of doing business in acquiring and supporting our forces.
    Therefore, we have instituted an aggressive series of reforms that
    extend across the range of our infrastructure and acquisition
    practices.
    Acquisition Reform
        The Air Force is beginning to move beyond the Lightning Bolt
    initiatives that jump started our acquisition reform process. These
    initiatives have been highly successful and are generating the cultural
    change across the force that is essential for their long-term effect.
    The Air Force has already identified about $17 billion in savings and
    cost avoidance through these measures, and we are expecting much more
    in savings to follow. The Joint Direct Attack Munitions program
    provides a vivid example of the benefits we are reaping from
    acquisition reform. We will acquire that system at $14,000 per unit
    instead of our projected $40,000; we will buy out the program in 10
    years instead of the projected 15; and we will receive a warranty
    increase from five years to 20. An equally successful program is the
    Wind Corrected Munitions Dispenser (WCMD) for the B-52 fleet. By using
    commercial practices, WCMD will be delivered 18 months early with the
    average unit production price reduced 64 percent--from $25,000 to less
    than $9,000--resulting in a program savings and cost avoidance of $850
    million.
        Throughout 1997, we will focus on reform through the development
    and execution of a new strategic business management plan. Our goal is
    to provide a seamless transition from the highly successful Lightning
    Bolt initiatives to a culture of Continuous Process Improvement. This
    business plan will describe Chief Executive Officer level goals,
    objectives and measures and will establish the foundation to support
    our vision of Twenty-first Century Air Force acquisition--lean, agile
    buyers and sustainers of more affordable warfighting capability.
    Outsourcing and Privatization
        Outsourcing and privatization is an essential means of freeing
    resources to apply toward modernization and other priorities. More than
    that, these steps enable the Air Force to harness the expertise of the
    commercial sector for our needs and allow us to focus more consistently
    on our core responsibilities.
        The Air Force has made considerable progress in this very complex
    arena. We successfully transitioned the depot work at Newark Air Force
    Station to private contractors. We are in the early stages of depot
    maintenance competition for a large portion of the Sacramento Air
    Logistics Center's workload and the C-5 business area at Kelly AFB,
    Texas. We have progressed toward completing a strategic plan covering
    the range of our outsourcing and privatization initiatives and expect
    to finish that in 1997, and we have identified those areas where we
    expect to find the most near-term payoffs: support functions, depot
    maintenance, and military family housing.
        The key to our success in the support area is competition between
    the public and private sector. Our most notable example, and also our
    largest competition to date, is a recent cost comparison of aircraft
    maintenance at Altus AFB, Oklahoma. The competition, completed in only
    16 months, was won by a streamlined in-house organization which reduced
    its manpower by 49 percent, resulting in a $95 million savings over
    five years.
    Commercial Off-The-Shelf (COTS) Technology
        The distinction between military technology and commercial systems
    has become increasingly blurred over recent years. The line that once
    divided the commercial sector from the defense industry, too, has
    faded. As a result, it has become increasingly attractive to employ
    off-the-shelf commercial technologies in our systems. The Air Force is
    aggressively pursuing those technologies--and we are abolishing old
    prohibitions that limit our ability to take advantage of them.
        One vivid example is what is now called the Global Broadcast
    System, which is currently used to provide an upgraded flow of data to
    our deployed forces. By using an existing commercial satellite
    constellation to provide an interim operational capability, we were
    able to field a high data rate capability quickly, without spending an
    extraordinary amount for a unique military solution.
        The Air Force has used this same approach to structure its
    acquisition of our next-generation long-range executive transport, the
    VC-32A. By using commercially available off-the-shelf technologies, in
    this case four Boeing 757 aircraft, we have saved almost $40 million
    per aircraft and reduced acquisition time by about one-third.
    Financial Management
        Ultimately, the success of all these measures relies on sound
    financial management practices and good business sense. The Air Force
    financial management community has worked hard to improve business
    practices, quality of management accounting data, and financial reports
    required by the Chief Financial Officers (CFO) Act of 1990. These
    financial reports not only provide meaningful information to senior Air
    Force managers, but also assurances to the public that the Air Force is
    a good steward of its financial resources.
        The Air Force has made fast moving progress in shaping reform and
    bringing about change. We have reduced problem disbursements by up to
    90 percent since 1993 and antideficiency violations are down nearly 80
    percent since 1994. Nearly 70 percent of the CFO audit recommendations
    have been corrected, and generally the remaining corrective actions
    represent the critical, long-range financial system improvements
    required for CFO Act compliance. Corrective actions required for
    existing financial and other systems are being prioritized and
    implemented. In instances where systems are being replaced, the
    Operational Requirements Document now stipulates that the new system be
    compliant with Federal Generally Accepted Accounting Principles.
        The Air Force also developed an Automated Battlefield System (ABS)
    to improve our ability to accomplish those financial transactions that
    must be done during overseas operations. The ABS, which consists of a
    simple piece of software that works with ground-based communication
    equipment or a portable satellite transmission device, permits the user
    to access all financial information resident in stateside computers.
    The ABS avoided the need to procure costly new software for use during
    contingency operations.
    Small Business Management
        Our Small Business Program continues to serve as the catalyst for
    economic vitality among the nation's small businesses. Despite the
    recent suspension by DOD of minority business set-asides, the Air Force
    once again surpassed the mandated goal of 5 percent awards to minority
    businesses by awarding more than $1.65 billion to minority owned firms.
        Our efforts in support of women-owned businesses are unparalleled.
    The Secretary of the Air Force serves as the DOD representative on the
    Interagency Committee on Women's Business Enterprise and introduced the
    Air Force's ``rule of one'' for women-owned businesses, pioneered
    mentor-protege opportunities and was a significant contributor to the
    committee's report to the president entitled: ``Expanding Business
    Opportunities for Women.'' Additionally, the Air Force participated in
    the first ever Women Owned Business Research Agenda held at the Kellogg
    School at Northwestern University, and subsequently chaired a round
    table on procurement opportunities for women at the Women Owned
    Business Summit 96.
        In April 1996, the Air Force Small Business Office launched its own
    Internet home page to give small businesses maximum access to
    information. This electronic outreach forum provides the Air Force
    Marketing Information Package by Internet, including the Long-Range
    Acquisition Estimate; Selling to the Air Force; Diversification for
    Small Business; and the Mentor Protege Handbook. Additionally, focus
    forums, useful marketing tools and links to many other important
    resources are also available.
        As we move toward increasing the use of outsourcing and
    privatization, we will continue to rely upon our strategic planning
    process to provide the framework for maintaining and improving small
    business participation in the future.
                                air force people
        When people think of the Air Force, they rightly think of high
    technology: of supersonic aircraft, satellites orbiting overhead, and
    computers and communications networks at the leading edge of
    technology. But it is not just our technology that makes us
    successful--it is our people. To provide a common frame of reference
    for understanding and employing air and space forces, we have decided
    to create a new Air and Space Basic Course for all newly commissioned
    officers and selected civilians which focuses on the history, doctrine,
    strategy and operational aspects of air and space power. This course
    will also provide them a shared understanding of the core values by
    which they live and work.
    Core Values
        Our core values are essential to our very existence as an
    institution. These fundamental and timeless values--integrity first,
    service before self, and excellence in all we do--form the bedrock of
    our force. It is crucial that our members share a common understanding
    of these values, and live by them.
        Integrity First is the keystone of military service. Integrity is
    the moral touchstone that is the foundation for always doing the right
    thing for the right reason, even when no one is looking. Our military
    force operates on the basis of trust--we expect our people, throughout
    the ranks, to live up to the highest standards of integrity.
        Service Before Self is at the heart of the military profession. It
    represents the absolute need to put our nation, our Service, our unit
    and our mission before ourselves. There can be no room for personal
    agendas at the expense of the institution or the nation.
        Our push for Excellence In All We Do fuels our endless drive to
    improve ourselves and our capabilities. Mediocrity is not tolerated in
    our profession; the stakes are too high. The Air Force has learned
    never to relax or rest on past laurels, because we must be prepared to
    face tomorrow's challenges.
        These values are for life, not just for working hours. We ensure
    our people understand and embrace them because they are essential to
    our effectiveness as a military force. Across the vast range of
    expertise necessary to operate and sustain the Air Force, these values
    provide a unifying element, bringing us together in the service of our
    nation.
    Leadership Initiatives
        Leadership has always been an art and has always been at the heart
    of military effectiveness. Today, Air Force leaders at all levels are
    being challenged by new responsibilities as they operate in an
    increasingly complex environment. So, over the past two years we have
    fundamentally restructured our approaches to select, train, and support
    our leaders--and we will continue to refine these processes.
        In 1995, the Air Force conducted the first command screening board
    in order to identify eligible colonels and colonel-selects best suited
    to fill wing commander and group commander vacancies. This process
    ensures those officers most qualified to command are identified so that
    the future leadership of our Air Force is comprised of the best people.
        An essential element in effective leadership is preparation for
    command. Once selected, all wing, group, and squadron commanders now
    receive formal resident training prior to assuming command. These
    courses emphasize command responsibility, accountability, and
    discipline. In addition to these fundamentals, the courses include case
    studies and time-sensitive topics for effective command in this very
    complex environment--with a focus on issues ranging from equal
    opportunity and diversity, to violence in the workplace, to outsourcing
    and privatization.
        The Air Force has long focused on bringing front-line technology
    into its weapons systems. We have now begun to apply that same logic to
    leadership development. Last March the Air Force hosted a conference
    for the Service Secretaries which focused on modeling and simulation.
    As the Service Secretaries toured the Air Force's Theater Battle Arena,
    the Joint Training and Simulation Center run by U.S. Atlantic Command
    and the Joint Staff's Joint Warfighting Center, they were all impressed
    by the potential at these facilities for training our leaders and
    battle staffs. There is almost no end to the utility and potential of
    these technologies, and we are pursuing them with vigor.
    Quality of Life (QoL)
        The Air Force traditionally works at the leading edge of
    technology, and it goes without saying that we rely on highly trained
    and disciplined people throughout the ranks as the foundation of our
    strength in sustaining that approach. The success of this strategy
    depends on our ability to recruit, train, and retain quality people--
    ultimately, to provide a reasonable quality of life for them and their
    families as they serve this nation.
        Service members' quality of life, to a large extent, tends to
    influence the decision to stay in or leave the service. Retention
    across the force remains healthy, but we're beginning to see
    indications of a slight decline. Our response is to continue to
    emphasize quality of life issues as a top priority and smartly use
    targeted incentive programs such as Aviator Continuation Pay for
    officers and Selective Reenlistment Bonuses for enlisted personnel. We
    will continue to emphasize quality of life as a positive influence on
    retention, and therefore, a vital element in ensuring our readiness.
        The Air Force Quality of Life strategy is to pursue a balanced
    approach supporting our 7 priorities: fair and equitable compensation;
    safe, affordable housing; quality health care; OPTEMPO/PERSTEMPO
    considerations (the demands our operational tempo places on our
    people); increased community programs; preservation of retirement
    systems and benefits; and continued support to educational programs.
        Air Force QoL initiatives rank compensation and benefits as our
    first priority in ensuring the right quality of life for our people.
    Congress has already taken steps necessary to embed pay adjustments in
    our program, so that in future years there will be no surprises, and
    adjustments can be made within a planned framework. The 3 percent pay
    raise authorized in fiscal year 1997 helped close the private sector
    pay gap, but clearly we have some distance yet to travel in this area.
        The report by the Marsh Commission framed then-Secretary of Defense
    Perry's priorities, and with congressional support, the Air Force made
    gains in many of these areas. For example, the Air Force maintains its
    emphasis on upgrading housing throughout the force. Over 1996, the Air
    Force began a long-term effort to improve the quality of housing for
    unaccompanied enlisted members with initiatives ranging from new
    construction and assignment standards to renovation of old dormitories.
    We also began construction of our first-ever Dormitory Master Plan to
    establish a common yardstick for our installations and improve our
    management oversight in this crucial area. We expect to complete this
    effort by the summer of 97.
        Already these initiatives are bearing fruit. The Air Force began
    implementing the new DOD one-plus-one dormitory standard, with 28 such
    dormitories approved for construction in the fiscal year 1996 Military
    Construction Program. We will follow these with another 20 projects in
    fiscal year 1997. We also established an institutional goal of
    eliminating all gang latrines in dorms for permanently assigned
    personnel by the year 1999. All of these initiatives, and this
    considerable capital investment, represent our commitment to meet our
    single and unaccompanied members' highest priority concern in quality
    of life: privacy.
        For Air Force families, we need to revitalize over 58,000 housing
    units. With the average age of our housing units now over 34 years,
    this is a major requirement as we seek to improve living conditions for
    our people. Privatization offers a real opportunity for improved
    quality with limited investment of Air Force resources. The Air Force's
    first project in this area will be at Lackland AFB, Texas, where we
    identified a deficit of 580 units and another 521 units which need
    major renovation or replacement to meet adequacy standards. To address
    this problem, the Air Force has funded a 420-unit project including
    construction of new units, demolition of existing substandard units,
    and ownership and operation of the new housing. We expect this
    innovative approach to provide a pattern for others to follow.
        We also realize that medical care is a key concern for our people,
    so we will continue to emphasize the provision of quality health care
    for Air Force members and their families. In this regard, TRICARE is
    the best option to ensure this kind of care for dependents as we cut
    back on what can be provided by Service medical treatment facilities.
    We will also sustain our support for Medicare Subvention for military
    retirees over the age of 65 because it is the right thing to do.
        Finally, the Air Force is continuing to focus attention and
    resources on providing our people the child care they need to enable
    them to perform their duties. High PERSTEMPO and the demands of
    changing society where more of our families have both parents employed
    have expanded the demand for child care. We need about 86,000 child
    care spaces to meet these demands and have begun to meet this challenge
    by adding an additional 325 trained personnel.
                                   conclusion
        As we embark on our journey into the next 50 years and beyond, the
    Air Force is postured to build on our golden legacy and shape our
    boundless future. We have defined a strategic vision that will take us
    into the next millennium and continue our Service's transition from an
    air and space force to a space and air force.
        The key to our future success rests on the Air Force's ability to
    continue to fully exploit the unique characteristics of the air and
    space mediums--the foundation upon which our core competencies rest.
    From our core competencies flow the capabilities that make us an
    integral and indispensable member of the joint team and are key to
    achieving the overarching goal articulated in JV 2010--Full Spectrum
    Dominance. Maintaining this level of expertise will require an ongoing
    commitment to innovation and aggressive integration and exploration of
    the most advanced and promising technologies.
        Smart business practices have put the Air Force out in front in the
    efficient management of precious resources needed to procure our
    systems, maintain the infrastructure that supports them, and ensure a
    reasonable quality of life for our people. Combined with our time-
    phased modernization program, our acquisition reform efforts have
    allowed us to put better, more reliable equipment into the hands of our
    people faster and cheaper than ever before.
        Air Force people are engaged around the globe and are continuing to
    build the capabilities our nation will need from its air and space
    force in the future. The Air Force is proud of its golden legacy of
    service over the past 50 years, and its current role in support of our
    National Security Strategy of Engagement and Enlargement. We stand
    ready to work as part of the joint team to secure our country's
    security for the next 50 years and beyond.

        Senator Stevens. Thank you, Madam Secretary.
        General Fogleman.
        General Fogleman. Mr. Chairman, distinguished members of
    this committee, it is a privilege once again to appear before
    you on behalf of the men and women of the U.S. Air Force and,
    as you noted, Mr. Chairman, particularly on this, our 50th
    anniversary year.
        Our 1998 budget request really focuses on people and on
    modernization. And at the same time, we have tried not to lose
    sight of the near-term readiness equation. I believe that we
    have presented and developed a sound program. I think it is a
    balanced approach to a rather uncertain future. I believe it is
    on the right course. And I am very pleased to report to you and
    to the people of the United States that you have a strong,
    ready, and dedicated Air Force, and it is doing its job for the
    Nation.

                               Global engagement

        As the Secretary has already stated, over the past year,
    the Air Force has been globally engaged around the world,
    supporting our national interests. That global engagement is
    really made possible by the 380,000 plus active duty people,
    the 192,000 guardsmen and reservists; and the roughly 165,000
    civilians that we have in our Air Force, 80,000 of which are
    permanently forward deployed in the Pacific, in Europe, or in
    Southern Command.
        This morning when I looked at my ops summary, I had 11,400
    troops who were TDY in support of a major contingency or
    crisis. And of that number, of that 11,400, roughly 2,000 were
    guardsmen or reservists, 99.9 percent of whom were volunteers.
    So it is a total air power team effort.
        It is a team made up of members like the following. For
    instance, I would just bring to your attention a senior airman
    by the name of Joe Sampson, who was recently awarded a medal.
    He is a load master in the 16th Airlift Squadron at Charleston
    Air Force Base. And he risked his own life to save an Army jump
    master, who had his reserve chute deploy while he was still
    inside the airplane. Seeing what had happened, this airman
    jumped into the door, managed to retrieve the parachute, and
    potentially saved the life of this jump master. This is the
    kind of people that we have serving.
        We have already had the Senator from the State of North
    Dakota tell us about the people at Grand Forks, who delivered
    that flood relief and opened up their base. In addition to
    providing billeting for 4,000 to 6,000 folks, those people at
    Grand Forks were serving 30,000 meals a day for the community.
    These people reflect the very best of American society. And I
    would tell you that we strive to recruit the very best, but it
    is getting tougher.

                                 Quality forces

        Last year in the Air Force, we brought in just over 30,000
    enlisted troops. Over 99 percent of them have a high school
    diploma; 82 percent scored in the top one-half of our Armed
    Forces qualification test. But our recruiters are working
    harder and harder to be able to keep that quality up.
        Another part of our equation is how do we retain that
    quality once we train it. And in this we generally have very
    good news. Our first-term reenlistment rate is currently 59
    percent. That is down slightly, but it is still well above our
    goal. Our second-term and our career reenlistment rates are at
    near all-time highs.
        On the other hand, in the rated retention area, we are
    starting to see a downturn. This is driven, as we go out and
    survey, by a couple of things we believe. One is the OPTEMPO
    that we are driving our people to. And that is resulting in
    less quality of life for them and their families. The other
    thing is that in this country, we are undergoing an
    extraordinary period of hiring by the airlines. And from a
    monetary standpoint, we just simply cannot compare with the
    airlines and the kind of stability that it will give to
    families.
        Now, one of the things that we do need some help on is the
    aviation bonus program. And all the services are united on
    this. DOD has put forth some proposed legislation to OMB that
    would allow us to increase our pilot bonus and recover some of
    the money that has been lost due to inflation in this. So we
    would ask your support whenever that gets to the Hill.
        The other priorities that we have in this budget include
    taking care of our people, keeping our modernization programs
    on track. We talk a lot about quality of life. The Secretary
    mentioned the seven categories that we talk about. Certainly, I
    believe that one of the key things that we can do for our
    troops is we can take care of them when they are in the field--
    force protection.

                                Force protection

        You know, the bombing at Khobar Towers introduced a
    significantly more sophisticated and powerful level of
    terrorism. And here we are, 1 year later, and still no one has
    been brought to justice. But yet we had all these people who
    were telling us how precise the intelligence was and how
    everybody should have been prepared for this.
        I think we have some work to do in this area. And so we
    have instituted some new organizations to deal with force
    protection. The headquarters has stood up a force protection
    group and a force protection battlelab.
        When we look at the more traditional perspectives--good
    quality of life--that are essential to combat effectiveness,
    that this committee has supported. We have asked for a 2.8-
    percent pay raise for fiscal year 1998. We have a dormitory
    master plan, as well as a military family housing privatization
    plan. Certainly, quality health care remains a concern, and
    implementation of Tricare is important. And Medicare subvention
    for our retirees is extremely important.
        We worked hard to try and manage the OPTEMPO and PERSTEMPO,
    and particularly, we tried to make use of Guard and Reserve
    forces to do this. And as the Secretary pointed out, we, as a
    service, made some very hard decisions early in the 1990's so
    that we would, in fact, have a time-phased, affordable
    modernization program. The most urgent need in the near term is
    strategic lift. And the C-17 is what will provide this Nation
    rapid global mobility. And so we are in the midst of executing
    that multiyear program that you approved last year.
        In the early midterm, our priorities have been on our
    bomber force and conventional munitions. We are trying to take
    these three nuclear bombers and upgrade them and give them
    greater conventional capability. And what we see that this will
    do for us is it will give us the capability to put some of
    these bombers on alert here in the States. And that will
    relieve some of the requirement to have forward-deployed forces
    on temporary duty in various locations. We can respond very
    quickly.
        In the midterm, we are talking about our airborne laser, we
    are talking about the space modernization of the evolved
    expendable launch vehicle, and the space-based infrared system.
        And then, of course, in the long term, the most critical
    program that we are looking at is the overall TACAIR
    modernization, not just for the Air Force, but for the Nation.
    And so, the F-22 and Joint Strike fighter.

                        revolution in Business practices

        Now, a key part of making this modernization program a
    success is, in fact, continuous improvement of how we go about
    acquiring things and managing it. Reforms in business
    practices, outsourcing, privatization, commercial off-the-shelf
    technology, acquisition reforms, and retaining a viable and an
    efficient depot system. And we think that the public/private
    competition strategy provides the best value, without
    jeopardizing support for our combat forces. Noncore activities
    competed under full and open conditions.
        As the Secretary pointed out, during the past year, we
    concluded the first part of our long-range planning effort to
    produce a vision to meet the needs of the Nation in the first
    quarter of the 21st century. That vision, of course, is called
    ``Global Engagement.'' It defined those core competencies that
    the Secretary talked about.
        I would tell you that we are committed to integrating air
    and space into all the operations, and reinvigorating within
    the Air Force a spirit of creativity. We have created focused
    battlelabs and centers of excellence to embrace technology
    developments. Battle management efforts are being put forth
    that will provide an integrated picture of the battle space for
    the joint force commander. And we believe the time is right to
    prepare our people and our equipment, our infrastructure, and,
    in fact, change the culture where it needs to be changed so we
    can meet the challenges of the 21st century.
        So, Mr. Chairman, I would like to request, respectfully, if
    I could, to have this copy of ``Global Engagement'' entered
    into the record as a formal statement of the Air Force vision.
    It is very important, I think, because it also provided the
    game plan that the Air Force used as we went into the
    ``Quadrennial Defense Review.'' And so the rationale for the
    kinds of proposals and options that we made in the
    ``Quadrennial Defense Review'' are found in this document. We
    were able to take that vision and present it, and we feel
    comfortable with the results.
        [The information follows:]
           Global Engagement: A Vision for the 21st Century Air Force
                                   Department of the Air Force,
                                                        Washington, DC.

        Welcome to the United States Air Force vision into the first
    quarter of the 21st Century. This vision is one of air and space power
    and covers all aspects of our Air Force--people, capabilities, and
    support structures. It charts a path into the next century as an Air
    Force team within a joint team.
        While Global Reach-Global Power has served us well, extraordinary
    developments in the post-Cold War era have made it essential that we
    design a new strategic vision for the United States Air Force. As a
    result, we embarked on an intensive 18-month effort to develop a
    comprehensive vision to shape the nation's Air Force during the first
    quarter of the 21st Century. This endeavor culminated in a week-long
    meeting of senior Air Force leaders who agreed on the future direction
    of our Service.
        Global Engagement: A Vision for the 21st Century Air Force flows
    from the National Security Strategy and is our continuing commitment to
    provide America the air and space capabilities required to deter, fight
    and win. This vision is grounded in the Chairman of the Joint Chiefs of
    Staff concept of how we will fight in the early 21st Century--Joint
    Vision 2010. Moreover, it embodies our belief that in the 21st Century,
    the strategic instrument of choice will be air and space power.
        In the end, our success in implementing this vision will depend on
    the outstanding men and women who make up the nation's Air Force.

                                       Ronald R. Fogleman,
                                         General, USAF, Chief of Staff.
                                       Sheila E. Widnall,
                                            Secretary of the Air Force.
                                  introduction
        Change in the world around us requires change in the Air Force.
        The end of the Cold War swept away national security requirements
    that had appeared to be fixtures of the global security landscape. The
    Air Force anticipated the change and produced a vision for dealing with
    the post-Cold War world in the ground-breaking document, Global Reach--
    Global Power. This vision has guided the restructuring and
    modernization of the Air Force for the past six years. Because the
    change and uncertainty of the immediate post-Cold War era will endure,
    the Air Force must forge a new vision that will guide it into the 21st
    Century.
        To enable the Air Force to meet the challenges of change, the
    Secretary and Chief of Staff of the Air Force initiated a rigorous,
    systematic, multi-faceted examination of future demands on the Air
    Force as a member of America's joint military force. This revolutionary
    effort has had the deep involvement of Air Force leaders. It was guided
    by a Board of Directors consisting of senior military and civilian
    leaders, and chaired by the Air Force Vice Chief of Staff.
        After extensive study and discussion, the Air Force senior
    leadership began to build this Air Force vision for the 21st Century.
    It was shaped by Joint Vision 2010, the new guidance published by the
    Chairman of the Joint Chiefs of Staff. Air Force leaders understood
    that their new strategic vision must meet the national security needs
    of the nation, and a national military strategy that has as its focus
    an increasingly U.S.-based contingency force. The Air Force also
    recognizes the emerging reality that in the 21st Century it will be
    possible to find, fix or track and target anything that moves on the
    surface of the earth.
        Global Engagement: A Vision for the 21st Century Air Force is based
    on a new understanding of what air and space power mean to the nation--
    the ability to hit an adversary's strategic centers of gravity directly
    as well as prevail at the operational and tactical levels of warfare.
    Global situational awareness, the ability to orchestrate military
    operations throughout a theater of operations and the ability to bring
    intense firepower to bear over global distances within hours to days,
    by its very existence, gives national leaders unprecedented leverage,
    and therefore advantages.
        This strategic vision addresses the entire Air Force--people,
    capabilities and infrastructure--and charts the course of the Air Force
    into the first quarter of the 21st Century. The vision is the first
    step in the Air Force's back-to-the-present approach to long-range
    planning. Although this strategic vision document establishes overall
    direction, the Air Force will develop a Long-Range Plan to make the
    vision come true. Formulating a coherent, shared strategic vision is a
    critical step, but the real challenge is to make the vision actionable
    and implementable.

                                          The Security Environment Is Changing

                               Yesterday                                                Tomorrow

    Known adversaries and understood threats................  Unpredictable opponents, unknown challenges.
    National survival at stake..............................  Vital interests at risk.
    Homeland at risk of Soviet nuclear attack...............  Homeland at high risk of limited terrorist attacks.
    Humanitarian and ``lesser'' operations a sideline.......  Multiple humanitarian and ``lesser'' operations the
                                                               norm.
    Limited access to ``leading-edge'' technologies.........  Global technological proliferation.
    Slow spread of nuclear, biological and chemical (NBC)     Rapid spread of NBC weapons.
     weapons.
    Combat oriented to open plains, des-  erts..............  Conflict also likely in cities, jungles and mountains.
    Extensive forward-basing structure......................  Project power increasingly from the U.S.
    Information an adjunct to weapons.......................  Information as a weapon/target.

                               today's air force
        Explorations of the future must proceed from where the Air Force
    stands today: the world's most powerful air and space force. New
    technology and new operational concepts already offer an alternative to
    the kind of military operation that pits large numbers of young
    Americans against an adversary in brute, force-on-force conflicts. This
    new way of war leverages technologically superior U.S. military
    capabilities to achieve national objectives. It is a strategy of
    asymmetric force that applies U.S. advantages to strike directly at an
    adversary's ability to wage war. It offers potentially decisive
    capabilities to the Joint Force Commander to dominate the conduct of an
    adversary's operations across the spectrum of conflict.
        But technology and tactics only go so far. Our core values,
    history, mission and the professionalism with which they are brought
    together are what make us the institution we are today. Our core values
    are simple and forthright: Integrity first, service before self, and
    excellence in all we do.
        These values are both a guide and source of great pride to the men
    and women of the Air Force team. As we plan for the future, it is
    important to remember that what makes the Air Force successful will not
    change. Quality people define the Air Force. From the flightline to the
    depot to the workstation transmitting on-orbit satellite repair
    instructions, it is the professionalism and dedication of our people
    that makes the Air Force the preeminent air and space force to meet the
    nation's needs.
        The men and women of the Air Force can build upon a tremendous
    heritage. They are the beneficiaries of an Air Force forged in World
    War II by the vision of airmen such as General Henry H. (Hap) Arnold.
    We have the opportunity today, on the eve of the 21st Century, to build
    a new vision that will ensure the future vitality of our force. Our
    challenge is to dominate air and space as a unique dimension of
    military power. Global Engagement provides the strategic blueprint for
    meeting that challenge.
                         planning into the next century
        For all the transformation the world will undergo in the next 30
    years, fundamental U.S. national security objectives will remain
    largely as they have been for the past 220 years: to ensure our
    survival as a nation, secure the lives and property of our citizens,
    and protect our vital national interests.
        Securing those vital interests under future conditions, however,
    will significantly change the demand for U.S. military capabilities
    into the 21st Century. In Joint Vision 2010, the Chairman of the Joint
    Chiefs of Staff has provided a common direction for our Services into
    the next century. The Chairman's vision calls for the capability to
    dominate an opponent across the range of military operations--Full
    Spectrum Dominance. The plan to achieve this goal comprises four
    operational concepts to guide future joint warfare development--
    Dominant Maneuver, Precision Engagement, Full-Dimensional Protection
    and Focused Logistics. In addition, Full Spectrum Dominance requires
    Information Superiority, the capability to collect, process, analyze
    and disseminate information while denying an adversary's ability to do
    the same.
    Joint Vision 2010--Guidance toward 2025
        These concepts form a lens through which the Air Force looks to the
    first quarter of the 21st Century.
              what the nation will need from its military in 2025
    What?
        Protect the nation's interests, wherever and however they are
    threatened.
        Respond to new challenges and new missions.
        Hedge against surprises.
        Support national information needs.
        Provide strategic and operational choices.
        Respond to changing science and technology.
    Where?
        In non-traditional environments.
        In the shadow of NBC weapons, or after the use of NBC weapons.
        Increasingly from the CONUS.
        Global infosphere.
    How?
        To win the nation's wars decisively by dominating the battlespace.
        With minimal human losses.
        With minimal collateral damage.
        With reasonable demands on the nation's resources.
        In accordance with the nation's values.
        As partners in joint-combined and regional operations.
    When?
        Immediately, when called upon.
                    air and space power for the next century
        Full Spectrum Dominance depends on the inherent strengths of modern
    air and space power--speed, global range, stealth, flexibility,
    precision, lethality, global/theater situational awareness and
    strategic perspective. Air and space power also contributes to the
    level of engagement and presence necessary to protect and promote U.S.
    national interests by augmenting those forces that are permanently
    based overseas with temporary or rotational deployments and power
    projection missions.
        Ensuring that air and space power continues to make its unique
    contributions to the nation's Joint Team will take the Air Force
    through a transition of enormous importance. We are now transitioning
    from an air force into an air and space force on an evolutionary path
    to a space and air force. The threats to Americans and American forces
    from the use of space by adversaries are rising while our dependence on
    space assets is also increasing. The medium of space is one which
    cannot be ceded to our nation's adversaries. The Air Force must plan to
    prevail in the use of space.
        Space is already inextricably linked to military operations on
    land, sea and in the air. Several key military functions are migrating
    to space: Intelligence, Surveillance and Reconnaissance (ISR); warning;
    position location; weapons guidance; communications; and, environmental
    monitoring. Operations that now focus on air, land and sea will
    ultimately evolve into space.
        All the Services depend heavily on space assets to support their
    missions. The Commander-in-Chief of U.S. Space Command (USCINCSPACE) is
    already tasked with the missions of space control and force application
    in support of the joint warfighter. The Air Force will sustain its
    stewardship of space and will fully integrate Air Force space
    capabilities in joint efforts to support the needs of the nation.
        The Air Force recognizes that any further use of space will be
    driven by national policy, international events, threats moving through
    and from space, and threats to U.S. space assets. However, the nation
    will expect the Air Force to be prepared to defend U.S. interests in
    space when necessary.
                               core competencies
        Our core competencies represent the combination of professional
    knowledge, airpower expertise, and technological know-how that, when
    applied, produces superior military capabilities. A particular core
    competency is not necessarily unique to the Air Force. Speed,
    flexibility, and the global nature of its reach and perspective
    distinguish the Air Force's execution of its core competencies.
        The first quarter of the 21st Century will demand that the Joint
    Force Commander field robust, flexible capabilities to cope with a wide
    range of contingencies. Each military service must present to the
    combatant commander a set of relevant and complementary capabilities.
    This presentation allows the Joint Force Commander to consider all
    options available, and to tailor campaign plans to best meet the
    military objectives of the mission.
        The Air Force contribution to the Joint Force Team is graphically
    depicted as an arch. It begins with a foundation of quality people. Air
    Force men and women carry out the core competencies of Air and Space
    Superiority, Global Attack, Rapid Global Mobility, Precision
    Engagement, Information Superiority, and Agile Combat Support. These
    are represented as an arch because they are all mutually supporting and
    provide synergistic effects. These competencies are brought together by
    global awareness and command and control to provide air and space power
    to the Joint Force Team.
        Within the Air Force, core competencies provide a bridge between
    doctrine and the acquisition and programming process. In the context of
    long-range planning, defining future core competencies provides
    strategic focus for the vision. Each core competency illuminates part
    of the strategic vision that will guide decisions and set the course
    toward the Air Force of the 21st Century.
                       air force commitment to innovation
        The key to ensuring today's Air Force core competencies will meet
    the challenge of tomorrow is Innovation. Innovation is part of our
    heritage as airmen. The Air Force was born of a new technology-manned
    powered flight. Innovation will enable the Air Force to evolve from an
    air force to an air and space force on its path toward space.
        The Air Force is committed to a vigorous program of experimenting,
    testing, exercising and evaluating new operational concepts and systems
    for air and space power. It will provide additional emphasis in six
    areas of ongoing activity in Air Force centers of excellence. That will
    be accomplished with a series of focused battle laboratories for space,
    air expeditionary forces, battle management, force protection,
    information warfare and unmanned aerial vehicles.
        These new battle labs will be aimed, both institutionally and
    operationally, at our core competencies. Creating focused battle labs
    will explore new ideas and foster innovative technologies that will
    improve the capabilities of our core competencies.
        The rate of technological change has accelerated and the nation's
    future force must keep pace to maintain its military edge. We must
    reinvigorate the spirit of innovation and creativity that has long been
    the hallmark of the United States Air Force.
    Air and Space Superiority
        Superiority in air and space--control over what moves through air
    and space--delivers a fundamental benefit to the Joint Force. It
    prevents adversaries from interfering with operations of air, space or
    surface forces, and assures freedom of action and movement. The control
    of air and space is a critical enabler for the Joint Force because it
    allows all U.S. forces freedom from attack and freedom to attack. With
    Air and Space Superiority, the Joint Force can dominate enemy
    operations in all dimensions--land, sea, air and space.
        Gaining Air and Space Superiority is not just operationally
    important, it is also a strategic imperative for protecting American
    lives throughout a crisis or conflict. It is the precursor for Dominant
    Maneuver and is also the basis of Full-Dimensional Protection.
    Strategic attack and interdiction--crucial to the outcome of any
    battle--are not possible without air superiority. Effective surface
    maneuver is impossible without it. So is efficient logistics. The
    bottom line is everything on the battlefield is at risk without Air and
    Space Superiority. Moreover, if air dominance is achieved and joint
    forces can operate with impunity throughout the adversary's
    battlespace, the Joint Force Commander will prevail quickly,
    efficiently and decisively.
        Defense against ballistic and cruise missiles is an increasingly
    important element of Air and Space Superiority. The rapidly growing
    theater and global threat posed to Americans and America's interests by
    cruise and ballistic missiles is one of the developments which is
    accelerating warfare along the air-space continuum. The Air Force is
    moving aggressively to counter this threat. Although the global and
    theater missile threats are now addressed separately, over time they
    will merge into a common missile defense architecture, becoming a
    single counter air and space missile defense mission.
    Global Attack
        The ability of the Air Force to attack rapidly anywhere on the
    globe at any time is unique. The military utility of air power,
    particularly its speed, range, and flexibility prompted creation of the
    Air Force as a separate Service following World War II.
        With the advent of the Cold War, Air Force long-range bombers and
    later intercontinental ballistic missiles began their vital roles in
    the nation's first priority of deterring nuclear war. Although nuclear
    weapons no longer play as central a role in America's national security
    strategy as they did during the Cold War, we recognize the dangers
    posed by the efforts of rogue states and others to acquire them. The
    Air Force will sustain its efforts in the nuclear area and strengthen
    its response to the growing risk of proliferation. To this end, the Air
    Force will maintain the bomber and land-based ballistic missile legs of
    the Triad while remaining prepared to undertake further reductions as
    circumstances require. The Air Force will also sustain its commitment
    to support the nuclear requirements of the theater CINC's. Moreover,
    the Air Force remains absolutely determined to maintain its record of
    excellence as the custodian of nuclear weapons by ensuring the safe and
    secure operation of those weapons.
        Air Force short- and long-range attack capabilities continue to
    support the deterrence of conventional warfare by providing versatile,
    responsive combat power able to intervene decisively when necessary.
    The ability of the Air Force to engage globally, using both lethal and
    non-lethal means, is vital to today's national security strategy of
    Engagement and Enlargement. At present, almost a quarter of Air Force
    personnel are deployed overseas at any one time. The Air Force will
    maintain that level of commitment and will employ air and space power
    aggressively to meet the nation's needs for presence and power
    projection. Over time, however, technological change, threats to
    forward bases, asymmetric strategies by adversaries who seek to deny
    entry to U.S. power projection forces, and growing budgetary pressures
    will likely change the way the Air Force carries out its presence and
    power projection missions.
        The Air Force has developed and demonstrated the concept of an Air
    Expeditionary Force (AEF) rapidly deployable from the United States.
    This expeditionary force can be tailored to meet the needs of the Joint
    Force Commander, both for lethal and non-lethal applications, and can
    launch and be ready to fight in less than three days. The Air Force
    will develop new ways of doing mobility, force deployment, protection,
    and sustainability in support of the expeditionary concept.
        Air Force power projection and presence capabilities today are a
    complementary mix of long-range and theater aircraft, based in the
    United States and forward-based. The Air Force has relied heavily in
    the past on the elements of that mix that were permanently forward-
    based overseas. Currently, the Air Force is increasing the role of
    expeditionary forces to maintain its global engagement capability. In
    the future, capabilities based in the continental United States will
    likely become the primary means for crisis response and power
    projection as long-range air and space-based assets increasingly fill
    the requirements of the Global Attack core competency.
    Rapid Global Mobility
        Rapid Global Mobility provides the nation its global reach and
    underpins its role as a global power. The ability to move rapidly to
    any spot on the globe ensures that tomorrow, just as today, the nation
    can respond quickly and decisively to unexpected challenges to its
    interests.
        As the number of forward-deployed forces declines and the need for
    immediate response to overseas events rises, the Air Force's global
    mobility forces will be in great demand by future Joint Force
    Commanders. When an operation must be carried out quickly, airlift and
    aerial refueling will be the key players. Rapid Global Mobility may
    build an air-bridge for joint forces, enable multi-national peace
    efforts, or speed tailored support to forces already on the scene.
        Rapid deployment will remain the future Joint Team's most reliable
    combat force multiplier. Fighter forces paired with precision weapons
    provide formidable capabilities that our mobility fleet can deploy
    worldwide and sustain at high in-theater sortie rates. In other cases,
    such as delivery of humanitarian relief, the rapid delivery of material
    is the focus of effort.
        In the 21st Century, Rapid Global Mobility will be multi-faceted.
    Better use of commercial carriers will be made to increase the
    efficiency of Air Force mobility. The speed with which forces are moved
    will increase, and airlift and air refueling capabilities must be able
    to deliver tailored forces operating with a smaller footprint.
    Precision Engagement
        Joint Vision 2010 defines Precision Engagement as the capability
    ``* * * that enables our forces to locate the objective or target,
    provide responsive command and control, generate the desired effect,
    assess our level of success, and retain the flexibility to re-engage
    with precision when required.'' The Air Force's core competency of
    Precision Engagement is grounded in the Joint definition. Its essence
    lies in the ability to apply selective force against specific targets
    and achieve discrete and discriminant effects. The nation needs the
    precise application of military capability to meet policy objectives.
    The Air Force's Precision Engagement core competency provides the
    nation with reliable precision, an ability to deliver what is needed
    for the desired effect, but with minimal risk and collateral damage.
        Technology has driven each military era's definition of precision.
    In the 21st Century, it will be possible to find, fix or track and
    target anything that moves on the surface of the earth. This emerging
    reality will change the conduct of warfare and the role of air and
    space power. As Air Force members, we have a responsibility to
    understand, develop and advocate new ways that air and space power can
    serve the nation and the Joint Force Commander. We must develop new
    operational concepts that clearly address how air and space power can
    achieve directly or contribute to achieving the full range of joint
    campaign objectives. Our ideas and doctrine must be as creative and
    flexible as the instrument itself.
        When conflict occurs, the Air Force of the 21st Century must be
    able to offer options for the employment of force in measured but
    effective doses. To do so, the Air Force will rely on global awareness
    capabilities to support national decision-making and joint operations
    to determine military objectives and enable precise targeting. Air and
    space forces will then apply power that is no less overwhelming because
    it is also discriminating. Discriminating effects are selective; they
    aim for efficiency and steer away from unwanted collateral damage. The
    Air Force core competency of Precision Engagement will remain a top
    priority in the 21st Century.
    Information Superiority
        In no other area is the pace and extent of technological change as
    great as in the realm of information. The volume of information in
    joint warfare is already growing rapidly. The ability of the future
    Joint Team to achieve dominant battlefield awareness will depend
    heavily on the ability of the Air Force's air- and space-based assets
    to provide global awareness, intelligence, communications, weather and
    navigation support. While Information Superiority is not the Air
    Force's sole domain, it is, and will remain, an Air Force core
    competency. The strategic perspective and the flexibility gained from
    operating in the air-space continuum make airmen uniquely suited for
    information operations.
        Providing Full Spectrum Dominance requires a truly interactive
    common battlespace picture. The Air Force is committed to providing the
    integrated global and theater air, space and surface picture of the
    battlespace to the 21st Century Joint Force Commander. Moreover, its
    future Battle Management/Command and Control (BM/C\2\) systems will
    enable real-time control and execution of all air and space missions.
    The Air Force will also ensure that its information systems will be
    fully interoperable for seamless integrated battlespace management.
        The Air Force will exploit the technological promise of Unmanned
    Aerial Vehicles (UAV's) and explore their potential uses over the full
    range of combat missions. The highest payoff applications in the near-
    term are Intelligence, Surveillance, Reconnaissance (ISR) and
    communications. A dedicated Air Force UAV squadron will focus on
    operating the Predator medium-range surveillance UAV, which also will
    serve as a testbed for developing concepts for operating high altitude,
    long endurance UAV's. In the mid-term, the Air Force expects that
    suppression-of-enemy-air defense (SEAD) missions may be conducted from
    UAV's, while the migration of additional missions to UAV's will depend
    upon technology maturation, affordability and the evolution to other
    forms of warfare.
        Information Operations, and Information Warfare (IW) in particular,
    will grow in importance during the 21st Century. The Air Force will
    aggressively expand its efforts in defensive IW as it continues to
    develop its offensive IW capabilities. The top IW priority is to defend
    our own increasingly information-intensive capabilities. Already
    dedicated and operational in the garrison defense of computer systems,
    the Air Force will continue to invest in defensive IW, and move to
    defend its forward-deployed assets, particularly in BM/C\2\. On the
    offensive side, the Air Force will emphasize operational and tactical
    IW and continue, in conjunction with other Federal agencies, to support
    strategic information operations.
    Agile Combat Support
        Agile Combat Support is recognized as a core competency for its
    central role in enabling air and space power to contribute to the
    objectives of a Joint Force Commander. Effective combat support
    operations allow combat commanders to improve the responsiveness,
    deployability, and sustainability of their forces. The efficiency and
    flexibility of Agile Combat Support will substitute responsiveness for
    massive deployed inventories.
        Combat operations in the 21st Century will require highly
    responsive and agile forces. The Air Force leadership adopted the
    concept of time-definite resupply, a fundamental shift in the way we
    support deployed forces. Resupply of deployed forces will begin upon
    arrival, reducing their initial lift requirement. Time-definite
    delivery will form the basis for all resupply in the theater, thus
    reducing total lift requirement. When combat commanders require an
    item, the system will reach back to the continental United States and
    deliver it where and when it is needed. This reach-back approach will
    make it possible to deploy fewer functions and personnel forward for
    the deployment and sustainment processes. This, in turn, will reduce
    the size and therefore the vulnerability of our forces forward.
    Providing for force protection is not just a matter of airbase
    operability and security, as important as they are. It also involves
    the redesign of our power projection forces to reduce the size of the
    force protection problem.
        To provide Agile Combat Support, information technology must be
    leveraged to improve command and control which is key to accurate and
    timely decisions. As an example, the ability to know the location of
    critical parts, no matter which Service or agency holds the parts, will
    allow enormous gains in efficiency. The Air Force depot system will
    continue to reduce cycle times and streamline its infrastructure.
    Outsourcing and privatization, as well as other Services' capabilities,
    will be major tools in helping to move the materiel required for
    deployed forces from ``factory to flightline.'' These concepts will be
    pursued, first in the context of the Air Expeditionary Force and, once
    matured, for the 21st Century force.
        Agile Combat Support's essential contribution to air and space
    combat capability complements the Joint designation of Focused
    Logistics as an operational concept, which is indispensable to
    achieving Full Spectrum Dominance.
                                air force people
        People are at the heart of the Air Force's military capability, and
    people will continue to be the most important element of the Air
    Force's success in capitalizing on change. The Air Force of tomorrow
    and beyond must encourage individuals to be comfortable with
    uncertainty and willing to make decisions with less than perfect
    information. Accordingly, our people must understand the doctrine,
    culture and competencies of the Air Force as a whole--in addition to
    mastering their own specialties. Emphasis on creating an Air Force
    environment that fosters responsiveness and innovation, and rewards
    adaptability and agility will be crucial as we move into the early part
    of the next century. Many things may change, but the Air Force of the
    first quarter of the 21st Century will continue to place a high
    priority on maintaining the high quality of its men and women, and on
    providing quality of life for Air Force members and their families.
    The Total Force of the Future
        One sign of change in the Air Force will be how the definition of
    the Air Force operator develops in the future. At its birth, all Air
    Force operators wore wings. Future definitions of operators will change
    as the Air Force changes. Moreover, all combat operations in the 21st
    Century will depend on real-time control and employment of information,
    further broadening the definition of the future operator. In the
    future, any military or civilian member who is experienced in the
    employment and doctrine of air and space power will be considered an
    operator.
        The composition of the future Total Force will change as the nature
    of air and space power changes. As a result, the Air Force is committed
    to outsourcing and privatizing many functions now performed internally.
    The force will be smaller. Non-operational support functions will
    increasingly be performed by Air Force civilians or contractors. Most
    uniformed personnel will be operators and a greater percentage will be
    from the Reserve components.
        To prepare for the changes ahead, the Air Force has reviewed,
    generally reaffirmed and initiated some adjustments to its career
    development patterns for its officers, enlisted and civilian force. To
    ensure its future leaders all share a full and common understanding of
    air and space operations, the Air Force decided to create a new Air and
    Space Basic Course. This course will focus on the history, doctrine,
    strategy and operational aspects of air and space power. The desired
    outcome is for each new officer and selected senior NCO's and civilians
    to have a thorough knowledge of the day-to-day capabilities of combined
    air and space operations. Most officer graduates from this course will
    go directly to operational jobs as their first assignment before
    performing their functional specialty.
        The Air Force will seek new opportunities to capitalize on the
    synergy of the Air National Guard and Air Force Reserve forces in an
    integrated Total Force. In its effort to maximize and improve
    operational effectiveness and efficiency, the Air Force will explore
    additional opportunities for new Guard and Reserve missions as well as
    expanding the use of Individual Mobilization Augmentees (IMA's). The
    Air Force's ability to rely upon and integrate its Reserve components
    is already a fundamental strength, one that will continue to play a
    major role for the nation in the next century.
    A Force Grounded in Core Values
        The ideals embodied in the Air Force core values are: Integrity
    first, service before self, and excellence in all we do.
        They are universally prescriptive. Despite the uncertainty of the
    future, the Air Force can say with certainty that today and tomorrow,
    it must live up to these ideals or it cannot live up to its
    responsibilities. Our core values are fundamental and timeless in
    nature, and reach across the entire force. Our core values are values
    for service, values for life, and must be reflected in everything that
    we do.
        A values-based Air Force is characterized by cohesive units, manned
    with people who exhibit loyalty, who want to belong, and who act in a
    manner consistent with Air Force core values, even under conditions of
    high stress. To ensure this values-based Air Force, three elements--
    education, leadership and accountability--provide a framework to
    establish the strongest imprint of shared Air Force core values. In the
    Air Force of tomorrow, as in the Air Force of today, these stated and
    practiced values must be identical.
        The Air Force will continue to reinforce its core values in all
    aspects of its education and training. The goal is to provide one
    hundred percent of the Total Force with core values education and
    training continually throughout a career. The Air and Space Basic
    Course will also ensure that the Air Force's future leaders, military
    and civilian, have a common, shared foundation in core values,
    doctrine, and operations.
                    key elements of air force infrastructure
        Defining our future core competencies tells us what business the
    Air Force will be in as it enters the 21st Century. But the Air Force
    must change the way it does business if it is to meet the future
    demands for air and space power. Continuing pressure on resources will
    make increased efficiency and reduced infrastructure costs necessary
    for success.
        The Air Force has long recognized the importance of responsible
    stewardship of taxpayer dollars and will strive to achieve the highest
    standards for efficiency. Ensuring the nation has capabilities to hedge
    against unforeseen and multiple threats across the full spectrum of
    conflict puts a premium on efficiency. The real penalty for
    inefficiency is not just wasted dollars, but unmet demand for military
    capabilities.
        Our warfighting activities will be designed for effectiveness and
    our support activities will be designed for efficiency. All support
    activities will be run more like businesses, using the ``best
    practices'' gleaned from top performers. Air Force personnel will focus
    on preparing for and conducting military operations--their competence--
    while support activities not deployed for combat will be performed by a
    robust civilian and competitive private sector. The Air Force is
    committed to the organizational and cultural change to make this vision
    a reality.
        The Air Force will increase the efficiency of its modernization
    process through the focused exploitation of emerging information
    technologies and by accelerating its ongoing acquisition reform
    program. It also will strengthen the concept of integrated weapon
    system management by clarifying relationships between single-product
    managers, their customers and the depot and contracted activities that
    support them.
        The Air Force is committed to the aggressive reduction of
    infrastructure costs. The role of commercial industry will be maximized
    to ensure ``best-value practices'' throughout the development and
    production process. These activities--research, development, testing
    and evaluation (RDT&E), and sustainment--will be consolidated into
    Centers of Excellence encompassing mission areas directly related to
    Air Force core competencies. The Air Force will also explore teaming
    with the other services to form Joint Centers of Excellence for RDT&E.
        Inefficiency drains resources needed for the capabilities the
    nation needs from its future joint force team. The overlap and
    redundancy of test and evaluation facilities must be reduced through
    streamlining, integration, outsourcing and privatization. New
    technologies, particularly in testing through modeling and simulation,
    must be exploited to reduce costs and improve effectiveness.
        The Air Force's determination to become more efficient will also
    affect the composition of its future workforce. Its commitment to an
    aggressive program of civilianizing many combat support functions, as
    well as outsourcing and privatization, will push more support functions
    into the civilian workforce and, in many cases, into the private
    sector.
        The Air Force believes that one of its most important attributes is
    a sense of community among its members and their families. Far more
    than simple ``pride in the team,'' this factor builds the motivational
    identity and commitment that underlie our core values, career
    decisions, and combat capability. The excellence of our installations
    and Quality of Life standards contribute to this, and to the general
    well-being of the members of the Air Force family. The Air Force is
    rededicating itself to both maintaining this sense of community and
    finding new and more efficient ways of providing it.
             looking back to the present to plan for a new century
        This document sets out a new Air Force strategic vision for the
    21st Century. It provides a vision of the future and a path back to the
    present to guide today's planners. Following this path requires a
    revitalized and institutionalized long-range planning process.
        The Long-Range Plan will identify those initial steps and
    transition decisions which are necessary to reach the goals outlined in
    this strategic vision document. Transition decisions are critical to
    formulating meaningful divestment and investment strategies, to making
    transitions from sunset to sunrise systems and capabilities, and to
    providing the milestones and feedback mechanisms that ensure
    accountability. The Long-Range Plan will further guide the Air Force's
    other planning and resource allocation processes.
                                 final thoughts
        Global Reach--Global Power prepared the Air Force to deal with the
    challenges of the transition era following the Cold War. Global
    Engagement: A Vision for the 21st Century Air Force charts a course
    that will take the Service beyond this transitional period and into the
    future. It is a future in which dramatic changes wrought by technology
    will be the norm. It is also a future in which the core values of
    service, integrity and excellence will continue to sustain the men and
    women of the Air Force. Most importantly, the Air Force's devotion to
    air and space power will continue to provide the strategic perspective
    and rapid response the nation will demand as it enters the 21st
    Century.
        Our Vision Statement remains: Air Force people building the world's
    most respected air and space force * * * global power and reach for
    America.

        General Fogleman. And, of course, we are prepared to
    address the details of this study during this hearing or in the
    near future. But I think the important consideration is not the
    exact numbers of specific systems, but whether the
    contributions of each piece were adequately considered and how
    they shape the way that we are going to provide for capability
    for America in the future.

                          Restructuring and downsizing

        Since the end of the cold war, we have focused on
    restructuring and downsizing. We, in the Air Force, we took our
    cuts early. We invested in readiness, and we started a time-
    phased modernization program. Just a real short review.
        Since 1990, we have reduced from 139 to 87 major
    installations. Our fighter wings have gone from 36 to 20.
    During the QDR, we took one of our active fighter wings and
    transferred it to the Guard and Reserve--just what we said we
    would do as we looked at how we went into the future.
        In our bomber force, since the early 1990's, we have gone
    from 301 to 138. In the ICBM's, we are programmed to go from
    1,000 to 550.
        In the end, Mr. Chairman, we are interested in combat
    capability. We are not interested in numbers. We are not
    interested in end strength. There is a difference between end
    strength and combat capability. And there is a difference
    between end strength and combat forces. And so we look forward
    to addressing any questions that people may have on end
    strength. We think that we have done what is smart, what is
    reflected is a maturation of the BUR process and the QDR focus.
        We have shaped forces carefully to balance our force
    structure, our modernization, and our readiness. Fifty years
    ago, in the immediate aftermath of the Second World War, with
    the experiences of that war fresh in our minds, your
    predecessors created the U.S. Air Force. This was a force that
    was forged in fire. It was formed in the crucible of combat. It
    has become a great source of pride for the entire Nation.
        The Berlin airlift, the Korean war, the cold war, all of
    those troops, sitting nuclear and air defense alert, manning
    radar sites out there, Vietnam, Libya, Grenada, Panama, Desert
    Storm, and Bosnia, throughout this whole thing, we have always
    tried to stay focused on what the national security objectives
    were. Our priorities in this budget continue to focus on that--
    that is, people, modernization, and a vision that we believe
    prepares us for the future, that will ensure that the U.S. Air
    Force remains a key part of the joint team, and continues to be
    the pride of the Nation and the envy of the world.
        And so I thank you again for allowing me to be here on
    behalf of the men and women of that Air Force.
        Senator Stevens. Well, thank you very much, General.
        I want to, on the record, thank you for loaning us your
    airplane when we went to North Korea. Flying on the Speckled
    Trout is an experience in the test bed of aviation. It was an
    interesting trip, and we have discussed that trip with the
    Secretary and its implication to our defense.
        General and Madam Secretary, on our visits to Italy and to
    Kuwait and to Saudi Arabia, we did find an extreme level of
    tempo and really had the feeling of an overdeployment. I would
    urge that as you review the QDR's implementation we find some
    way to assure that the CINC's, the regional commanders, have
    the same type of advice that you all have with General Stringer
    sitting behind you. I am sure he tells you what your allocation
    is, in terms of money, and puts controls on the expenditures.
    But we did not find that in the regions.
        And we are talking to the Armed Services Committee about
    that, and would like to visit with you and the other chiefs and
    secretaries about it. But it does seem to us that one of the
    missing links, right now, is some sort of fiscal awareness on
    the part of the activities in the regions under the command of
    the CINC's.
        I am just going to make that statement today and hope that
    my colleagues will be willing to sit down and have some
    discussions before we take any action. We would not want to
    take any action that would be counterproductive, but there
    certainly ought to be some way to put some restraint on CINC's
    from obligating us to spend money before it is really reviewed
    by you and by us in terms of its long-range implications.
        One of the QDR's recommendations is to reduce the F-22 buy,
    as you said, from 438 to 339. Now, I have a series of questions
    about that.
        Will we still be able to meet the Air Force requirements
    into the future? Will that reduction mean that we will have to
    buy actually more of the Joint Strike fighters? Do we have an
    impact of what that reduction will mean in terms of unit cost
    increase as we reduce the buy? We normally see an increase in
    cost. Has that been estimated? And can you tell us why the fly-
    away unit costs on the first two production aircraft has
    increased almost more than twofold?
        I mean we are looking at an escalation of costs here that I
    want to make sure that we have taken into account when we deal
    with the F-22. Would either of you, or both of you, like to
    address that issue?

                                  F-22 program

        General Fogleman. If I could, sir, I will take the question
    first.
        Relative to will we be able to do the mission with 339
    versus 438, we will be able to do the mission, but we will do
    it with higher risk. We were not replacing our air superiority
    fighters on a 1-for-1 basis at 438; 438 was far fewer. It did
    not include the replacement for the aircraft that Senator Bond
    just talked about, the A and B models that we have out there.
    So we already had a certain amount of risk. But what we are
    doing by going down to 339 is saying that we are going to
    increase the level of risk to do this job.
        Now, given everything that we know about this aircraft and
    what we are seeing as it comes along in the process, we have a
    fairly high degree of confidence that this is truly a
    revolutionary airplane. And we have resisted those who have put
    out this siren call that says the way you ought to save money
    on this airplane is to take capability out of it. We think the
    way you ought to save money on this airplane is you ought to
    take advantage of modern manufacturing technology, you ought to
    take advantage of the reforms that we have seen in acquisition.
    And that makes a lot more sense to us as we go down the road.
        To answer your second question relative to have there been
    any credible analysis done in terms of what this will do to the
    cost per unit, I would have to tell you that the answer is no.
    We have had some rough order of magnitude kind of estimates on
    this. But, clearly, the Air Force restructured the F-22 program
    earlier this year.
        And we put together a program based on a joint estimating
    team that took advantage of extending the engineering,
    manufacturing, and development phase. And then, after looking
    at that, we looked at how we could do things differently as a
    result of some initiatives that have appeared within the last
    year or so having to do with lean manufacturing, et cetera, to
    keep the cost of production down.
        So, I think it is those combinations of things that we
    thought we had a pretty good program when we had the 438, and
    we had negotiated a MOU with the folks at Lockheed and Pratt
    and Whitney. Clearly, as we change this--and we understand the
    rationale for the change in the QDR--as we do that, we need to
    then go back and look and see what this is going to do.
        My fear on this is that we are taking a well managed,
    executable program and starting a self-fulfilling prophesy on
    all those who have been prophets of doom on this thing. They
    are going to take a program that is well along its way, needed
    by this country, and they are going to turn it into another B-2
    as they start to reduce the numbers, and the cost per unit is
    going to go up. Because there is a set cost associated with the
    R&D that goes into this before you get the first airplane.
        And I think that is the answer to the question on why the
    first two production models of this thing cost so much. It is
    because, as we slow it down, you run the costs up.
        Senator Stevens. Secretary Widnall.
        Dr. Widnall. Well, I could adjust one or two things to
    that. Obviously, we need--the QDR recommended several changes
    in the F-22 program, not just the numbers, but having to do
    with the profile. So clearly we have some work to do in order
    to assess the impact. I certainly would join General Fogleman
    in making the point that the early production aircraft--you
    know, obviously, those are almost--those are really initial
    flight test articles, and you learn a lot at that stage.
        Senator Stevens. Could you pull that microphone closer to
    you? Some people back in the back are indicating they are not
    hearing you.

                             F-22 production costs

        Dr. Widnall. So I think we, as General Fogleman said, I
    think we believe the program is well managed and that we are on
    track. As I looked at the numbers in the QDR, going from, say,
    you know, the 400 to the 338, it is in the nature of aircraft
    procurement that if you run the numbers based on the program at
    that point, that if you cut 25 percent of the airframes, you
    only save 8 percent of the money. So clearly it is not a linear
    relationship. So we do expect that the unit costs will go up.
        Now, we have been in contact with industry, and I think
    they are prepared to make the same kind of commitment to
    streamlining, working with us, management reforms, on the shop
    floor improvements in manufacturing, so that they can meet
    aggressive cost-reduction targets. And we expect that they are
    committed to that and will do that.
        Senator Stevens. Well, that was to be my next question. Can
    we find any way to keep some of these escalating costs down?
    And are we going to change the avionics or change any of the
    software because of this increased cost? I, for one, do not
    want to see the F-22 become a lesser airplane because of the
    QDR. It may cost more because of the lower buy, but it ought
    not to be stripped. Are there plans to reduce its avionics or
    any of the software or any of the systems?
        Dr. Widnall. No; not at all. I mean really, the most
    important thing at this point is the program stability. This
    aircraft is technically successful. It will have a great
    engine. It will have great avionics. It will have a great
    airframe. So I do not think that we intend to make changes in
    that.
        We will continue working with the contractor to manage the
    production costs. And we fully expect them to meet their
    commitment to aggressive cost-reduction targets.
        Senator Stevens. I am out of time. We are going to go on
    the early bird rule. I will now turn to my colleague, Senator
    Inouye.
        Senator Inouye. Thank you very much, Mr. Chairman.
        The QDR calls for the reduction of our Reserve defense
    squadrons from 10 to 4. What is the rationale for such a
    drastic reduction?

                                Force conversion

        General Fogleman. Sir, it was driven primarily by two
    things. As we approached the QDR, we were trying to determine
    if there were portions of the force structure that had less
    utility than others. And so when we were looking at the OPTEMPO
    and the PERSTEMPO and the mission of the dedicated air defense
    squadrons, it was clear that these squadrons, while they have a
    mission associated with our air sovereignty, associated with
    drug interdiction and these types of things, that on the main,
    they were not as critical to the overall force mix as general
    purpose forces.
        And so the decision was made to take six of these units and
    convert them to general purpose forces. They would become the
    backfill for the active general purpose wing that we would take
    down, and we would retain four of these air defense units--sort
    of--taking the approach of looking at four corners. And the
    assessment of the CINCNORAD was that, with these four squadrons
    and with some assistance from the general purpose forces, he
    could continue to conduct his air sovereignty mission, and we
    could continue to support the war on drugs.
        Senator Inouye. When will the announcement be made on the
    reclassification of missions or the elimination of units for
    the six that are going to be changed?
        General Fogleman. Sir, I believe that, again, as the
    process is to unfold, in the ``Quadrennial Defense Review,''
    now that the--once the hearings are completed this afternoon
    and tomorrow, then the next step in this process will be to
    have the DOD staff issue defense planning guidance. And when
    that defense planning guidance document comes out from the OSD
    staff, it should have in it the detailed instructions to the
    services as to how they are supposed to go execute that.
        So I would--and we were told that we should see that within
    a couple of weeks. And then that will become part of the POM
    process that goes through the budget process, and all that will
    eventually bubble up in the December 1997 timeframe, whenever
    the national defense panel rolls in with its recommendations,
    and when Secretary Cohen's reform panel has an impact. And so I
    would anticipate that this will become open information with
    the submission of the 1999 budget.
        Now, I may be wrong on that, but that is the way I
    understand the game plan to be.
        Senator Inouye. If I could be a bit parochial, one of the
    squadrons is in Hawaii. Can you give us any indication as to
    what will happen to it?
        General Fogleman. Sir, I would be fairly confident that the
    squadron in Hawaii, one, will not go away because of its
    strategic location, and I quite frankly, cannot remember if it
    is one of the four squadrons that stays in the air defense
    business or whether it goes general purpose. But--and I am not
    trying to be evasive. I am generally a pretty straight shooter,
    and if I could remember the information, I would tell you, sir.

                                  C-17 basing

        Senator Inouye. On another subject, whenever the chairman
    and I travel to our respective States one question is always
    asked: Why can't we have airlift or C-17's based in Alaska and
    Hawaii? Because, for example, in the case of Hawaii, the
    marines and the Army would like to use some of the facilities
    in Alaska for training, because they have the best facilities.
    But the costs of bringing a deadhead aircraft all the way to
    Hawaii is just outside their budget.
        So the cost factor is a very serious one. Madam Secretary
    or General, do you have any response to that?
        General Fogleman. Sir, I believe that really has to do with
    just the tradeoff between the finite number of C-17's we are
    getting, which is 120, and the attempt to bed them down in the
    most efficient manner that we can, looking at long-term life
    cycle costs.
        I have talked with General Kross, CINCTRANS, and the
    commander of our Air Mobility Command, about some kind of a
    scheme where we may be able to get the efficiencies of the
    consolidated beddown--that is, we have tried to build an east
    coast location, Charleston, a west coast location, McCord Air
    Force Base in Washington, but then we need to look if we can
    gain some efficiencies, maybe of not having them permanently
    assigned there, but some kind of a detachment that would marry
    up with the needs and desires of the other services in joint
    exercises, et cetera.
        Senator Inouye. One of the matters that very few Americans
    are cognizant of is that Alaska is nearer to Bosnia than any
    other location in the Continental United States, and for that
    matter, the same thing with Hawaii to Asia. Taking that factor
    into consideration, do you not think it might make sense to
    have, as you say, a detachment or some permanent assignment of
    C-17 aircraft in Alaska and Hawaii?
        General Fogleman. Sir, again, that is one of the things I
    have asked General Kross to look at. And while I thought I was
    very well aware of the geography involved in that, it was one
    of our previous commanders in Alaska, a man who just recently
    died, Dave Nichols, who dramatically demonstrated that when he
    took a fighter deployment and was able to deploy it to Europe
    in a day, flying out of northern Alaska. But the issue, sir,
    really comes down to not just where the aircraft are located,
    but where the bulk of the forces are that have to be picked up
    to be taken somewhere.
        So if we do not have the right balance, then we end up
    dead-heading these aircraft back to the lower 48 and then
    picking up and moving from there. So there is a combination
    that we need to work, sir.
        Senator Inouye. Your prepared testimony today does not say
    much about recruiting. Are you concerned that with the QDR and
    other factors, that recruiting and retention may become
    exceedingly difficult?

                               Recruiting update

        General Fogleman. Sir, I believe, first of all, right now
    recruiting is difficult. As you know, the U.S. Air Force is the
    only service that spends zero dollars on TV advertising. We
    have no TV advertising budget at all. The other services have a
    TV advertising budget. We do get some benefit from a
    centralized DOD advertising budget. But what my recruiters are
    telling me, and I visit with them virtually every time I go out
    to a major metropolitan area, is that they are beginning to be
    squeezed by this lack of visibility, if you will, out there. We
    depend upon public service radio and television to tell our
    story.
        In spite of that, we have been able--we were last year,
    which was a very difficult recruiting year, and this year--we
    were able to make our goal. Some of that comes about as a
    result of some plus-ups that this committee was part of. You
    did increase the number of recruiters that we had. You gave us
    some money that allows us to do things in a smarter way for our
    recruiters, to share information, et cetera. But, yes, sir, we
    have a concern about recruiting. But, for us, it has not yet
    become a critical issue.
        The issue of retention is one, as I mentioned. We have seen
    a downturn in our first-term reenlistments. So we have done a
    lot of survey work to try and determine what is causing that.
    But more--the biggest problem we have with retention is in our
    rated force. And while today it has manifest itself primarily
    in the pilot force, we also see that we have a problem with our
    navigators. We also have a very large enlisted force.
        And so one of the things that the Air Force is doing is
    taking and relooking its whole rated management scheme. You
    know, an AWACS aircraft without weapons controllers in the back
    is not of much value. And so while in the past we have always
    focused on the people in the front end of the airplane as our
    rated management issue, we have now started to examine what it
    means to look at this entire crew on the aircraft.
        So our biggest concern in the retention area is in the
    rated management area.
        Senator Inouye. Will this review, with the call for further
    drawdown and reduction and possible BRAC, will that have an
    impact upon retention?

                                   Retention

        General Fogleman. Yes, sir. Clearly--and it is one of my
    biggest concerns--one of the things I am trying to do in a
    proactive way as the Chief of Staff--and the Secretary and I
    have talked about this--is trying to share the information with
    the troops in the field as fast as we can. Because the biggest
    thing that causes concern is instability, is turbulence.
        Our troops are magnificent. If you tell them what is going
    to happen, they can live with that. They will make decisions,
    personal and professional, and they can live with that. But
    what is going to happen with this QDR is we have now submitted
    it to the Hill. So the debate will begin on the Hill. The
    debate will begin with the national defense panel and defense
    intellectuals. And as these debates swirl and different
    proposals pop up, there will be headlines in the professional
    journals. And all that will be there to try and--it will end up
    having a very destabilizing impact on the force.
        We saw it during the last drawdown, where people got this
    idea that maybe we were going out of business. And so why
    should I stay with an outfit that is going to go out of
    business?
        So we have got a real challenge, to try and get the
    information out there to the troops about what career fields
    will be impacted by outsourcing and privatization. Today, I
    have in my briefcase a product that we think is about 80
    percent accurate, that I hope to be able to put out in the
    field within the next 2 weeks, so that people will be able to
    see and be able to start making decisions early on.
        Senator Inouye. Thank you very much.
        Thank you, Mr. Chairman.
        Senator Stevens. Senator Specter.
        Senator Specter. Thank you very much, Mr. Chairman.
        I join my colleagues in congratulating the Air Force on 50
    years of outstanding achievement, and I note my own
    participation. I volunteered for Air Force Reserve officer
    training in college and served 2 years in the Office of Special
    Investigation.
        I have grave concerns about what happened at Khobar Towers.
    And since I have not been able to get many responses, I am
    going to use my time today to move on that subject. The only
    time a Senator has an opportunity on oversight of responses is
    when we have the appropriations process or when we have an
    oversight hearing. And in my capacity last year as chairman of
    the Senate Intelligence Committee, I made considerable efforts
    in writing to you, Secretary Widnall, without responses, on a
    series of the five letters which I will ask to be put in the
    record. And I have noted your comments, General Fogleman,
    earlier in testimony this year. And before asking the
    questions, I want to review the facts.
        [The information follows:]
                                  United States Senate,
                                Committee on Veterans' Affairs,
                                        Washington, DC, April 25, 1997.
    Honorable Sheila Widnall,
    Secretary, Department of the Air Force,
    Washington, DC.
        Dear Secretary Widnall: I have noted repeated press accounts on an
    Air Force report on the responsibility, if any, for the terrorist
    attack at Dhahran on June 25, 1996.
        As you know, I have made repeated requests for copies of all DOD,
    including Air Force, reports on this incident.
        According to press reports, Secretary of Defense William Cohen is
    personally reviewing this matter.
        I would very much appreciate it if you would promptly provide to me
    a copy of any report on assessing responsibility for the Dhahran
    terrorist attack of June 25, 1996.
                Sincerely,
                                                         Arlen Specter.
                                     ______

                                  United States Senate,
                              Select Committee on Intelligence,
                                     Washington, DC, December 12, 1996.
    Honorable Sheila E. Widnall,
    Secretary of the Air Force, The Pentagon,
    Washington, DC.
        Dear Secretary Widnall: Please reference my letters to you of
    October 17, November 5, and December 5, 1996.
        According to The New York Times today, selected portions of the Air
    Force report on Dhahran have already been made available to the news
    media by representatives of the Air Force who are favorably disposed to
    the Air Force report.
        I would like your prompt advice as to whether that news report is
    accurate.
        In any event, this is a formal demand that the report be turned
    over to the Intelligence Committee forthwith.
                Sincerely,
                                                         Arlen Specter.
                                     ______

                                  United States Senate,
                              Select Committee on Intelligence,
                                      Washington, DC, December 5, 1996.
    Honorable Sheila E. Widnall,
    Secretary of the Air Force, The Pentagon,
    Washington, DC.
        Dear Secretary Widnall: I want you to know that I consider the
    letter from Brig. Gen. Lansford E. Trapp, Jr., of November 6, 1996,
    totally insufficient in response to the letter from Senator Kerrey and
    me to you dated October 17, 1996, and the copy of the letter which I
    sent to you dated November 5, 1996, with the original going to
    Secretary Perry.
                Sincerely,
                                                         Arlen Specter.
                                     ______

                                   Department of the Air Force,
                                      Washington, DC, November 6, 1996.
    Honorable Arlen Specter,
    Chairman, Select Committee on Intelligence,
    United States Senate, Washington, DC.
        Dear Mr. Chairman: This is in response to your joint letter of
    October 17, 1996, regarding what you describe as a document concerning
    force protection in Southwest Asia that was referred to in a Washington
    Post article on October 10, 1996.
        Contrary to the implications in the article, the Air Force has not
    issued a report entitled ``Force Protection in Southwest Asia, An Air
    Force Perspective.'' Rather, a preliminary briefing was prepared by the
    Office of the Deputy Chief of Staff, Plans and Operations, for internal
    use on the consideration and evaluation of the protection of our forces
    against terrorism following the bombing of Khobar Towers in Saudi
    Arabia. That preliminary briefing has now been given to Lieutenant
    General Record for his use in reviewing this matter and considering
    issues of accountability. When Lieutenant General Record's process is
    complete, we will be glad to provide the Committee with the results of
    his review and related official documents.
        A similar letter is being provided to Vice Chairman Kerrey who
    joined you in your letter.
                Sincerely,
                                        Lansford E. Trapp, Jr.,
                Brigadier General, USAF, Director, Legislative Liaison.
                                     ______

                                  United States Senate,
                              Select Committee on Intelligence,
                                      Washington, DC, November 5, 1996.
    Hon. William J. Perry,
    Secretary of Defense, Department of Defense,
    Washington, DC.
        Dear Secretary Perry: This letter constitutes a formal complaint on
    the obstruction by you, others and the Department of Defense on the
    inquiry by the Intelligence Committee to determine whether there was an
    intelligence failure relating to the terrorist attack in Dhahran on
    June 25, 1996 on the following:
        Prohibiting key witnesses from being interviewed by this Committee
    (Brigadier General Terryl Schwalier, Colonel Gary Boyle, Lt. Colonel
    James Traister).
        Prohibiting General Downing from testifying before this Committee
    except on your terms in closed session.
        Refusing to give this Committee access to an Air Force report
    which, as reported in the Washington Post on October 10, 1996,
    contradicted a major conclusion of the Downing report.
        In the Intelligence Committee hearing on September 19, 1996, I
    emphasized the gross impropriety on the part of Secretary Widnall in
    ordering the specified Air Force personnel not to speak to this
    Committee and asked for a response. None has been received.
        On October 17, 1996, I personally raised my strong objection to
    Acting Secretary Hale about his refusal to provide this Committee with
    a copy of a report which was the subject of the extensive Washington
    Post story of October 10, 1996.
        Comity between the Executive and Legislative branches is
    indispensable if our system of government is to work. In any judgment,
    there has been no comity between you/Department of Defense and this
    Committee on this important subject. In the absence of such comity, the
    sole recourse of the Senate or a Senator is through the confirmation
    and appropriations processes, which will be pursued.
        I am sending a copy of this letter to the chain of command involved
    in these decisions so they will know my views on this subject because
    they, as well as you, are individually responsible.
                Sincerely,
                                                         Arlen Specter.
                                     ______

                                  United States Senate,
                              Select Committee on Intelligence,
                                      Washington, DC, October 17, 1996.
    Honorable Sheila E. Widnall,
    Secretary of the Air Force, The Pentagon,
    Washington, DC.
        Dear Secretary Widnall: As you know, the Committee is reviewing the
    adequacy of intelligence support and its use by consumers in the
    context of the recent terrorism incidents affecting your forces in
    Saudi Arabia. Recently it came to our attention that the Air Force
    completed a report entitled ``Force Protection in Southwest Asia, An
    Air Force Perspective,'' dated 17 September 1996. This report was
    quoted in Washington Post article appearing October 10, 1996.
        Since we have been unable to obtain a copy of the report through
    your legislative liaison office, we are forwarding our request for a
    copy of this report directly to you and ask for your assistance. Given
    the widespread coverage of the report in the media and its importance
    to our ongoing oversight responsibilities, there can be little
    justification for not promptly providing a copy to the Committee.
                Sincerely,
                                       Arlen Specter,
                                                              Chairman.
                                       J. Robert Kerrey,
                                                         Vice Chairman.

        Senator Specter. On June 25 of last year, a truck bomb went
    up against a perimeter fence, 80 feet from Khobar Towers,
    killing 19 airmen and wounding more than 400 others. According
    to Secretary of Defense Perry, that bomb was 3,000 to 5,000
    tons. On a Defense Intelligence Agency report issued 8 days
    earlier, there was an alert as to Khobar Towers, with the
    language specifically--a pattern appears to be developing that
    warrants improved security efforts--and a big picture of Khobar
    Towers on the front.
        There had been, in January, an OSI report, which emphasized
    the particular vulnerability of perimeter security, given the
    proximity of the outside fence to many of the buildings.
    Secretary Perry said that it was a surprise to have a bomb
    3,000 to 5,000 pounds. And you, General Fogleman, said that
    this was, ``a significantly more powerful level.'' I believe
    that not to be the case, based upon the attack by the
    terrorists in Beirut on October 23, 1983, killing 283 marines,
    where the Long Commission found a bomb of some 12,000 pounds.
    Now, that is the Mideast. And that is not unexpected.
        You have Secretary Perry articulating a series of standards
    as to what the Secretary should do. And when I posed those to
    General Downing after he filed his report, he found the
    Secretary derelict in two of the Secretary's own standards.
    First, the Secretary said establishing policies and guidance
    for our commanders, including the policy and guidance for force
    protection. General Downing said that was not done. And the
    second standard by Secretary Perry himself, organizing and
    structuring the Department of Defense in such a way that force
    protection is optimal. And again, General Downing said that was
    not done.
        General Shalikashvili was in the area a few weeks before
    the Khobar Tower attack. In the visit, he saw Khobar Towers and
    made no effort to take a look at any terrorist problem,
    notwithstanding two warnings from the OSI in January and
    notwithstanding the fact that there had been a car bombing in
    Riyadh, killing four Americans on November 13, 1995.
        General Peay, four-star General Peay, testified before a
    Senate committee last July. And when asked about the proximity
    of the fence being close--it was estimated at that time at 100
    feet--asked if it should have been farther, said, I don't know,
    I just don't know.
        The Downing report came to the conclusion that General
    Schwalier was responsible in a number of particulars. And I
    will not take the time to read them now. And I really am
    sympathetic to the report, which singles out Brigadier General
    Schwalier without holding accountable General Peay, General
    Shalikashvili, and the Secretary of Defense.
        But this report, a voluminous report, which is more than
    General Downing's report--it is the Secretary's report to the
    President--concluded that other vulnerabilities were not
    addressed adequately. Intelligence indicated that Khobar Towers
    was a potential terrorist target, and incidents from April
    through June 1996 reflected possible surveillance of the
    facility.
        General Fogleman, when you testified on February 25 of this
    year, you said: ``It is criminal for us to try to hold somebody
    accountable or to discipline somebody for political correctness
    or because the media has created a frenzy based on partial
    information and not the full facts.''
        Now, obviously there are very severe time limitations here
    today. I have told the chairman earlier this morning that I
    would be questioning in this area. And with that setting, I
    want to--I do ask these facts.
        Secretary Widnall, Senator Kerry, in his capacity as vice
    chairman of the Senate Intelligence Committee, and I, wrote to
    you last October 17, and received a response from a
    subordinate, dated November 6. I wrote back promptly in
    November, saying that that response was insufficient. And I
    have since written to you on December 5, December 7, and April
    25 of this year.
        And let me give you a series of questions which I would
    like responses to. This Defense Appropriations Subcommittee
    must obviously evaluate this $61 billion request, and the
    competency of this Air Force Department to administer this very
    important duty. And my question to you, No. 1--and I am going
    to go on to some others before asking for a response here--is
    do not you have a duty to respond so that we can have an
    adequate basis for evaluating your competency and whether we
    ought to give you $61.3 billion?
        The second question that I have relates to stories in the
    New York Times--and I have the documents here--where they have
    disclosed on two occasions that the Air Force released copies,
    or portions of the report, to try to justify the Air Force
    position that no one ought to be held accountable. And my
    second question is: How is it that the New York Times has a
    copy of your reports when I cannot get a copy, Senator Kerry
    cannot get a copy, the Intelligence Committee cannot get a
    copy, or even a response for the letters?
        And the questions that I have for you, General Fogleman,
    are in more of a military line, although obviously the
    Secretary is free to comment. Was not it dereliction of duty
    when no action was taken to move that fence beyond 100 feet? I
    have paced it myself at 80 feet, and I went to the scene and
    talked to people.
        The second question for you, General Fogleman: Was
    Secretary Perry derelict according to his own standards? Was
    General Shalikashvili derelict? Was General Peay derelict? Was
    General Schwalier derelict?
        And when you raise the question in your testimony that it
    is criminal for us to try to hold somebody accountable or to
    discipline somebody for political correctness or because the
    media has created a frenzy based on partial information and not
    the full facts, why do you characterize or challenge motives on
    grounds of political correctness? There are plenty of critics
    out there, one of which is me. And I have spoken up on it at
    considerable length. And I think I have the facts. I have been
    there and I have talked to people, and I have read a lot of
    documents.
        My question is: Why is it necessary to challenge critics,
    including me, on grounds of political correctness? And why do
    you say that the media has created a frenzy based on partial
    information and not the full facts, where you have this
    voluminous Downing report? I know you said you read it. I saw
    your testimony on the record report. You have the benefit of
    that. I do not.
        Let me start with you, Secretary Widnall.
        Senator Stevens. Senator, let me tell you, we are on a 10-
    minute limitation. I am going to put on the 10 minutes to let
    them answer your question. But we will have a separate hearing
    if you want. This is a hearing to talk about the procurement
    request before us. And I have to tell you, there are others
    waiting here to ask questions. I think this subject is another
    subject. But I think, in fairness, they ought to be able to
    answer the questions. But I have to limit you and your time
    just so everybody can get time before we have to go back to the
    floor.
        So if there is no objection, I am going to put this back on
    green now and you all have 10 minutes to answer his questions.
        Senator Specter. Mr. Chairman, that is fine with me. I just
    took my 10 minutes on the question. I know it leaves a lot to
    be answered. And if there were a better way--I have been
    searching for it for about 1 year.
        Senator Stevens. Well, I think you have the power in the
    Intelligence Committee to subpoena someone to come before the
    Intelligence Committee. This is not our issue here. Our issue
    here is funding. But I think it is relevant. Do not
    misunderstand me. So change it to put the green up, please.
        Senator Specter. Mr. Chairman, that is fine with me to get
    the answers at a separate hearing. And perhaps I would take you
    up on that suggestion, if there is not adequate time here. And
    I do not wish to impose upon my fellow members. And if I had an
    alternative course, I would have pursued it.
        Senator Stevens. Well, I will leave it to you all. Would
    you prefer to have 10 minutes now or come back at another time
    to deal with this question? It sounds to me like it is not a
    10-minute question. But beyond that, you take your choice. We
    will have a separate day for review of this.

                                 Khobar Towers

        General Fogleman. I would prefer to answer the questions.
        Dr. Widnall. Yes.
        Senator Stevens. Go right ahead.
        Dr. Widnall. I mean I can say a few things. As I say, in my
    responsibility as sort of the----
        Senator Stevens. Do you want to pull that microphone up
    again? People in the back cannot hear.
        Dr. Widnall. With my responsibilities as the review
    authority in the military justice system--and not having your
    background as a lawyer and prosecutor, I am never quite sure
    what I can say.
        Senator Specter. Secretary Widnall, I am a Senator asking
    questions.
        Dr. Widnall. Right.
        Senator Specter. I am not a lawyer or a prosecutor here.
        Dr. Widnall. No, I understand. But I worry about my own
    responsibilities. That is all I am saying.
        Yes; I do believe I have a duty to respond, but to the
    extent of my capability. As you know, the Air Force has had
    processes underway. We had an article 32, the record report as
    you refer to it. That report has been submitted to the
    Secretary of Defense. My understanding is it has not been
    released. The Secretary--at the request of Dr. White, had
    followed that report with an administrative look at the issue
    by our inspector general and our JAG. That report has been
    completed, and that has also been submitted to the Secretary.
        But I believe those reports have not been released. So my
    ability to respond to you, I think, basically stops at that
    point.
        I know nothing about the release of any report to the New
    York Times. So I guess that is all I can say.
        Senator Stevens. General.
        General Fogleman. I was going to--even though that question
    was not directed to me, there has been no Air Force release or
    no official Air Force release of--that I am aware of--or any
    sanctioned unofficial Air Force release of a report to the New
    York Times. Things get released all the time in this town. And
    normally, they are released out of frustration. They are
    released, quite frankly, because, as you said, you have not had
    the benefit of all the facts. Through no fault of your own, you
    have not been provided the record report.
        The record report is a very comprehensive, documented
    report that was specifically charged to go look at the
    assertions made in the Downing report. And so when I speak
    about being in possession of the facts, I talk about not only
    having the Downing report, but the record report as well. I
    think I have had the opportunity to balance the two and to see
    the documentation that appears in the record report.

                        Investigation report evaluation

        And based on that, I will answer your first question. No; I
    do not think that General Schwalier was derelict, nor was
    General Peay, nor General Shali, nor Secretary of Defense
    Perry.
        Twenty/twenty hindsight is a wonderful thing. But when you
    are a commander in the field you have responsibilities not only
    to protect your troops, but accomplish the mission, and you
    have this plethora of intel and all these other inputs that are
    coming in to you, and you have to sift through them, and you
    have to make the very best decisions that you can make, and you
    make those decisions--in this case, General Schwalier took over
    130 different actions throughout the year that he was there.
        He responded to both an OSI vulnerability assessment that
    was done in the summer of the previous year and that
    vulnerability assessment that was done in the January-February
    timeframe. He very carefully went through those things. He made
    corrective actions and chose to ignore--not ignore, but really
    chose to evaluate and put into a different category two
    suggestions out of the whole group that were given in that
    vulnerability assessment.
        In spite of that, everything we saw--you go back and cite
    the Beirut bombing--that was not a perimeter bomb. That was a
    penetrating bomb. That helps lead to the mindset that says
    these people do penetrating bombs. And so that is what he was
    working on over there. He focused on that. He did not ignore
    the perimeter. He actually took actions, went to the Saudis.
    They actually moved the barriers in various parts.
        The one part that he was not able to get moved was the
    northern part of the boundary, where there was a parking lot
    that was a public use item. He had people in his command who
    were working that issue. He is a man on the scene contextually.
    You make progress a little bit at a time when you are out there
    in the field working with host nation people. And he thought he
    was making progress. He got increased security surveillance. He
    had a lot of things that he was working on.
        And the mindset relative to the size of the bomb--I think
    it was Downing's assessment that this bomb was somewhere in the
    magnitude of 5,000 pounds.
        Senator Specter. Perry's.
        General Fogleman. I think that when we went to the weapons
    effects people, they told us they thought this bomb was closer
    to 20,000 pounds, which was a significant increase over what we
    had seen. And even if you go back to the OSI vulnerability
    assessment, in that, they talk about a 400- or 500-pound bomb,
    a vehicle bomb--all of these things are playing on the minds of
    a commander in the field.
        And so my concern about this is that--this is not about
    Schwalier. This is not about the Air Force. This is about the
    future for all the commanders that we will send out there. And
    they will do everything in their power, to the best of their
    ability, to protect their forces. That was not an accident.
    This was an act of war. This man was targeted. He was targeted.
    People who lead people in combat, we are going to lose people.
    We try to do everything we can to lessen that chance.
        And in virtually every case, if you go back, in 20/20
    hindsight, start putting something together, you will be able
    to say, if you did not get out of bed that day, you would not
    have gotten killed. But the fact of the matter is you have to
    get out of bed. You have a mission you have to do. And you have
    got to protect your troops while you are doing it. And when you
    go do that and you do it to the best of your ability, then you
    deserve to have the chain of command stand up, once they have
    seen all the facts, and make a value judgment. And that is all
    I ask, Senator.
        I am embarrassed that you do not have the facts. But it is
    not in my power to release those to you. But I am embarrassed
    that you do not have them. I am embarrassed that we have not
    had this thing out in the open.
        One year later, we still do not know who did this. One year
    later, I have got an officer that is just twirling over there.
    He is a fine officer. But it is not about him. It is about all
    those lieutenant colonels and colonels that we are going to
    send out there to be commanders in the future. And whether or
    not the power of this Government stands behind them when they
    go out there, or whether we sit back here in Washington and we
    persecute them or prosecute them whenever something goes wrong
    and they are trying to do the mission, that is with what this
    is about, Senator.
        Senator Stevens. We have to go on. We have 40 minutes left
    and four people still have not asked their questions. Senator,
    we have just got to leave this now. This is not the function of
    this committee. There is the Armed Services Committee and the
    Intelligence Committee. I have tried to keep this committee,
    and so has Senator Inouye, on course regarding funding and the
    adequacy of the funding and the need for funding. We are not
    going to spend anymore time on this now.
        If they will not hold hearings in those other committees,
    as I said, we will later.
        Senator Bond.
        Senator Bond. Thank you very much, Mr. Chairman.
        General Fogleman, to come back to some of the things that I
    mentioned earlier about the National Guard general purpose
    squadrons. I understand that there are restrictions on
    upgrading the F-15A's because of the imminence of their
    retirement, the same thing that happened to the Navy A-6's. But
    I understand that there are A's out there which still have a
    lot of life left on them, even more life than some of the early
    model F-15C's. Now, is there anything that we can do to help
    with either an F-15A system upgrade or the replacement of A's
    with F-15C's?
        And specifically, do you see any way to speed up the
    process to take advantage of the experience of Guard pilots
    when they are asked to integrate with other deployed units?

                        Air National F-15 force upgrade

        General Fogleman. What I would tell you, Senator, is until
    we did the QDR, I would not have had much of a positive answer
    to this thing. I think that we are constantly trying to balance
    our modernization accounts with our modification accounts. But
    one of the things that gets called into question is if you are
    going to go down to three air superiority wings of F-22's, then
    you are going to have to keep some F-15's around longer. And so
    the projected trickle down that we could have had of C models
    into the Guard and Reserve will not occur in all likelihood, at
    least not on the schedule that was there. And so this will
    cause us to go back and relook this whole area.
        Senator Bond. If they need waivers or something, we would
    look forward to working with you. Because it seems to me that
    this is one of the possible avenues that we need to pursue.
        Let me ask--and I address this to either of you, General,
    or to the Secretary--the Air Force has a continuing requirement
    for 18 attrition replacement F-15E aircraft. The committee has
    funded 12 through the current fiscal year. The current strategy
    from the Air Force calls for funding three F-15E's in 1998,
    three in 1999, for $165 million. But I understand that that
    strategy would force a break in production, resulting in an
    increase in the cost of the final aircraft. If the Air Force
    were to request procurement of all six in fiscal year 1998, I
    understand that the total to the program would be $271 million,
    a savings of almost--of over $64 million.
        Would it make sense to--would that kind of saving make
    sense, to get the same aircraft in one year for $64 million
    less that you could get them for two?
        General Fogleman. Yes, sir; this really became a question
    of affordability. In fact, these aircraft--this additional
    attrition reserve buy was dual listed on our 1998 unfunded
    priority list that we sent over here to the Hill. Now, I will
    confess it was not very high, but it was on the list of things
    that, if we had more money, it would make sense to do.
        Senator Bond. Let me ask a tough question, General. The Air
    Force and the Navy are currently involved in a joint program to
    develop the subsonic midrange cruise missile, designated as the
    joint air-to-surface standoff missile, or JASSM. I understand
    that the Navy has already developed the weapon. And I am
    familiar, or reasonably familiar, with the SLAM-ER, which could
    be modified into a SLAM-ER-plus variant at minimal cost, I
    understand, to incorporate the Air Force's unique requirements,
    such as overall missile length, eliminating the man in the loop
    element of it, and the bomb impact assessment capability.
        And it is my understanding that if the JASSM program were
    to be terminated today, it could save $900 million. The SLAM-ER
    program is fully funded and in production. If these
    modifications were to be made to the SLAM-ER, is there any
    reason that the Air Force could not meet its mission
    specification requirement for JASSM with the SLAM-ER-plus, and
    gain a savings of about almost $1 billion?

                        Midrange cruise missile programs

        General Fogleman. Sir, I would have to go back and get a
    more detailed answer to this. But I would tell you that there
    are two dimensions to this program. First of all, you are
    correct in saying that there is a SLAM-ER program, but there is
    no SLAM-ER-plus program that is in existence today. So that
    needs to become reality. And currently, the SLAM-ER will not
    fit in the bomb bays of our aircraft.
        [The information follows:]

               Joint Air-to-Surface Standoff Missile Requirements

        In defining the Joint Air-to-Surface Standoff Missile
    (JASSM) requirements, the Key Performance Parameters were kept
    to a minimum to allow the two competing contractors maximum
    flexibility in designing a solution to the JASSM need. As such,
    there are three Key Performance Parameters--Missile Operational
    Range, Missile Mission Effectiveness (or the expected number of
    missiles to kill one of each target types) and Carrier
    Operability in the JASSM Operational Requirements Document
    (ORD). The contractor may trade other items in the ORD;
    however, each significant trade of a functional/performance
    requirement is assessed as to its impact on the mission
    execution capability and the operational limitation. Specific
    criteria to determine if the system performance meets the needs
    of the jointly developed JASSM requirements are mission
    planning; integration with the threshold aircraft;
    compatibility with the objective aircraft; projected launch,
    carriage and jettison envelopes for objective and threshold
    aircraft; autonomy; insensitive munition requirements; time on
    target; and bomb impact assessment. In addition, affordability
    is a key driver in this program with the Average Unit
    Procurement Price (AUPP) included in the system performance
    specification for the JASSM.
        The Standoff Land Attack Missile-Extended Range Plus (SLAM-
    ER+) version is a modification to the SLAM-ER to incorporate an
    Automatic Target Recognition (ATR) seeker. The SLAM-ER+ needs
    further modification to meet JASSM requirements and be suitable
    for Air Force use. These modifications include shortening the
    weapon by four inches for carriage in the B-1B, a fuel tank
    surface tension screen and folding fins for carriage on rotary
    launchers, strengthened fins for external carriage on the B-
    52H, removal of Man-in-the-Loop Data-Link, and addition of a
    bomb impact assessment capability.
        The AF SLAM-ER+ variant cannot meet the minimum acceptable
    operational range requirement. JASSM will have an operational
    range well beyond the minimum, providing the warfighter with
    greater operational flexibility in employing the weapon.
        The AF SLAM-ER+ variant would not equal JASSM in the area
    of Missile Mission Effectiveness. The JASSM will have a 1,000
    lb.-class warhead versus a 500 lbs.-class warhead for the SLAM-
    ER+. The JASSM has better penetration and blast/fragmentation,
    stealthy design, and capability against Global Positioning
    System jamming. In addition, JASSM is designed to defeat the
    2010 surface-to-air missile threat. These JASSM features result
    in a Missile Mission Effectiveness that is significantly better
    than that of the SLAM-ER+. The AF SLAM-ER+ would require many
    more missiles and increased sorties to accomplish the mission.
        The JASSM ORD has a requirement that the missile be an all
    up round (no build-up required) with an expected 20 year
    service life. The JASSM contractors will provide a 15-20 year
    warranty to cover the costs of all failures including redesign
    and retrofit. The JASSM system will require no Government or
    depot maintenance. In contrast, the SLAM-ER+ will require
    spares and recurring Government depot repair. The SLAM-ER+ has
    an estimated life of only 10 years with a follow-on weapon
    required in 2010 timeframe.
        Most important is the JASSM concept of Cost as an
    Independent Variable. To date this concept has resulted in a
    reduction from $600,000 to less than $360,000 as an Average
    Unit Procurement Price (AUPP) for the JASSM. In the Engineering
    and Manufacturing Development phase, the selected contractor
    will be further incentivized to reduce costs and move the
    schedule to the left through the use of a Cost Plus Incentive
    Fee arrangement. In contrast, the AUPP for the SLAM-ER+ is
    estimated to be a higher figure than the JASSM objective
    requirement of $400,000. With a lower AUPP, a predicted lower
    life cycle cost (which includes a warranty for the life of the
    system), and its anticipated superior effectiveness, the JASSM
    projects to be the overall better alternative.
        The cost estimate which shows a savings by canceling JASSM
    in favor of the AF SLAM-ER+ variant does not take into account
    any life cycle costs, nor does it account for any performance
    differential which would require an estimated 1,100 additional
    AF SLAM-ER+ to equal JASSM effectiveness. With these additional
    factors taken into account, the JASSM SPO estimates that to
    procure an AF SLAM-ER+ variant would actually cost over $1
    billion more than JASSM.

        Senator Bond. Yes; but you can reduce it to--well, the
    length--reduce the missile length if you take out the man in
    the loop.
        General Fogleman. And then the issue becomes, will it meet
    our requirements in terms of range and in signature? And quite
    frankly, what we are encouraging is that, as we look at part of
    the JASSM review process, that there will be a joint Navy
    evaluation of this, that it will actually be put on the table
    and evaluated.
        Senator Bond. Well, I would ask you to do that, and keep us
    advised. Because it seems to me that this may be--if, in fact,
    there are certain things that could be done, if you could save
    $900 million or $1 billion and get the same capability, given
    what you are going through, it obviously makes a lot of sense.
        General Fogleman. Yes, sir.
        Senator Bond. Finally, are you satisfied with your joint
    work with the Navy and the flight officer training program? Is
    that working well?
        General Fogleman. Yes, sir; it has worked well. And we hope
    to do more of this, not only with the Navy, but more joint
    training. There are several dimensions to this that benefit
    both the Air Force and the other services. But that program has
    been, to date, a success; yes, sir.
        Senator Bond. All right. Well, thank you very much. And we
    look forward to working with you to see if there are these
    possible avenues for interservice cooperation which can lead to
    some savings. We would like to see the capability maintained to
    the greatest extent possible, and I appreciate your willingness
    to look at those.
        General Fogleman. Yes, sir.
        Senator Bond. Thank you, Mr. Chairman.
        Senator Stevens. Thank you, Senator.
        Senator Domenici, who is carrying a great load on the floor
    right now, has come in and wants to ask a question. We will
    yield time to him at this time, with the concurrence of Senator
    Bumpers.
        Senator Domenici. Thank you. I have a number of questions.
    But I will submit them, Mr. Chairman. I just want to ask one
    about a particular facility in New Mexico that I was rather
    excited about and I wondered if General Fogleman had any
    comments today about it.
        On March 17, I wrote to you about an idea that I believe
    fits nicely into your privatization efforts, and it would save
    the Air Force a few million dollars. As you know, Gerald
    Champion Memorial Hospital in Alamogordo, NM, proposed the
    creation of a shared hospital facility. They are prepared to
    build a new hospital, and they are excited about the prospects
    of it being a partnership relationship with the Air Force,
    since you are in need of some facilities there also.
        At your direction, and I thank you for it, your Surgeon
    General has been meeting with officials from Gerald Champion
    regarding the initiation of the construction for this new
    facility, which again, would be private. Can you tell us
    whether any agreement has been reached about--and anything you
    might share--about the merits of this proposal for the Air
    Force?
        General Fogleman. Yes, sir.

                           Shared hospital facilities

        Dr. Widnall. I would be happy to do that. We are very
    excited about the program. It is everything you say. It is a
    good example of privatization and very innovative. I think we
    are moving closer to reality. It does have to be examined by
    legal and others. But we do not see any showstoppers to being
    able to do this. And it is a wonderful example of a community
    stepping forward and getting both their needs and our needs
    met. So our medical people are very excited about it.
        General Fogleman. I think, Senator, that the two biggest
    hurdles at this point--and one is we have got to go through
    this legal review. Because my Surgeon General now is excited
    about this, and we think that we have got a winner here. So I
    do not anticipate a great problem with that. But the other
    minor hurdle that we have is the funding is not currently in
    the Defense Health Program--that we need to work our way
    through that. But those are the only two issues that we have
    got that we see that will slow this process down.
        Senator Stevens. Senator, we want to work with you on that.
    We have a similar prospect now in Fairbanks, with the Bassett
    Memorial Hospital being replaced for the Army. We hope that we
    can find a way to have the on-base hospital be the trauma
    center for the interior of Alaska and have the community
    hospital be the one that handles family problems for the
    military and an outpatient Indian Health Service facility to
    handle outpatient facilities for all others.
        So I think we can get some real savings on such an
    arrangement. We would like to work with you on yours to make
    sure it also produces savings and improves the quality of
    service at the same time.
        So I commend you and I hope you can work it out, Secretary
    Widnall.
        Senator Domenici. Thank you.
        Fellow Senators, what it amounts to is the community has a
    bond that they have already issued, and they are ready to build
    a new hospital. And it turns out that the Air Force needs a
    facility. Rather than build a whole new one, it looks like
    there is some partnering that can take place, where the Air
    Force will save money and they will be using a facility jointly
    that belongs to the citizens of the community, and the Air
    Force will have some claim to use some partnership arrangement.
        Senator Stevens. Well, I can commend to you the Fairbanks
    Community Hospital. Back 20 years ago, Senator Stennis and I
    worked out an arrangement whereby we had a sharing of that
    hospital by the Indian Health Service, rather than building an
    Indian Health Service hospital. We actually made a grant to the
    community to reserve 16 beds in that hospital permanently, and
    it has worked out wonderfully. So it is a concept I think we
    should pursue.
        Senator Domenici. Thank you very much.
        Thank you, Madam Secretary.
        Senator Stevens. Senator Bumpers.
        Senator Bumpers. Thank you. Mr. Chairman.
        General Fogleman, first, let me compliment you in your
    answer to Senator Specter's question. I thought it was open,
    candid, and right on target. And let me just say that one of
    the things that makes this such a hostile environment to work
    in is it has gotten to where simple mistakes in judgment,
    negligence, and even political differences are becoming
    criminal offenses in this Capital City. So I appreciated your
    response to that question. Some things just happen.
        Having said that, let me ask you, Madam Secretary, if you
    have seen this insert that appeared in many national
    publications on the F-22?

                            publication on the F-22

        Dr. Widnall. No; I have not seen it.
        Senator Bumpers. You have not seen it?
        Dr. Widnall. I have not seen that.
        Senator Bumpers. Inside is a simulated postcard. This was--
    there are literally millions of these things that were
    distributed in national publications. And here is what the
    postcard said--it is supposedly from a female soldier to her
    husband, and it is dated June 18, 2007.

        Dear Rick and the Jakester--well, we are here and I am OK.
    Everybody in the battalion is pretty tense, though. The
    situation is extremely complicated, and I am sure the diplomats
    are really earning their paychecks right now. I think about you
    and Jake constantly. I cannot say much about what is going on
    except that you guys should not worry. I am surrounded by great
    people. We have got great equipment. And we know what we are
    doing. We also have those F-22's upstairs totally ruling the
    sky and covering us like Jake's big, fuzzy blue blanket. Give
    the little guy a big kiss for me. I will write again soon. Love
    Katy.

        Can you tell us for sure that the Air Force is not paying
    for any of this? [Laughter.]
        Dr. Widnall. I have never seen that. I know nothing about
    it.
        Senator Stevens. I am sad that they did not ask me to sign
    it. I would have signed it for them. [Laughter.]
        Dr. Widnall. But it is a nice story. It is a nice story.
        Senator Bumpers. I wish they would just give me three lines
    at the bottom of the postcard. It borders on being sick, in my
    opinion. You can always tell when a weapon system is in some
    difficulty. Of course, when you have got a $50 to $70 billion
    contract riding, I can understand why they are trying to sell
    the American people on the F-22.
        But, in any event, let me just say, General Fogleman, that
    I am not going to reiterate all of my reasons for opposing the
    F-22, none of which have much to do with its technical
    capability. It is a matter of cost and whether there is a
    mission for it and why we are building the FA-18E/F, and also
    the Joint Strike fighter, and sandwich this in between.
        But on the cost figures, the cost analysis improvement
    group at the Pentagon and the CBO, and now the GAO in the draft
    which you have probably seen and the final product of which
    will be released sometime maybe next week, all of them say that
    the cost of the program would increase by $16 billion. Now,
    this whole questioning is based on the proposition that we are
    going to procure 438 aircraft. We are not going to procure that
    many, but just for argumentive purposes, let me say that this
    is all based on that. They all say that the cost is going to be
    $16 billion more than the original projected $48 billion.
        And my question is: What does the Air Force know that all
    of those people do not know?

                              F-22 cost estimates

        General Fogleman. Well, sir, I would answer that in I guess
    two ways. We think, as we go back and look at all their cost
    projections--and particularly we know this from talking to the
    people in DOD, in the CAIG--that what they are using for cost
    projections are old models, predicated on the way we have
    manufactured airplanes back in the seventies and eighties, that
    they have really not taken into account the results of the so-
    called joint estimate team that has gone in and looked at not
    only new manufacturing technology, but also procurement reform
    in general.
        Let me give you a couple of examples. The CAIG estimate
    that was given for the JDAM, the joint direct attack munition--
    granted, not nearly as technical as an F-22--their estimate was
    that we would end up paying $24,400 a copy for that munition.
    The fact of the matter is, with the new manufacturing
    technology, with acquisition reform and turning the contractors
    loose, we saved 44 percent on that thing. It came in at
    $13,700.
        The C-17, the CAIG estimate was $213 million a copy. When
    we were done with the multiyear and all the things that John
    Deutch initiated, it came in at $188 million a copy. Granted,
    only 12 percent, but it is 12 percent.
        The space-based infrared system that the Secretary talked
    about, the SBIR's-high system, again, the life cycle cost [LCC]
    estimate was $11.9 billion by the CAIG. When the contract was
    let for that, the LCC estimate had dropped to $7.2 billion, a
    39-percent savings. The wind-corrected munitions dispenser,
    while not a CAIG estimate but the estimate using the normal
    approach, was again $25,000 a copy. We are now on contract for
    $8,900 a copy, a 64-percent savings.
        So we know that this is stretch. We know it is going to be
    a challenge. The contractor knew that, too. But Mr. Norm
    Augustine, who is a man who I do not think normally puts his
    signature on the line lightly, signed up in a memorandum of
    agreement with us that his company, working with our folks,
    would identify the savings that would result in not having that
    cost growth. That is really the basis of our position, sir.
        Senator Bumpers. I understand that, General Fogleman. Let
    me make this observation. Secretary Cohen has said that CAIG's
    estimates have normally been very reliable. Now you point out a
    couple of instances where they were not. But when you have
    CAIG, GAO, and CBO all going into this program in some depth--
    now here is a chart, let me show you a chart from the GAO--let
    me stand up here for you--this is in the GAO report. Can you
    see this OK, General?
        General Fogleman. I can see it fine, sir.
        Dr. Widnall. He can see it, but he is going to let me
    answer the question. [Laughter.]
        Senator Bumpers. Here is some history. You mentioned the C-
    17, which has had, what was it, a 12-percent cost reduction.
        General Fogleman. Yes, sir.
        Senator Bumpers. Here is 100 percent of initial costs of
    various aircraft, including the F-22. This is what the initial
    production was. And, of course, they always go down. We
    anticipate that. But here is 100 percent right here of the
    initial cost of the F-15 and the F-16. It goes out to about
    right here. And the reduction in the F-15 and F-16 from the
    initial cost was 35 percent--a 35-percent reduction in regular
    production. Then here is the F-18 program--here is 100 percent
    of the cost of it. And it has gone down 69 percent. That is
    pretty impressive.
        Now, the F-22, in order to make the money fit at the cost
    you are going to have, the $48 billion, here is 100 percent,
    $400 million for the first few airplanes, and it goes down
    right here. All of a sudden, by the time they procure about 90
    aircraft, the cost goes down 82 percent and stays at that level
    during the entire production.
        Now, General, my question is--we have never even come close
    to approaching an 82-percent cut in production cost from the
    initial cost. And it seems to me that this is a real stretch in
    order to make these figures fit $48 billion. I simply do not
    think that can happen, but I would make one other observation.
    And that is, when you consider that the F-16, for example,
    those are metal airplanes, they are not stealthy airplanes--you
    mentioned the C-17, which the cost reduction was rather
    admirable--but, by the same token, there were virtually no
    really big, innovative technological leaps with the C-17. That
    is a cargo airplane, not an advanced fighter.
        And when you look at our experiences in the past--and, in
    the case of the F-22, you are dealing with a much, much more
    sophisticated aircraft, with stealthy qualities and all kinds
    of avionics--and yet you are saying that you can reduce the
    initial cost by 82 percent for the full production costs. I do
    not think that is even remotely possible.

                         F-22 production cost decreases

        Dr. Widnall. Well, Senator, let me make two comments on
    that, because I think, in some sense, you have made your own
    point. We would expect, for a stealth aircraft, a highly
    sophisticated aircraft, that the cost of the first airplane
    would be high. I mean this is almost an experimental airplane
    at this point. And the way you have your number scale, that, of
    course, is your baseline. That is your 100 percent.
        General Fogleman mentioned the term ``12 percent'' in
    connection with the C-17. That is the cost of quote, the
    program, as we worked the later stages of it to get the costs
    down. But I recall very specifically, when I came in as
    Secretary of the Air Force, the unit cost of the C-17 was $338
    million a copy.
        Senator Bumpers. I remember well.
        Dr. Widnall. And now it is, well, $188, $175 million, you
    know there is--so, you know, that is almost a factor of two. So
    I really do believe that--and I will obviously do some numbers
    and try to put C-17 on this same chart that you have your
    numbers on--but I really do believe, with modern aeronautical
    engineering, technology, manufacturing technology--sure, it is
    an aggressive program, and we have really signed up the
    contractor to be aggressive, and that is exactly what we expect
    him to be. And so he is committed to this. We are committed to
    this.
        My view of the CAIG and the CBO is that, you know, they are
    basically in the forecasting business, and so, at this point,
    everybody has made their forecast. And I think what we believe
    is now is the time to get some real data, to really start
    building airplanes and really track those cost reduction
    curves. And we are obviously going to keep some very aggressive
    looks at that program.
        Do you want to add anything?
        Senator Bumpers. Thank you, Madam Secretary.
        Mr. Chairman, my time is up. General, I would like to say,
    I want to submit a question to you in writing on the B-2. You
    have not asked for anymore B-2's.
        General Fogleman. No, sir.
        Senator Bumpers. But there may be a move to add some
    whether you want them or not. And I would just like to ask a
    few questions on that.
        Thank you, Mr. Chairman.
        Senator Stevens. If I could find a printing press, I would
    give you some more B-2's, but I do not think it is in the
    budget. We cannot get them right now.
        Senator Dorgan, we want to recognize you, but I want to
    state a policy for the future. When a Senator comes in and then
    leaves, they get on the early bird roster when they come in the
    second time. Because people come and go, it is not fair to
    those who sit and wait. I have checked with Senator Hutchison,
    and she is not in any rush, so I do recognize you.
        Senator Dorgan. Mr. Chairman, I am not in a rush either. I
    was simply inquiring whether I was going to be called on next.
        Senator Stevens. We recognize you, please.
        Senator Dorgan. Mr. Chairman, I would like to ask a couple
    of questions of the witnesses.
        First, on the missile defense plan of the Air Force, last
    year's authorization act required the Department to report on
    the plans costs and effectiveness. That report was to have been
    done in January of this year. When might we expect that report?

                              Missile defense plan

        General Fogleman. I would tell you, sir, that we--the Air
    Force submitted its input on that report in February of this
    year. And it is my understanding that the report is in the
    Office of the Secretary of Defense, awaiting his signature, to
    come out.
        Senator Dorgan. So it is done?
        General Fogleman. Oh, yes, sir.
        Senator Dorgan. Do you have any idea on when we might get
    it?
        General Fogleman. No.
        Senator Dorgan. All right. We will ask the Secretary.
        General Fogleman, we have visited and you have made some
    comments on an unsolicited proposal that has been made on
    reengining the B-52 to extend the reach of the B-52. And it is
    an exciting and an interesting proposal. And I am wondering
    what the status is with respect to the Air Force evaluation of
    that proposal.

                            B-52 reengining proposal

        General Fogleman. Yes, sir, we formally debriefed the folks
    who made the proposal. I believe it was on May 7 or 8. And
    unfortunately, the analysis shows that it would cost us about--
    I believe the number is--$1.3 billion more to operate over the
    life of the weapon system using this than just continuing the
    way we are going. I was very disappointed personally in that,
    because I not only wanted to see the increased capability that
    would come from the reengining, but I thought it would also set
    a precedent for a good way to use commercial practices to
    upgrade other aircraft.
        While we have said that it does not look practical under
    the proposal we have, we have also said if the contractors want
    to come back to us with another proposal, we are willing to
    listen. But that particular original proposal, at this point,
    we are not doing anything more with it, sir.
        Senator Dorgan. And is the contractor, to your knowledge,
    working to come back with another proposal?
        General Fogleman. Yes, sir, they are working hard to try
    and meet that.
        Senator Dorgan. Madam Secretary and General Fogleman, I
    would like to ask about the issue of base closings once again.
    You are familiar with the Secretary's discussion of it and the
    recommendations of the ``Quadrennial Defense Review'' that the
    Congress authorize two more base closing rounds. I have great
    concern about implementing new rounds of base closing for a
    number of reasons.
        We have been through four rounds of base closings. What
    happens during these rounds, and has happened especially to the
    two air bases in North Dakota, is we create enormous
    uncertainty, especially with targeted bases that will be on
    some list almost any time you start these discussions. The
    result is there is a stunting of economic growth, a ceasing of
    investments in regions, because people do not know what the
    future holds.
        We are very appreciative in North Dakota of having two
    wonderful Air Force bases, and we certainly want to keep them.
    But they are a much larger part of our economic existence than
    they would be, for example, of California or Texas or other
    States. We have 640,000 people. Either base being closed in
    North Dakota, in previous rounds it was estimated, would cause
    about 25 to 30 percent unemployment in a region of our State.
    That is a huge economic crater.
        And is there a way to go through base closings and
    downsizing without again using a commission, without painting a
    bull's eye on all of these gates, saying, by the way, this is
    not a good place to invest until somebody makes a decision 1 or
    2 or 3 years from now? I would like to get your comments about
    that. Because I have great concern about whether this is
    something that is advisable for the Congress to do.

                                  Base closure

        Dr. Widnall. Well, let me say that I think we all share the
    concern. It is the most difficult process. It is difficult for
    communities. It is certainly difficult for you. It is difficult
    for us.
        I think Secretary Cohen has certainly indicated his desire
    to work with the Congress to get legislation that would make
    this possible and yet improve it. I guess on the issue of
    economic impact, I would only note that economic impact is one
    of the criteria as we look at bases. It is certainly not
    ignored. And that is certainly out of recognition of the fact
    that for some communities the presence of a military
    installation is a much more important part of their economy.
        So that is clearly factored in. But I share with you the
    concern about how difficult it is for the communities that are
    involved.
        Senator Dorgan. What kind of excess capacity exists that
    would urge or encourage a base closing round on behalf of the
    Air Force, for example, General?
        General Fogleman. Well, I would tell you, Senator, that
    just from a military perspective only--not using any of the
    base closure criteria, but just from a military perspective--we
    would be able to save a considerable amount of money by
    consolidating our force structure on fewer bases. And if we
    were to do that, I would think that we probably have about five
    or six major installations that could become excess.
        Now, I have some concern about that number, because, quite
    frankly, I think that we need to keep some kind of a
    contingency capability in our basing. So you mentioned the idea
    of, you know, what is the construct that you might go about?
    Would we want another BRAC in its traditional form?
        That will certainly be decided above my pay grade. But if
    somebody were to ask me for a recommendation on it, I would--I
    am a little naive perhaps on this, but would rather take an
    approach that says I believe that there is a way that we could
    put some bases in a contingency status.
        Now, the pain in that is the bases are still going to lose
    the people and the missions. What we will end up doing is maybe
    putting a Reserve unit or something there to keep the
    facilities operating so that--but rather than inflict this base
    disposal process onto a community, which may not be able to
    absorb it or does not want it, at least we would maintain the
    facility. In the event we had to bring force structure back
    from overseas or we built up again or whatever, you would have
    some surge capacity as you do that.
        But you do not--and we could maintain those bases, I think,
    relatively cheaply--and you would not have the up-front cost
    associated with environmental and all that. The problem would
    be getting the agreement that we could take the force structure
    off the base to bring it down and downsize it. So that is one
    scheme. So there are a lot of different ways, I think, that we
    end up going about this.
        I would only make one other observation. And that is that
    if there is another round of BRAC, I will be long gone before
    that, but my proposal would certainly be to whoever is in my
    position--or my advice to the Secretary would be do all of your
    base closures in the first round that you can in the Air Force
    because of the very thing you talk about. Dragging it out just
    extends the pain for our own people, and it adds to the
    uncertainty of the communities.
        So I think the number of closings that we need to do or the
    downsizing ought to be manageable in the first round. And so my
    recommendation would be, whatever we do in the Air Force, we
    ought to do in the first round. It is best for our people. It
    is best for the communities that have supported us.
        Senator Dorgan. Well, General, I am not sure there should
    even be one round. And your implication that maybe there ought
    to be one round and you make the choices you have to make in
    that round is something I guess I understand. Because I think
    the minute you begin this process--we have now demonstrated
    with BRAC that you essentially freeze an economy, especially in
    a State that is a largely rural State with not much
    population--you freeze economic investment, you create
    uncertainty. It often lasts for a number of years.
        Then we have lists and a base goes on the list, then off
    the list, then maybe back on the list. It had a devastating
    impact on the local economy, even if, in the end, the base
    stays open. The process can stunt economic growth for a couple
    of years.
        So I do not know exactly how this is going to come out, but
    I am going to have a pretty aggressive discussion about the
    Secretary's recommendations about base closing. Downsizing,
    certain institutions being excessed in certain conditions, I
    understand all that. I mean we cannot deny that we need to make
    some changes here and there. But the BRAC process has become an
    institutional process that I think has some significant down
    sides to it as well. And I think the Senate would be well
    advised to move very, very carefully before it triggers another
    round or another two rounds of a BRAC process.
        General, I appreciate very much your candid response. As
    always, you are very candid. And, Madam Secretary, I again
    appreciate your comments, as well.
        Dr. Widnall. Thank you.
        Senator Stevens. I think the Senator has a point. And
    having lived through the efforts to reduce deployment overseas,
    starting with Senator Mansfield, and then the attempts to
    reduce deployments then to the Korea area. It seems to me that
    the decisions with regard to the necessity for bases ought to
    be made sometime into the next century--not too late into it--
    but on the basis of what the next generation wants to do.
        I hear talk as I travel throughout the country of asking
    why it is necessary to maintain troops in Europe if we are
    going to have an expansion of the NATO. I hear questions about
    why should there be so many forces deployed in the Pacific. We
    get that considerably. I believe they should be there. But the
    point is that you are right, the contingency of bringing forces
    home has to be looked at. What will it cost to build new bases
    later if we do end up with a deployment-based concept basing in
    the United States, with temporary participation overseas in
    maneuvers? That could well be the mode of operations in the
    next century, the way I see it.
        Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.
        And just going along that same line, I am not against
    considering BRAC again, but I do raise questions. And one of
    the questions would be, is the downsizing of the force
    recommended in the QDR realistic? Should we be downsizing as we
    are putting troops out in the field in so many missions, some
    of them nonmilitary? And is this a time to downsize bases?
    Because once you do close a base and you go to the expense of
    it, it would be a huge, terrible burden to have to reopen or
    build new ones.
        And second, I just wonder if we know yet what the real cost
    of closing bases is. And I do not think we are going to know
    until the year 2001, when all of this last round is really
    finished, what the costs are. As you know, I just wrote you a
    letter where there has been reported in a base that was closed
    about 20 years ago in Amarillo, that perhaps there was material
    buried there that is perhaps toxic.
        So you know, how long do you go before you really know what
    the real cost is? So I would just say that I think we ought to
    look at all of these issues before we go to base closures. And
    I would like to know what you think of the force structure
    downsizing as well as the base closure issue.

                               Capability shaping

        Dr. Widnall. Well, let me respond, and I am sure General
    Fogleman would like to as well.
        I guess I do not think we think of it as force structure
    downsizing. I think we think of it as capability shaping. And
    we are continually modernizing and upgrading our capabilities
    in the Air Force. And we are paying attention to, basically,
    providing those in the most cost-effective way possible. But we
    do have number of operations--privatization, outsourcing--a
    number of examples of replacing military maintenance personnel
    with civilian personnel in cases where it is warranted. So the
    net effect of all of that tends to lower end strengths. But
    that is fundamentally not why we are doing it. We are doing it
    because we want a more capable force.
        General Fogleman, do you have a comment?
        General Fogleman. I think, Senator, that your question is a
    good one. And it was one that really weighed heavily on the
    minds of all the service chiefs as we went into this QDR and we
    looked at some of the proposals that were coming forward. Early
    on in the process, there were people that were proposing the
    standard sort of salami slice--let us take two divisions from
    the Army, a carrier from the Navy, two fighter wings from the
    Air Force. And the chiefs said, wait a minute, you know, given
    what we are being asked to do, with the strategy and everything
    else, this really does not make a lot of sense to us.
        We all have spent a lot of time--in the case of the Air
    Force, we went through this 18-month-long, long-range planning
    process--and in the process of doing that, the senior
    leadership sat down and very carefully made deliberations about
    what kind of combat capability would be needed and what were
    the things that we could do to preserve that combat capability,
    that OPTEMPO/PERSTEMPO kind of thing that needed to be there.
    And in our case, we said we think that in the base operating
    support side of the house, where we have already had some
    significant successes, particularly with the Air Education and
    Training Command, that we think we can do more of this.
        And the reason you would do this--interestingly enough, I
    am an old programmer, you know, so every time I have ever been
    involved in any kind of an effort to identify offsets, it has
    been because the Defense Department's top line has come down,
    and, therefore, our top line was coming down. This was not that
    kind of a drill. Our top line is not coming down.
        What the QDR was about was how to rebalance the money
    within our top line so that we could ensure that the
    procurement accounts would be funded and we would not see
    migration out of those procurement accounts like we do every
    year. So we were asked to go identify ways that we could stop
    spending money in some places and make sure that this stayed in
    procurement. And so, for us, when we did this study and we were
    done, we said, outsourcing, privatization, changing the way you
    do business, in terms of combat support or combat service
    support, would be the way.
        So the numbers look massive for the Air Force--26,000
    active duty, less than 1,000 Reserve and Guard, and about
    18,000 civilians. But the fact of the matter is, of all those
    numbers, when you add it up, there is only about 5,000 of those
    that are directly associated with bringing down some kind of
    combat force structure. When we combine the bomber forces on
    fewer bases, when we combine our fighter forces on fewer bases,
    you save direct combat manpower when you do that.
        But where we really get our savings is when you look at the
    rest of that manpower number, we contract them out. And
    historically, what we have discovered is when you contract out
    a blue suit or a DOD civilian, you do it on a ratio of about 7
    to 10. Or, put another way, for every 10 folks, if you do the
    contracting, you end up with seven contractors, and you save
    about 30 percent. And that 30 percent is what we are going to
    try and push over to keep the procurement account from
    migrating.
        So that was sort of the philosophy. That is why, when it is
    done, the Air Force still has 20 TAC fighter wings. We actually
    have slightly more, but one more of them is in the Guard and
    Reserve.
        Senator Hutchison. Well, let me, go into--you mentioned
    contracting out--part of your assumptions, and in the QDR, you
    ask for relief from the 60/40 rule on depot maintenance--I
    think there has been a lot of misinformation on privatization
    and the possibilities for saving money. In fact, the GAO keeps
    saying that your numbers are not right, that it will not save
    taxpayer dollars. The GAO seems to try to assess the readiness
    factor, which I think is above their pay grade. I think they
    need to refer to you for the readiness issues.
        But I would like for you to speak on the record about what
    you think it costs taxpayers to keep the 60/40 rule in place,
    and, second, if you believe that you can save dollars that you
    are trying to put into other missions by using Kelly and
    McClellan and allowing them to take--do privatization work for
    the Air Force.

                           Public/private competition

        Dr. Widnall. Clearly what we are conducting with respect to
    those workloads is a public/private competition. There have
    been a lot of studies, there has been a lot of forecasting, but
    I really do believe that it is through that competition that we
    actually get real numbers. In other words, we get real numbers
    of people who are prepared to do a job and are giving us a
    price to do that job.
        I think that is probably the most accurate kind of study
    that you could get with respect to what is it going to cost you
    to do this workload. Because you actually have somebody who has
    costed it out and is prepared to step forward and put their
    reputation and their commitment on the line to do the workload.
        We are, as you know, engaged in a series of steps, RFP
    initiatives, where we will exactly get those kinds of proposals
    to do those workloads. And I think that that is how we will
    find out how to get best value for the American taxpayer. I
    cannot give you a number as to what the net savings will be if
    we get rid of the 60/40 provision, because my fundamental
    principle is we will find that out through having the ability
    to do these public/private competitions. And so we will make
    those decisions on the basis of what is best for the American
    taxpayer and for the Air Force.
        Senator Hutchison. So you are saying competition is needed
    for you to be able to be more efficient?
        Dr. Widnall. I believe that. I believe that has been shown
    time and time again.
        Senator Hutchison. General Fogleman.
        Dr. Widnall. Every time we have had success in acquisition
    reform it has been because there has been a competitive
    environment, where we have challenged contractors--really
    challenged the Air Force--to deliver the product for less. And
    that is the only way I know how to make these things happen.
        Senator Hutchison. Why cannot you convince the GAO that
    this seemingly commonsense approach is the right one?
        Dr. Widnall. Well, I guess I do not want to really comment
    on GAO. I view them as they are in the studies business. They
    are in the forecasting business. And they do have a methodology
    that they apply to making those forecasts.
        Senator Hutchison. Well, what are they missing?
        Dr. Widnall. I think it is maybe a little like the
    discussion we just had of the CAIG numbers. They are using sort
    of past experience to sort of forecast future behavior. They
    are being very conservative. I will not say they are using
    worst-case scenarios, but they are----
        Senator Hutchison. So you think they are forecasting
    behavior necessarily----
        Dr. Widnall. They are giving us a range of what they might
    think would happen, all the way from a best-case scenario to a
    maybe-not-so-good scenario. And again, my position is I just
    prefer to get on with the competition. Because I really do
    think that is when you get the sharpest pencils and the most
    accurate numbers. So I am excited about the direction we are
    going in, and I really do ask the support of Congress to take
    us to this next step, so that we could get the best value for
    the taxpayer.
        Senator Hutchison. General Fogleman, do you think that GAO
    is looking at the readiness issues? And do you believe that 60/
    40 should be done away with for you to have more options?
        General Fogleman. Well, I have not seen a lot of
    consideration or understanding of the readiness issue in the
    analysis that has been done by GAO. Not only do we advocate
    doing away with the 60/40, but I think very clearly the
    Secretary of Defense and the ``Quadrennial Defense Review''
    says that this is one of those enablers that really needs to be
    put in place for us to be able to move forward, and not just as
    the Air Force, but as a whole department. And so it is
    something we have been saying for sometime now that I think has
    been picked up on at the Department level.
        Senator Stevens. I will have to recognize Senator Harkin
    now, Senator.
        Senator Harkin. Thank you, Mr. Chairman.
        Secretary and General, I just have two lines of
    questioning, both quite divergent. The first has to do with how
    much money is being spent in the Air Force to go after what I
    call a holdover of blue laws in the States. I am talking about
    what I consider to be the parallel of old blue laws, and I am
    talking about Lt. Kelly Flinn and her case.
        I understand from the press it has been put on hold now.
    And I am sure that any response you would make on that would be
    that I cannot talk about it now because it is in review--unless
    you would like to make a comment.
        But I am reading in the paper that Flinn was one of almost
    70 people the Air Force has court-martialed for adultery since
    1996. That must take a lot of manpower, a lot of lawyers. I am
    wondering if that is a wise use of taxpayers' dollars. Hundreds
    more, it says, were punished nonjudicially for the same crime.
        My question is: How many people did the Air Force
    investigate on charges of adultery in the last year? I am sure
    you do not know that question, but I would like to have that
    for the record.
        Dr. Widnall. We will certainly get that to you.
        [The information follows:]

                                Adultery Charges

        In 1996 the Air Force Office of Special Investigations
    conducted 29 investigations in which adultery was one of the
    offenses alleged. All of those cases also involved allegations
    of other offenses. There exists no central database that can
    identify all other inquiries involving allegations of adultery.

        Senator Harkin. Second, I would like to know, of the almost
    70 people cited here--I do not know if that is correct; I am
    only telling you what is in the paper--I would like to know how
    many of those were of the rank of Lieutenant Flinn or higher?
        Dr. Widnall. I would have to supply that for the record.
        Senator Harkin. I would like to know the answer to that.
        [The information follows:]

                       Adultry Charges--Rank of Personnel

        The following charts break down by gender and rank, courts-
    martial and nonjudicial punishments for calendar years 1993
    through 1996 that included a charge of adultery under Article
    134 of the Uniform Code of Military Justice (UCMJ). The
    ``Adultery Only'' chart shows cases in which adultery was the
    only charge. The ``Including Adultery Charges'' charts also
    include cases in which adultery was charged together with other
    offenses. You will note that very few members are tried by
    court-martial on charges of adultery alone. We do not track
    administrative actions by specific precipitating offense and
    thus cannot determine how many may have been based on adultery.
        The data in the charts do not include cases in which an
    officer was charged with conduct unbecoming an officer under
    Article 133, UCMJ, as a result of misconduct involving
    adultery.

                    COURTS-MARTIAL INCLUDING ADULTERY CHARGES
                               (By Rank, 1993-96)
    ------------------------------------------------------------------------
                Year/rank                  Male        Female       Total
    ------------------------------------------------------------------------
    1993:
        AB...........................            1            1  ...........
        Amn..........................            2            2  ...........
        A1C..........................            6  ...........  ...........
        SrA..........................            7  ...........  ...........
        SSgt.........................            8  ...........  ...........
        TSgt.........................            4  ...........  ...........
        MSgt.........................            2  ...........  ...........
        SMSgt........................            1  ...........  ...........
        2Lt..........................            2  ...........  ...........
        1Lt..........................            1  ...........  ...........
        Capt.........................            1            1  ...........
        Maj..........................            2  ...........  ...........
                                      --------------------------------------
          Total......................           37            4           41
                                      ======================================
    1994:
        AB...........................            1  ...........  ...........
        Amn..........................  ...........            1  ...........
        A1C..........................            5  ...........  ...........
        SrA..........................           11  ...........  ...........
        SSgt.........................            5  ...........  ...........
        TSgt.........................            2  ...........  ...........
        MSgt.........................            1  ...........  ...........
        SMSgt........................            1  ...........  ...........
        CMSgt........................  ...........            1  ...........
        Capt.........................            4  ...........  ...........
        Lt Col.......................            5  ...........  ...........
                                      --------------------------------------
          Total......................           35            2           37
                                      ======================================
    1995:
        AB...........................            2  ...........  ...........
        Amn..........................            3  ...........  ...........
        A1C..........................            8  ...........  ...........
        SrA..........................            8  ...........  ...........
        SSgt.........................            7  ...........  ...........
        TSgt.........................            3  ...........  ...........
        MSgt.........................            1  ...........  ...........
        Capt.........................            5            2  ...........
        Maj..........................            3  ...........  ...........
                                      --------------------------------------
        Total........................           40            2           42
                                      ======================================
    1996:
        Amn..........................            2            1  ...........
        A1C..........................           10  ...........  ...........
        SrA..........................           10            1  ...........
        SSgt.........................           13  ...........  ...........
        TSgt.........................            2  ...........  ...........
        MSgt.........................            2  ...........  ...........
        CMSgt........................            1  ...........  ...........
        1Lt..........................  ...........            3  ...........
        Capt.........................            7  ...........  ...........
        Maj..........................            5  ...........  ...........
        Lt Col.......................            6            1  ...........
        Col..........................            3  ...........  ...........
                                      --------------------------------------
          Total......................           61            6           67
    ------------------------------------------------------------------------

                          ADULTERY ONLY COURTS-MARTIAL
                               (By Rank, 1993-96)
    ------------------------------------------------------------------------
                Year/rank                  Male        Female       Total
    ------------------------------------------------------------------------
    1993.............................  ...........  ...........  ...........
    1994.............................  ...........  ...........  ...........
    1995.............................  ...........  ...........  ...........
    1996:
        Amn..........................            1  ...........  ...........
        SrA..........................            1  ...........  ...........
                                      --------------------------------------
          Total......................            2  ...........            2
    ------------------------------------------------------------------------

                     ARTICLE 15'S INCLUDING ADULTERY CHARGES
                               (By Rank, 1993-96)
    ------------------------------------------------------------------------
                Year/rank                  Male        Female       Total
    ------------------------------------------------------------------------
    1993:
        AB...........................            3  ...........  ...........
        Amn..........................           12            3  ...........
        A1C..........................           29            7  ...........
        SrA..........................           55           10  ...........
        SSgt.........................           27            2  ...........
        TSgt.........................            6            1  ...........
        MSgt.........................           12            1  ...........
        SMSgt........................            1  ...........  ...........
        CMSgt........................            4  ...........  ...........
        2Lt..........................  ...........            1  ...........
        1Lt..........................            2  ...........  ...........
        Capt.........................            5            2  ...........
        Maj..........................            3  ...........  ...........
        Lt Col.......................            3  ...........  ...........
        Col..........................            2  ...........  ...........
                                      --------------------------------------
          Total......................          164           27          191
                                      ======================================
    1994:
        AB...........................            2            3  ...........
        Amn..........................           10            8  ...........
        A1C..........................           29            8  ...........
        SrA..........................           59           11  ...........
        SSgt.........................           34            4  ...........
        TSgt.........................           12            1  ...........
        MSgt.........................            7            1  ...........
        SMSgt........................            2  ...........  ...........
        CMSgt........................            1  ...........  ...........
        2Lt..........................  ...........            1  ...........
        1Lt..........................            2  ...........  ...........
        Capt.........................            4            2  ...........
        Maj..........................  ...........            1  ...........
        Lt Col.......................            3  ...........  ...........
        Col..........................            1  ...........  ...........
                                      --------------------------------------
          Total......................          166           40          206
                                      ======================================
    1995:
        AB...........................            4            2  ...........
        Amn..........................           15            3  ...........
        A1C..........................           31           13  ...........
        SrA..........................           64           14  ...........
        SSgt.........................           37            1  ...........
        TSgt.........................           14  ...........  ...........
        MSgt.........................           14  ...........  ...........
        SMSgt........................  ...........            1  ...........
        CMSgt........................            1  ...........  ...........
        1Lt..........................            1  ...........  ...........
        Capt.........................            7  ...........  ...........
        Maj..........................            2  ...........  ...........
        Lt Col.......................            2  ...........  ...........
                                      --------------------------------------
          Total......................          192           34          226
                                      ======================================
    1996:
        AB...........................            4            4  ...........
        Amn..........................           19            3  ...........
        A1C..........................           38           15  ...........
        SrA..........................           70           23  ...........
        SSgt.........................           49            8  ...........
        TSgt.........................           16            1  ...........
        MSgt.........................           14            3  ...........
        SMSgt........................            1  ...........  ...........
        CMSgt........................            5  ...........  ...........
        2Lt..........................            1            1  ...........
        1Lt..........................            1  ...........  ...........
        Capt.........................           10            3  ...........
        Maj..........................            3  ...........  ...........
        Lt Col.......................            3  ...........  ...........
        Col..........................            2  ...........  ...........
                                      --------------------------------------
          Total......................          236           61          297
    ------------------------------------------------------------------------

        Senator Harkin. And I would like to know the figure for how
    many were punished nonjudicially for the same crime, article
    15's. Mr. Spinner, her attorney, said he had requested that
    Flinn's case be handled this way, but was turned down. And I am
    wondering why. Why would that be turned down? Why would not
    this be an article 15?
        How many attorneys do you have in the Air Force, running
    around trying to find out how many people are committing
    adultery?

                  Uniform Code of Military Justice violations

        General Fogleman. Senator, I do not think we have very many
    people in the Air Force running around trying to figure out who
    is committing adultery. In most of these cases, what you
    discover is adultery is an incidental thing. To start with,
    adultery is a crime under the Uniform Code of Military Justice.
    That is a set of laws that was enacted by the Congress for the
    military to abide by.
        Senator Harkin. Yes, sir; I understand that.
        General Fogleman. So when--what we are interested in, in
    the U.S. Air Force, is not trying to regulate the sexual mores
    of America. We have got plenty of important things to do.
        Senator Harkin. I agree with you.
        General Fogleman. But what we are very much interested in
    is a thing called improper relationships that end up
    undermining the morale and discipline of an organization. And
    so the Lt. Kelly Flinn case is very much like the Khobar Towers
    case. I would really like to see people not comment so much on
    it until they have all the facts. And we cannot get the facts
    out until you either have a court-martial or you have a
    resolution of the affair so that you can put the facts out. And
    the facts have not come out.
        Some of them are starting to come out. And I think that, in
    the end, this is not an issue of adultery. This is an issue
    about an officer who is entrusted to fly nuclear weapons, who
    disobeyed an order, who lied. That is what this is about.
        The adultery thing is the fabric--that is the thing that
    has been spun up in the press. That is not what the Air Force
    is interested in.
        Senator Harkin. So the Air Force is not court-martialing
    her for adultery, then?
        General Fogleman. No; there is a specification of the
    charge of adultery, because that starts the chain of events
    here, where she ends up being charged with lying and----
        Senator Harkin. General, is not lying and disobeying orders
    also punishable under the UCMJ?
        General Fogleman. Yes.
        Senator Harkin. Then why was not she charged with that?
        General Fogleman. She is.
        Senator Harkin. I thought she was just charged with
    adultery. No; she is charged with lying and disobeying an
    order?
        General Fogleman. Yes, sir; it is this fact thing, sir. It
    is the fact thing.
        Senator Harkin. OK, then why was the adultery thing thrown
    in? I mean why were 70 other people and hundreds more punished
    nonjudicially for the same crime, or is that not true?
        General Fogleman. No; I am sure that those numbers are
    reasonably accurate. And it has not to do--it has to do with
    this idea that we must make sure that we have--let me go back
    and start it this way.
        Are you offended by what happened at Aberdeen? I suspect
    you are.
        Senator Hutchison. Yes.
        Senator Harkin. Absolutely.
        General Fogleman. My position on that and our position is
    if you do not have standards and if they are not universally
    known and uniformly applied, then the result will be incidents
    like Aberdeen. So, 2 years ago, the U.S. Air Force rewrote a
    regulation that had to do with a judgment that was, quite
    frankly, not very well understood. It was called
    fraternization. And everybody thought that that had somehow to
    do with a superior officer of one sex exploiting a subordinate
    of another sex.
        Fraternization is much broader. It could be a female/male
    or a male/male or female/female, but the whole essence behind
    fraternization is if somebody in a military organization thinks
    that somebody else is getting special favor or curried, it
    undermines the trust and integrity and morale.
        Senator Harkin. I understand that. And that is very
    legitimate. But what I am reading in the paper and what I am
    understanding in this case is that 70 were court-martialed for
    adultery. It seemed to me that there are other options that you
    could pursue--I think the Air Force is looking ridiculous on
    this, and I think the military is, too.
        Now, you used the word ``incidental.'' You said it was
    incidental to what happened. Then why was she even charged with
    it? Why not charge her with more egregious crimes, which I
    consider to be much more detrimental to the service, lying and
    disobeying orders?

                  Uniform Code of Military Justice enforcement

        General Fogleman. Sir, if we did that, somebody would drop
    a quarter on us and ask us why we were not charging this person
    for violating the Uniform Code of Military Justice. The wife of
    the young man involved in this has already written the
    Secretary a letter on this, asking this question. There is more
    than one victim as you get into these things. And so, when you
    start to talk about good order and discipline----
        Senator Harkin. No; but when it comes to things that get to
    things like adultery or fornication and things like that, it
    seems to me the best thing to do is to refer them to the
    chaplain, that is the proper people to handle something like
    that.
        General Fogleman. Sir, we do.
        Senator Harkin. You can note it in their record, and you
    can do the article 15's, but to spend time and money to
    prosecute people for this, I think is making us look
    ridiculous.
        General Fogleman. Sir, that is what we do. And
    unfortunately, I agree that it makes us look ridiculous because
    people do not have the facts. You start out with--you take this
    person who does this and you say, look, this is wrong, cease
    and desist.
        Senator Harkin. But, you see, a lot of States still have
    blue laws. That is what I was referring to, Madam Secretary.
        General Fogleman. I grew up in a State that had blue laws.
        Senator Harkin. Yes; they do. And I am sure, in some
    States, it is still a crime to commit adultery. But they do not
    enforce it because they have got better things to do with their
    time.
        General Fogleman. Yes, sir.
        Senator Harkin. And I am saying if you have got adequate
    charges against someone of disobeying an order and lying, then
    that is what you go after, not the adultery. Forget about the
    adultery. I do not know, it seems spiteful.
        General Fogleman. The chain of events starts--once the
    chain of events starts and you call someone in and you say
    cease and desist, and instead of ceasing and desisting, they
    continue----
        Senator Harkin. That is a violation of an order.
        General Fogleman. Exactly.
        Senator Harkin. Well, then you put them down for violating
    an order.
        General Fogleman. You do that.
        Senator Harkin. Then you court-martial them on that, too,
    or an article 15 or whatever you want to.
        General Fogleman. And you also--because somebody has been
    aggrieved by the original act, that becomes part of the
    specifications. You have to look at the totality of the thing.
        Senator Harkin. Any time you are involved in anything like
    adultery, there is always going to be some aggrieved party. I
    understand that. And I certainly do not condone adultery or
    fornication or anything else. But I am just saying that with
    all of the things that you have to do--you have got things like
    rape and sexual harassment and all the other things--disobeying
    orders, the things that really have to do with the form and
    structure and discipline of a military organization, but to
    throw in this adultery thing, it just seems to me just makes us
    look ridiculous. And I will just end on that.
        And to whatever extent we can send directions through the
    Appropriations Committee as to the expenditure of taxpayers'
    dollars in this regard, I would like to look at that. There are
    plenty of other things to investigate. And I am glad you have
    enlightened me on the other aspects of this case, but it seems
    to me that--if that had been done and that had been the
    charges--you would not have any of this stuff happening in the
    press.
        General Fogleman. Sir, those have been part and parcel of
    these charges since the very first day.
        Senator Harkin. But I say, should they have been part and
    parcel? Should you have a reexamination of how your lawyers and
    your investigators are spending their time if, in fact,
    hundreds--how many hundreds, I do not know--were punished for
    the same crime? I am beginning to wonder who is running around
    doing what and looking at this. And darn it, I did not even get
    to my second question which I really wanted to talk about,
    which was the F-22.
        Now, I do not know who paid for this insert. I assume
    Lockheed Martin. I do not know. But I do know who paid for
    this. I do know who paid for this brochure, publicizing the
    ``F-22 Raptor, the Keystone of Air Dominance.'' It has General
    Fogleman's picture. It has Dr. Widnall's picture. And it is a
    wonderful brochure about the F-22, and it must have cost a
    fortune to produce. And it is put out by the Air Force, paid
    for by taxpayers' dollars.

                         ``Global Engagement'' brochure

        General Fogleman. Yes.
        Dr. Widnall. Yes.
        Senator Harkin. I wrote you a letter--oh, you have got
    another one.
        Dr. Widnall. This is our document ``Global Engagement,''
    which we issued to let our Air Force know what we believe the
    Air Force would look like in the 21st century.
        Senator Harkin. Are you hawking a certain weapon system in
    that book?
        Dr. Widnall. Well, I think we are laying out a whole range
    of military capabilities.
        Senator Harkin. Oh, yes.
        Dr. Widnall. And I am sure there is a picture of the F-22
    in here, although I cannot swear to it.
        Senator Harkin. Well, this book is dedicated to only one
    thing, and that is to try to sell to the public and to Congress
    a certain aircraft manufactured by a private business in
    America.
        Now, I know times and conditions change. I wrote you a
    letter 1 month ago, asking about the use of Air Force planes to
    fly down for the F-22 roll out ceremony. And I just got a
    response yesterday.
        Dr. Widnall. Yes, right.
        Senator Harkin. I am going to have to respond again,
    because I did not get all my questions answered. But I know
    those used to be done in the past.
        There is a lot of things we used to do around here all the
    time that we do not do any longer because times change and
    circumstances change. There is no way you are going to convince
    me that taking an Air Force plane and taking Members of
    Congress and members of the press down for a rollout of a
    private aircraft from a private entity somehow enlightened them
    about the team and the program and the characteristics, et
    cetera, et cetera. That could be done in hearings. That is why
    we are paid to sit in hearings like this.
        Senator Stevens. Senator, I am going to have to tell you
    your time is up.
        Senator Harkin. Excuse me, Mr. Chairman, I know. I need to
    know----
        Dr. Widnall. And we will supply that information to you.
        [The information follows:]

                               F-22 Publications

        Three thousand copies of the brochure ``F-22 Raptor: The
    Keystone of Air Dominance for the 21st Century'' were printed
    at a cost of $12,200.

        Senator Harkin. I have a feeling that there is a fine line
    that has got to be walked here. And I understand the Air Force,
    General Fogleman; you have got to do what you think is in the
    best interest of the future defense of our country. On the
    other hand, I do not know if it is right and proper for
    secretaries of any military organization or generals to be
    putting their picture in a brochure that is basically hawking a
    certain procurement of a certain aircraft that is kind of
    contentious right now.
        You could talk about the need for the military structure,
    what the defense projects----
        Senator Stevens. Senator, I am really going to have to ask
    you to stay within the boundaries here. Now, Senator Cochran
    has been waiting a long time, and we agreed to be over by noon.
        Senator Harkin. I know. And I appreciate it. I am sorry. I
    really wanted to get into the F-22. I will submit my questions
    to you in writing about this and how much this cost and under
    what authority you felt that you could spend taxpayers' money
    to put that out.
        Senator Stevens. Well, I suggest you write the Secretary of
    Defense, because we do the same thing when we christen vessels.
    We do the same thing when we launch every kind of vessel we
    buy, and that F-22 is already approved by the Congress. It has
    now been--money has been spent. It is official policy of the
    United States that you disagree with. But it is nothing wrong
    with the official policy of the United States.
        Senator Cochran.
        Senator Cochran. Mr. Chairman, thank you very much.
        Madam Secretary, General Fogleman, we appreciate very much
    your patience and your cooperation with our committee.
        I know that in the ``Quadrennial Defense Review,'' one of
    the areas of concern was whether or not we were getting enough
    money planned for modernization. And one of the areas of
    modernization which we have to fund is the improvement of our
    current fighter trainers. We have a line of new trainers being
    funded in this legislation. I know they are going to be
    assigned to various pilot training facilities. Columbus Air
    Force Base in Mississippi is one of four pilot training
    facilities.
        We were very pleased to see that in the last BRAC round,
    the Air Force had rated that pilot training facility the No. 1
    flight training facility in the Air Force. Is it on schedule to
    receive these new trainers?
        I understand that they are going to be assigned on a
    schedule that would have the trainers going to Columbus last
    among all of the pilot training facilities. That has scared the
    hell out of the people in Columbus. You know, the base closing
    round experience has traumatized folks all over the country. If
    they see one signal that indicates that you are not in the
    first row or the first rank, or you are not a valued part of
    the Air Force infrastructure, the rumors start flying around
    that you are going to be on the list for the next base closing
    round.
        And so they start calling and wondering what is going on,
    what is the problem. Is there an explanation for that that will
    satisfy the people in my State that you have not all of a
    sudden decided that instead of the No. 1 pilot training
    facility in the country, that now we have the least favored
    pilot training facility in the country?

               Columbus Air Force Base pilot training facilities

        General Fogleman. Well, sir, I guess there would be two
    dimensions to that. There was nothing sinister in the
    deployment plan as they unfolded this thing.
        Quite frankly, I wish we were buying the JPATS at a faster
    rate so that we could be, in fact, putting it into the bases
    faster--all of the bases. I would tell you that there is almost
    a reverse psychology at work here. And that is Columbus,
    because of its air space proximity, relative lack of
    crosswinds, all of these kinds of things, makes it a lot more
    viable to operate the T-37 out of there longer than it does
    some other places. And so the JPATS kind of flowed to other
    places.
        The other part of the dimension is I will tell you that as
    we try to spin up our pilot training from the low numbers that
    we had in the past, up to about 1,000 to 1,100 a year, I cannot
    imagine us being able to close any pilot training facility when
    we are facing the problem we are with pilot retention, not only
    in the Air Force but all the other services.
        So you know, I do not know how a BRAC would unfold. I do
    not know what the criteria were. But if somebody were to ask me
    today, do we have any excess capacity in the pilot training
    business, should we be looking to close a base, my answer would
    be absolutely not. And so that is about as good as I can do
    probably, Senator.
        Senator Cochran. Well, I am reassured. I hope folks back
    home will be, too. Because I have understood all along that
    this is a modern facility and there has been a lot of money
    spent at that facility to upgrade simulators and all of the
    other equipment. The computerized training capacity there is
    very impressive. And all of my visits confirmed the fact that
    the Air Force has invested a lot of money there, and for a
    purpose--to keep it modern and keep it up to date. And I just
    wanted to be sure that something had not changed while I was
    not looking.

                                  future BRAC

        General Fogleman. No, sir; in fact, as we talked about how
    much you shape a future BRAC, you know, to keep some of this
    anxiety down. One of my recommendations would be to go to the
    military departments and get this kind of military judgment
    that says, you know, this is where we are at on these kinds of
    bases or whatever. And if we have a category of bases, like
    pilot training or something, that it makes no sense to go
    through all this pain, because there is no payoff at the end,
    we ought to just take them off the table upfront, I think.
        Senator Cochran. Well, that is one of the problems with the
    base closing process. The service can recommend and can put out
    the facts about what they think would sway the decisionmakers,
    and then the decisionmakers--in this case a commission that is
    independent, unaccountable, no appeal can be taken, not subject
    to cross-examination by anybody, but just sitting there and
    making these decisions, they get appointed by folks--but it is
    an unusual process. And because it is, it tends to frighten and
    traumatize--I used that word a while ago.
        And so I am not very impressed with the recommendation that
    we are going to get to go through another one of those
    experiences. Because what happens is the communities invest
    hundreds of thousands of dollars to help support the presence
    of a facility that they know is important to the Air Force, has
    been recommended to be kept open, not on a hit list of any
    kind, and zoning is undertaken, all the public officials are
    mobilized to do everything they can to demonstrate their
    support for the service that is involved, and then to say we
    are going to get to go through this all over again, you all,
    don't you look forward to it?
        I mean every town in America that has a military facility
    you can be assured is searching for ways to deal with this all
    over again. People contribute money, voluntarily, to help
    support the effort. Groups organize. People are hired--staff
    members, lobbyists. I mean if we took all the money that went
    into protecting communities from the possible effects of a base
    closure round, we could buy a lot more trainers, we could
    upgrade a lot more facilities.
        I am not sure that this is a money-saving operation at all.
    I think it is a huge expense. And why is it even undertaken?
    Because the perception is that Members of Congress cannot make
    rational or good decisions based on facts and evidence, in
    concert with testimony and advice from the military services
    and the Commander in Chief and his staff. I think we are making
    a big mistake, saying that our governmental institutions are so
    incapable of functioning that we have to turn to these
    independent commissioners and trust that they are going to make
    the wisest decisions.
        I am not impressed with that recommendation. I guess you
    can tell.
        General Fogleman. Yes, sir.
        Senator Cochran. And I would vote against it if it were on
    the floor of the Senate today. But that is not our committee's
    responsibility to make that recommendation. The Armed Services
    Committee has had a hearing on it. They are looking at it. And
    I am sure they will make a recommendation to the Senate, and
    then we will have an opportunity to debate it in the Senate.
        What we are having to do here is to allocate scarce
    resources among a lot of competing interests and needs for the
    Air Force. And it seems to me that we are stretching the
    dollars pretty thin over the global reach that the Air Force
    has under its responsibility.
        This air expeditionary force, for example, we looked at in
    Saudi Arabia and northern Italy to see what was being done
    there to carry our share of the burden for peacekeeping
    operations in Bosnia, as well as enforcing the no-fly zone in
    Iraq. And the big supplemental appropriation is supposed to
    offset some of those costs. But I wonder whether or not we are
    taking money from things like upgrading pilot training,
    trainers for the pilot training, or modernizing at Keesler.
        For example, we have a need for new air traffic control
    equipment that will help improve the quality of training of air
    traffic controllers in the Air Force. The 2d Air Force is
    there. We are happy that they are a resident of our State. And
    Keesler has been one of the long-time training facilities of
    the Air Force, and we are very proud and honored that it is
    located in our State of Mississippi.
        But my question is: Are we letting things like that slide?
    Is that one of the practical results of our ambitious effort to
    keep peace in the world and to send our planes and build
    facilities overseas? Are we putting in jeopardy those
    investments that we ought to be making here at home, in pilot
    training and training air traffic controllers at facilities
    that are important to our local economies as well as our
    national defense?

                        Air traffic controller training

        General Fogleman. Well, I think that what we are always
    trying to do is reach the balance in that. We try not to have
    any greater number of forces forward deployed than what we
    think we need to do the job. But clearly, I think the QDR gets
    at the heart of this.
        Because what happens historically is we have the money in
    the procurement. We migrate it out of the procurement to pay
    either these contingency bills or we let a system, like this
    air traffic control training system, slip. And it is really
    kind of covered in an account called other procurement. And we
    will let it slip until it reaches a crisis. And then, when it
    reaches a crisis, we have to go in and pull money out of
    another account and transfer it there.
        So in this QDR process, the way that it is supposed to work
    for us is, again, we stay within the top line. We have to
    identify some offsets that we can use to go work on these kinds
    of issues, to go fix things that would become migration
    candidates in the future. And that was one of the commitments
    that the Secretary of Defense made to the service chiefs as we
    went and worked this deal--that these dollars that we would
    identify would be available to us, as services, to go fix these
    kinds of things.
        And I think all of us have seen--and I mentioned it in my
    introductory statement--that we have seen some erosion in near-
    term readiness in some of these things, because we tend to be
    trying to get on with preserving our long-term modernization,
    and we tend to push some of these things out longer than we
    would like.
        Senator Cochran. Thank you very much.
        Senator Inouye [presiding]. Senator Hutchison.
        Senator Hutchison. Thank you, Mr. Chairman.

                               F-22 construction

        I just wanted to ask one other question. Do you think it
    would be more efficient or save money if the F-22 were made all
    in one place?
        Dr. Widnall. I guess I would not want to give a quick
    answer to that, because, at this point, we sort of are where we
    are. It is a teaming arrangement. We have a whole variety of
    subcontractors. And it is sort of a common way that one builds
    aircraft, to do the large sections at different manufacturers
    and bring them together. So I guess I really do not have an
    opinion on that. But I could sort of get back to you on that.
        [The information follows:]

                               F-22 Construction

        The F-22 program is structuring the production program to
    incentivize the contractor to produce the F-22 at an affordable
    price. The contractors are responsible for structuring
    efficient production operations to reach the established
    program pricing goals. Currently, the F-22 undergoes final
    assembly at a single site--Lockheed Martin Aeronautical Systems
    (LMAS), in Marietta, GA. Major structural sections are
    assembled at LMAS, Lockheed Martin Tactical Aircraft Systems
    (LMTAS), Fort Worth, TX, and Boeing Military Aircraft (BMA)
    Seattle, WA.
        A decision to abandon the Tri-Company (TRICO) organization
    at this point in the program would have immediate, significant
    cost, schedule, and industrial base impacts. First, the
    industrial business base would suffer as employment would be
    reduced at two of the three sites. The losing facilities would
    be directly impacted by reduced employment and indirectly
    impacted by lost learning which would have kept them
    competitive for future contracts (i.e., the Joint Strike
    Fighter). Secondly, the program would experience some level of
    added nonrecurring cost to reacquire unique production
    capabilities previously performed at the other sites. Examples
    of these include the Precision Drill Center and automated
    composite tape lay-up machine at Boeing. A third impact would
    be the necessity to relocate/recreate tooling from the other
    sites. The program team decided early to invest in production
    (``hard'') tooling to prove tooling concepts in Engineering and
    Manufacturing Development (EMD). This large, complex tooling
    would have to be relocated/recreated at the single production
    site. Finally, as we proceed with flight testing of the EMD
    aircraft and into initial production, we anticipate some level
    of design change to ensue. Given that each of the primes bring
    unique engineering talent to the team, there would be an added
    level of learning loss impact as we implement these changes
    into the production design.

                              Aircraft manufacture

        General Fogleman. I think I would have to defer to the
    Secretary on that.
        One of the things that makes this type of a manufacturing
    process more viable today than it ever was in the past is the
    fact that we are, in fact, using CAD/CAM systems out there. In
    the past, when you were building airplanes off of paper and you
    were essentially constructing metal parts, we spent a
    tremendous amount of time trying to match up wings and
    fuselages and things like that. And what we are discovering now
    is that we do have centers of excellence, you know, that
    certain manufacturers have made tremendous investments, many of
    them associated with their commercial activities or whatever.
    They have large autoclaves.
        And so you save having to replicate things or bring that,
    by taking advantage of the expertise that has been developed at
    these various centers. And with the CAD/CAM systems, we very
    quickly seem to be able to pull this stuff together and it
    works well. So, that is my only observation.
        Senator Hutchison. Well, it is just a thought that I
    thought I would throw out there. And it might be something you
    might consider asking if you are looking at saving money down
    the road and making it more efficient.
        Thank you.
        Thank you, Mr. Chairman.
        Senator Inouye. Thank you very much.
        Before recessing, if I may, I would like to make a couple
    of observations. First, on the concern expressed by my
    colleague from Iowa, I have always felt that it is your
    responsibility to communicate with Members of Congress in the
    best way possible. You could send us a volume of single-spaced
    memos, and you know very well that very few if any Members of
    Congress would read them. At the same time, you could do the
    same for personnel in the Air Force or any other service. You
    know that most airmen and officers would not read them.
    Communication is very important and I hope that you will
    continue doing this.
        Just a few weeks ago, I was privileged to participate in
    the launch of a very small ship, a Coast Guard ship. The unit
    price was less than a single F-22. From the standpoint of the
    budget, it is not that important. But yet the color guard was
    there, the Coast Guard band was there, and 3,000 people were
    assembled. It was a big event. And I suppose a few thousand
    dollars were spent for that purpose.
        But I think it is all part of the process, part of morale.
    And I consider that to be an important function on your part.
    So I hope that you will not stop communicating with us. I think
    it is very important that you issue your report to the troops
    and to the Members of Congress.
        The other observation I would like to make is the one that
    the chairman and I had the privilege of participating in on
    your aircraft. I thought I knew as much as anyone on what was
    happening on the Korean Peninsula. I have always considered
    that a sensitive area. But I left there feeling that this was a
    very dangerous place. Here you have a force up north that has
    about 10,000 artillery pieces aimed directly at one city,
    Seoul. They have the second largest army in the Pacific and
    Asian rim, second only to China--larger than ours, larger than
    Korea and the United States combined.
        And at the same time you have a regime that is almost
    religious in nature. And then you add to this dangerous
    formula, starvation. I can understand why, in our visit to
    Osan, your commanding general there suggested that they should
    step up their training program, to make certain that they are
    ready. And I must commend you, sir, for sending those
    instructions to the people. I just hope that the people of the
    United States sense that it is not all peaceful in the Korean
    Peninsula, that the potential for an explosion is real, and one
    mishap could bring this about.

                         Additional committee questions

        I know I speak for the chairman when I say thank you very
    much for your presence this morning and your testimony.
        [The following questions were not asked at the hearing, but
    were submitted to the Department for response subsequent to the
    hearing:]
               Questions Submitted to Secretary Sheila E. Widnall
                   Questions Submitted by Senator Ted Stevens
                    f-22 first flight and development status
        Question. Secretary Widnall, are you anxious about progress on
    avionics and integration and software development for the F-22?
        Answer. The F-22 will feature capabilities not previously achieved
    in a fighter weapon system. The development risks are well understood.
    However, program risks for avionics and software development,
    integration and interface are being mitigated by using common interface
    definition tools, performing integration incrementally beginning with
    subsystems and continuing to total systems integration, using a single
    set of software/hardware development tools, prototyping and
    benchmarking software, making extensive use of the avionics integration
    laboratories and simulators, and carefully evaluating progress using
    metrics.
        The avionics capabilities required to support the F-22 first flight
    are ready. Equipment operational/flight clearance (EOFC) have been
    issued, the necessary avionics hardware and software have been
    installed in the aircraft and have passed functional tests. However,
    these are only a subset of the suite of avionics equipment that will be
    the final F-22 configuration.
        The F-22 program restructure added development time, expanded
    ground test facilities, and added flight test time due to the
    anticipated complexity of the efforts. The Air Force is committed to
    and has fully-funded the F-22 program, and has high confidence that it
    will deliver on time and within budget.
        Question. Secretary Widnall, can you describe the prime
    contractor's planned investment in the F-22 EMD program?
        Answer. The bulk of the contractors' investment, some of which will
    begin now while the program is in the Engineering and Manufacturing
    Development (EMD) phase, is targeted for the Production program, which
    is scheduled to begin next year (fiscal year 1998). The planned
    investments are not needed or required to meet the EMD contractual
    requirements. The contractor plans to implement numerous producibility
    improvement projects, coupled with lean manufacturing initiatives and
    performance-based contracting to ensure costs remain within budget.
        The Lockheed-Martin/Boeing/Pratt & Whitney industry team, with
    Lockheed-Martin and Pratt & Whitney as the prime contractors, is taking
    numerous steps to continue the F-22's history as a model acquisition
    program.
                                f-22 performance
        Question. Secretary Widnall, what F-22 systems and technologies are
    important to the joint strike fighter program?
        Answer. The F-119 is the core engine for the Joint Strike Fighter
    (JSF) aircraft. The JSF F-119 derivative engine supportability will
    significantly increase from F-22 lessons learned because reliability
    and durability anomalies will be worked out during F-22 testing and
    operational usage. When the JSF enters service, the F-119 will have
    already experienced approximately 750,000 hours of use.
        F-22 avionics are important to the JSF. To date, $2.2 billion has
    been spent within the F-22 avionics program that has a direct benefit
    to JSF. Additionally, $1.3 billion of the work to go will have direct
    benefit to the JSF.
                                     ______

                  Questions Submitted by Senator Arlen Specter
                       status of mc clellan/tobyhanna moa
        Question. On March 13, 1997, the Defense Depot Maintenance Council
    approved the plan to transfer the ground communications-electronic
    workload from McClellan Air Force Base to Tobyhanna Army Depot. The
    DDMC directed the Army to prepare a Memorandum of Agreement to transfer
    workyears and authorizations so that Tobyhanna could start hiring Air
    Force Personnel. Please inform me if the MOA is proceeding under an
    acceptable time frame and when Tobyhanna will be able to hire?
        Answer. The Memorandum of Agreement (MOA) is proceeding under an
    acceptable timeframe. As of June 9, 1997, the last iteration of the
    draft MOA was sent to Air Force Materiel Command for approval with a
    high expectation of full agreement. After the MOA is signed, the Army
    will stand up some form of Forward Operating Agency at McClellan AFB,
    CA, and begin transferring people, as practical. Twenty-two percent of
    the current workload will transfer in phases over the following fiscal
    year beginning on Oct. 1, 1997. With the signed MOA, the Army should be
    able to hire people who are willing to transfer or hire against vacant
    positions.
                         transfer of funds to tobyhanna
        Question. The Defense Depot Maintenance Council also directed the
    Air Force to reprogram BRAC funds for the necessary renovations at
    Tobyhanna, which I understand will total about $13.6 million. I
    understand that the Army needs fiscal year 1998 military construction
    funds to accommodate the transfer of the ground communications-
    electronic workload in fiscal years 1999 and 2000. Has the Air Force
    requested funding for the transfer yet, and, if not, when will it do
    so? If military construction funds are not available, will the Air
    Force request a reprogramming of Operations and Maintenance funds to
    MILCON funds in order to complete the transfer as soon as possible?
        Answer. We are in the process of determining whether Military
    Construction or Operations and Maintenance funding will be the best
    source to meet facility and property requirements for this action,
    considering the tight authorization levels imposed on the Army. We
    expect to resolve this issue within the quarter.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
              air force research laboratory/impact to phillips lab
        Question. On April 1, 1997, the Air Force announced a plan to
    reorganize its laboratory organizational structure under a single
    commander based at Wright-Patterson AFB, Ohio. The final organizational
    structure is scheduled to be implemented by October 1997. We have
    considerable concerns about how this will effect manpower levels at
    Phillips Lab. Will you please provide the Subcommittee within 15 days,
    a report detailing the consolidation of the Wright, Armstrong, Rome and
    Phillips Laboratories into a single Air Force Laboratory?
        Answer. The new single laboratory, formed on April 8, 1997 and
    called the Air Force Research Laboratory (AFRL), is headquartered at
    Wright-Patterson AFB, Ohio. The primary goal of this organizational
    realignment is to reduce management overhead while improving the focus
    on technical activities. Additional goals include organizational
    alignment of similar technologies which are now distributed among
    multiple laboratories, as well accountability for all laboratory
    resources (funding and people) under a single commander. The expected
    result will be a streamlined laboratory structure that better meets the
    needs of the warfighter and our other customers.
        The mission of the single laboratory has not changed from that of
    the previous laboratories and the Headquarters Air Force Materiel
    Command (HQ AFMC) structure. The realignment to a single laboratory is
    strictly organizational in nature. There is no intent to close any
    sites or move any mission-related (research and technology development)
    activity from current locations.
        Under the currently implemented first phase of the realignment, the
    four existing laboratory structures remain intact, but now report to
    the new AFRL commander (AFRL/CC), instead of the four product centers
    to which the laboratories were previously assigned. The Air Force
    Office of Scientific Research (AFOSR), which manages our basic research
    program, also reports to AFRL/CC. In Phase II (to be implemented in
    October 1997), our intent is to disestablish the four existing
    laboratories as organizational entities and reorganize their current
    technology directorates (over 20) into about 10 larger technology
    directorates. The directors of the new technology directorates, along
    with the director of AFOSR, will report to AFRL/CC.
        Several of these new technology directorates will have components
    in more than one location since there is no intent to move mission-
    related work or close sites. The number and content of the new
    directorates will be carefully formed such that similar technologies
    are grouped together under a single manager so as to maximize technical
    synergy and, thereby, promote the most efficient application of dollars
    and people. The recommendation for the number of directorates and their
    technical content will be the result of a special task force composed
    of senior representatives from our current four laboratories who will
    examine various options over a period of several weeks.
        The current HQ AFMC Science and Technology (HQ AFMC/ST) staff is
    the core of the new AFRL staff, and will be augmented by staff
    personnel currently assigned to our four existing laboratories as we
    approach the October 1997 implementation date for Phase II. The new
    AFRL staff will provide support for both HQ AFMC (the old HQ AFMC/ST
    job) and the AFRL commander. The exact size of the single laboratory
    staff has not yet been defined, but will be smaller than the current
    sum of the HQ AFMC/ST staff and our four current laboratory staffs. In
    order to populate the headquarters with a representative group from all
    the laboratories, a small number of staff positions may be moved from
    current laboratory sites to Wright-Patterson AFB.
        There are approximately 7,100 authorized positions in the science
    and technology community today. While we expect manpower reductions to
    result from this reorganization due to organizational streamlining and
    reduced layering, we are still defining how large this reduction will
    be and where it will occur. Reductions resulting from the single
    laboratory realignment will focus on overhead (support and management)
    positions rather than on the scientists and engineers performing
    research.
        Question. As part of that report will you also include detailed
    information about the proposed organizational structure, changes in
    location, funding and staffing of directorates and programs, and
    potential impacts to the States involved (Texas, New York, California,
    Ohio, and New Mexico)?
        Answer. There are no plans to move people (with the exception of a
    few staff positions), technical programs, or funding from current
    locations. Overhead position reductions realized by the organizational
    streamlining will probably occur at all current locations. The exact
    number of positions which may be reduced has not yet been determined.
    Similarly, the exact effect of the organizational streamlining on any
    specific state cannot be determined at this time.
                           importance of kirtland afb
        Question. During the last base closure process Kirtland AFB was the
    only base in the history of base closure that the Secretary of Defense
    wrote to the BRAC Commission and said that he had made the wrong
    decision in recommending a major realignment of the base. Since long
    before that time, we had been working diligently to make Kirtland a
    ``sunrise'' base and not a ``sunset'' base. Can you tell us why
    Kirtland is so important to the Air Force and your views about the role
    it will play in the future?
        Answer. Kirtland AFB, NM offers a unique combination of units that
    provide the necessary oversight, implementation, modification and
    storage of United States nuclear assets. The nuclear units at
    Kirtland--Department of Energy, Defense Nuclear Agency, Kirtland
    Underground Munitions Storage Center, high explosive testing, and
    Radiation Simulator operations enhance nuclear synergism. It is also
    the location of one of the Air Force's premier laboratory facilities,
    Phillips Laboratory. The consolidation of Space Test and
    Experimentation from Los Angles AFB, CA offers the high-tech laboratory
    interaction needed to succeed in space. The base is also home for one
    of the Air Force's Special Operations Units, the 58th Special
    Operations Wing, and provides the unit with excellent training
    opportunities and support. Continued operations of these units at
    Kirtland will provide the Air Force with the research, tools and
    warfighters needed to achieve the objectives of Global Engagement.
                     usaf training for the german air force
        Question. Many know that Holloman Air Force Base is home of the
    famous F-117 Stealth Fighters, however, not many know that Holloman is
    also home to a training mission of the German Air Force. That mission
    is expanding soon to include an additional 30 Tornado aircraft and 500
    military personnel and their families. Can you tell us whether that
    mission remains on schedule and why relationships like the one we have
    formed with the German Government serve the interests of the Air Force
    and of the United States?
        Answer. Yes, the mission remains on schedule for the planned
    operational start date of October 1999. The Environmental Impact
    Statement (EIS) expanding the German Holloman AFB, NM operations is on
    schedule for completion in December 1997. No show-stoppers have been
    identified at this time. The construction program is scheduled to begin
    immediately following a favorable Record of Decision on the EIS. All
    projects are on schedule in the design phase.
        This relationship with the Germans serves the interest of the Air
    Force and of the United States, both militarily and economically. The
    drawdown in Europe and Germany continues to reduce the daily contacts
    our Services enjoyed for the past 50 years. This relationship further
    strengthens our military-to-military contacts directly contributing to
    the Peacetime Engagement component of our current National Military
    Strategy. The results of these contacts help build mutual trust,
    effective communications and interoperability, and doctrinal
    familiarity. The success of the allied forces in Desert Storm is, at
    least in part, attributable to the close and effective military-to-
    military working relationship fostered by training and working
    together. Germany, a key ally and coalition partner, is taking on more
    and more responsibilities outside their own country as demonstrated by
    their current contribution to NATO's Stabilization Force and Joint
    Endeavor. The training that the Germans receive from this arrangement
    makes Germany a more capable and reliable partner which translates into
    committing fewer U.S. troops to meet future contingencies around the
    world.
        Economically, the Germans are fully funding all construction costs
    associated with the Holloman beddown. They have already spent $35
    million on infrastructure projects and the next phase of construction
    will be over $100 million. They also pay for all base operating costs
    associated with being at Holloman AFB. Lastly, this relationship has
    had a positive economic impact for the local economy in the Alamogordo,
    NM community.
                           air force pay and benefits
        Question. What changes are being made in Air Force pay and benefits
    under the QDR?
        Answer. There are no final recommendations at this time from the
    Quadrennial Defense Review regarding Air Force pay and benefits. Many
    proposals and ideas have been surfaced and will receive further study.
                                  food stamps
        Question. How many Air Force families receive food stamps?
        Answer. The results of a 1995 Office of the Secretary of Defense
    food stamp survey found that approximately 11,900 active duty
    Department of Defense military personnel (0.8 percent) are eligible to
    receive food stamps. Based upon the DOD estimate, the Air Force
    estimated that approximately 1,200 active duty Air Force members (0.3
    percent) may be eligible to receive food stamps. More than half of the
    members eligible to receive food stamps are only eligible because the
    United States Department of Agriculture does not include in-kind
    housing (forfeited Basic Allowance for Quarters/Variable Housing
    Allowance) as cash income. If on-base families were excluded, the food
    stamp population would be reduced from 0.8 percent to 0.3 percent of
    the total DOD force (from 11,900 to 4,500 members) and from 0.3 percent
    to less than 0.1 percent of Air Force population (from 1,200 to 400
    members). Typically, those eligible for food stamps are junior enlisted
    members with larger-than-average families.
        Question. Does the Air Force believe that this is a serious
    problem? What do you propose to do to solve it in the Air Force?
        Answer. While the food stamp issue warrants attention, we do not
    consider it a serious problem at this time.
        The Air Force always emphasizes a full range of quality of life
    programs to complement other Governmental programs and to provide for a
    reasonable standard of living for all ranks. Most recently, we
    successfully sponsored Variable Housing Allowance locality floors to
    assist our younger members with their housing expenses in high-cost
    areas. We have maintained a mix of community programs to help our
    enlisted families meet financial challenges, such as spouse employment
    placement and personal financial management programs within our Family
    Support Centers in addition to the interest-free loans and grants
    available through the Air Force Aid Society. Also, our fee structure
    for such things as child care and youth before- and after-school
    programs are adjusted, based on total family income, to make such
    essential services affordable for everyone. Another area where our
    younger families face steep expenses is when they are reassigned
    through a permanent change of station. We have taken deliberate steps
    to ease their financial burden by providing tiered temporary lodging
    facility rates and by waiving the surcharges for family members in our
    enlisted dining facilities. Finally, in addition to quality of life
    initiatives, military personnel must continue to receive statutory pay
    raises or higher to keep pace with private sector wage growth.
                            f-22 radar cross section
        Question. What are the Air Force's current plans to measure the F-
    22 radar cross section at the RATSCAT facility at Holloman AFB? Is it
    correct that initial measurement will only be available from F-22
    contractors?
        Answer. There are no plans to measure the F-22 radar cross section
    (RCS) at the RATSCAT facility at Holloman AFB, NM. During the previous
    Demonstration and Validation phase, a full scale pole model was
    evaluated at the RATSCAT Advanced Measurement System (RAMS) facility at
    Holloman AFB. The F-22 full scale pole model will be measured at
    Lockheed-Martin's Helendale Measurement Facility, which is the
    predecessor (and nearly identical in design) to the RAMS facility. The
    program determined that testing at Helendale would be more cost
    effective. During the Demonstration and Validation phase of the
    program, full scale pole model data taken at both Helendale and RAMS
    were in agreement. Also, Air Force representatives will be present
    during the bulk of the F-22 pole model measurements taken at Lockheed-
    Martin's Helendale facility to ensure proper data collection procedures
    are followed.
                                     ______

                  Questions Submitted by Senator Dale Bumpers
                            b-2 cost per flying hour
        Question. I have heard that each B-2 flight hour costs about
    $120,000, when you include the cost and time of repairs and
    maintenance? Is that true?
        Answer. No, the direct incremental costs of each B-2 flying hour is
    approximately $16,000. This includes the costs for aviation petroleum,
    oil, and lubricant; supplies, parts, and maintenance which is the
    traditional method used by the Air Force to measure the operation and
    maintenance cost per flying hour. The higher number referenced in the
    question is an approximate measure of the annual B-2 funding in all
    appropriations divided by the programmed flying hours.
                           b-2 deployment requirement
        Question. Is it true that the Air Force recently eliminated the
    requirement that B-2 bombers be able to deploy to bases overseas? Why?
        Does that mean that, in the case of a war in the Middle East or
    Korea, B-2's would have to make day long round-trips from Whiteman AFB
    to deliver a load of bombs?
        Does that mean that B-2 will not be forward-deployed as part of an
    Air Expeditionary Force?
        Answer. It is true the B-2 Block 20 aircraft are not planned to
    deploy to forward locations. Several months prior to the B-2's Block 20
    Initial Operational Capability (IOC), Air Combat Command (ACC) reviewed
    the results of low observable testing and maintenance of the low
    observable characteristics at Whiteman AFB, MO. Based upon the
    difficulties encountered in maintaining the B-2's signature at the main
    operating base--maintenance process documentation, materials
    availability, material properties, and manpower availability--ACC
    determined that it would be unrealistic to expect that the signature
    could be maintained at austere, forward locations and that it would not
    be cost effective to try to overcome the problem prior to IOC.
    Therefore, ACC deleted the requirement for the Block 20 B-2 to conduct
    operations from a forward location, committing the aircraft to support
    combat operations, including those in Korea or the Middle East, from
    Whiteman AFB. The Air Expeditionary Force (AEF) is being supported by
    the B-1 and B-52; the B-2 is not currently included in AEF planning.
    The current B-2 Operational Requirements Document (ORD), a document
    that outlines a weapon systems expected operational capabilities,
    requires the ability to deploy to a forward operating location for the
    mature, Block 30, B-2 fleet. ACC is presently finalizing the deployment
    concept of operation for the Block 30 aircraft through the on-going
    requirements review process.
                         f-22 tier 1 and 2 initiatives
        Question. The Joint Estimate Team said that a major reason for F-22
    cost growth is because making the first three of nine development
    aircraft was taking more touch labor than planned. Specifically, how
    will the Tier 1 and Tier 2 initiatives solve this ``touch labor''
    problem?
        Answer. The Joint Estimate Team (JET) estimated increase for
    production touch labor (prior to initiatives) was due to the higher
    than expected realization factors (actual time to complete work was
    greater than originally predicted). The JET recommended producibility
    initiatives and a Government/Contractor investment agreement on how to
    fund the initiatives. The contractors have since composed Production
    Cost Reduction Business Plans (PCRBP) which implement the JET
    recommendations to reduce cost. The specific initiatives to reduce
    touch labor cost are included in the following two PCRBP categories.
    First is the Producibility Investment Plan (PIP) which is designed to
    primarily reduce work content and improve productivity. The PIP
    investment requires a $107 million contractor investment. Lockheed has
    approved 23 projects to date requiring an investment of $31.5 million
    that will result in production savings estimated at $604.4 million, a
    multiple return of 20:1. Examples of the PIP include single pass
    drilling and waterjet machining. Second is the Lean Aircraft Initiative
    which reduces touch labor and overhead costs. Examples of Lean Aircraft
    Initiatives include variability reduction and process improvement
    programs (such as six sigma at Lockheed Martin Aeronautical Systems),
    inventory control projects, and lead time reduction efforts.
                           f-22 program restructuring
        Question. According to the GAO, the JET's tier 1 and tier 2
    initiatives primarily consist of techniques that have been used on
    prior programs. Why were such initiatives not part of the F-22 program
    before you restructured it in February 1997. Weren't you concerned
    about saving money before then?
        Answer. The program has considered various cost reduction
    techniques all along. However, it had not determined the specific
    projects nor was funding available for initiatives that were
    identified. The concepts for these initiatives have matured as the
    program has progressed based on actual data from building the first
    aircraft. Furthermore as the design has been developed into part
    drawings and manufacturing processes, producibility enhancement
    initiatives were able to be identified to improve the manufacturing and
    management processes to reduce the cost. These initiatives were
    reflected in the average unit production cost, and the annual
    affordability cost estimates used to develop the program budget
    estimate. Funding for these initiatives requires Government and
    Contractor investment. A major contribution of the Joint Estimate Team
    was to develop a memorandum of agreement between the Government and
    Contractor to define a strategy to jointly fund producibility
    investments.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                      air force investigations of adultery
        Question. There has been a great deal of press attention on the
    case of Lt. Kelly Flinn and the accusations of her alleged adultery and
    other charges. I am curious as to how special a problem is the Lt.
    Flinn case. I understand that about 60 men and 7 women were court-
    martialed for adultery during the past year. How many Air Force cases
    during the past five years of personnel who committed adultery and
    related charges did not face court-martial and instead were handled
    administratively? What is the breakdown, by rank and gender, of the
    number of cases of adultery charges that ended in court-martial? What
    is the breakdown by rank and gender of the cases of adultery charges
    that were instead handled administratively?
        Answer. The following charts break down by gender and rank, courts-
    martial and nonjudicial punishments for calendar years 1993 through
    1996 that included a charge of adultery under Article 134 of the
    Uniform Code of Military Justice (UCMJ). The ``Adultery Only'' chart
    shows cases in which adultery was the only charge. The ``Including
    Adultery Charges'' charts also include cases in which adultery was
    charged together with other offenses. You will note that very few
    members are tried by court-martial on charges of adultery alone. We do
    not track administrative actions by specific precipitating offense and
    thus cannot determine how many may have been based on adultery.
        The data in the charts do not include cases in which an officer was
    charged with conduct unbecoming an officer under Article 133, UCMJ, as
    a result of misconduct involving adultery.

                    COURTS-MARTIAL INCLUDING ADULTERY CHARGES
                               (By Rank, 1993-96)
    ------------------------------------------------------------------------
                Year/rank                  Male        Female       Total
    ------------------------------------------------------------------------
    1993:
        AB...........................            1            1  ...........
        Amn..........................            2            2  ...........
        A1C..........................            6  ...........  ...........
        SrA..........................            7  ...........  ...........
        SSgt.........................            8  ...........  ...........
        TSgt.........................            4  ...........  ...........
        MSgt.........................            2  ...........  ...........
        SMSgt........................            1  ...........  ...........
        2Lt..........................            2  ...........  ...........
        1Lt..........................            1  ...........  ...........
        Capt.........................            1            1  ...........
        Maj..........................            2  ...........  ...........
                                      --------------------------------------
          Total......................           37            4           41
                                      ======================================
    1994:
        AB...........................            1  ...........  ...........
        Amn..........................  ...........            1  ...........
        A1C..........................            5  ...........  ...........
        SrA..........................           11  ...........  ...........
        SSgt.........................            5  ...........  ...........
        TSgt.........................            2  ...........  ...........
        MSgt.........................            1  ...........  ...........
        SMSgt........................            1  ...........  ...........
        CMSgt........................  ...........            1  ...........
        Capt.........................            4  ...........  ...........
        Lt Col.......................            5  ...........  ...........
                                      --------------------------------------
          Total......................           35            2           37
                                      ======================================
    1995:
        AB...........................            2  ...........  ...........
        Amn..........................            3  ...........  ...........
        A1C..........................            8  ...........  ...........
        SrA..........................            8  ...........  ...........
        SSgt.........................            7  ...........  ...........
        TSgt.........................            3  ...........  ...........
        MSgt.........................            1  ...........  ...........
        Capt.........................            5            2  ...........
        Maj..........................            3  ...........  ...........
                                      --------------------------------------
        Total........................           40            2           42
                                      ======================================
    1996:
        Amn..........................            2            1  ...........
        A1C..........................           10  ...........  ...........
        SrA..........................           10            1  ...........
        SSgt.........................           13  ...........  ...........
        TSgt.........................            2  ...........  ...........
        MSgt.........................            2  ...........  ...........
        CMSgt........................            1  ...........  ...........
        1Lt..........................  ...........            3  ...........
        Capt.........................            7  ...........  ...........
        Maj..........................            5  ...........  ...........
        Lt Col.......................            6            1  ...........
        Col..........................            3  ...........  ...........
                                      --------------------------------------
          Total......................           61            6           67
    ------------------------------------------------------------------------

                          ADULTERY ONLY COURTS-MARTIAL
                               (By Rank, 1993-96)
    ------------------------------------------------------------------------
                Year/rank                  Male        Female       Total
    ------------------------------------------------------------------------
    1993.............................  ...........  ...........  ...........
    1994.............................  ...........  ...........  ...........
    1995.............................  ...........  ...........  ...........
    1996:
        Amn..........................            1  ...........  ...........
        SrA..........................            1  ...........  ...........
                                      --------------------------------------
          Total......................            2  ...........            2
    ------------------------------------------------------------------------

                     ARTICLE 15'S INCLUDING ADULTERY CHARGES
                               (By Rank, 1993-96)
    ------------------------------------------------------------------------
                Year/rank                  Male        Female       Total
    ------------------------------------------------------------------------
    1993:
        AB...........................            3  ...........  ...........
        Amn..........................           12            3  ...........
        A1C..........................           29            7  ...........
        SrA..........................           55           10  ...........
        SSgt.........................           27            2  ...........
        TSgt.........................            6            1  ...........
        MSgt.........................           12            1  ...........
        SMSgt........................            1  ...........  ...........
        CMSgt........................            4  ...........  ...........
        2Lt..........................  ...........            1  ...........
        1Lt..........................            2  ...........  ...........
        Capt.........................            5            2  ...........
        Maj..........................            3  ...........  ...........
        Lt Col.......................            3  ...........  ...........
        Col..........................            2  ...........  ...........
                                      --------------------------------------
          Total......................          164           27          191
                                      ======================================
    1994:
        AB...........................            2            3  ...........
        Amn..........................           10            8  ...........
        A1C..........................           29            8  ...........
        SrA..........................           59           11  ...........
        SSgt.........................           34            4  ...........
        TSgt.........................           12            1  ...........
        MSgt.........................            7            1  ...........
        SMSgt........................            2  ...........  ...........
        CMSgt........................            1  ...........  ...........
        2Lt..........................  ...........            1  ...........
        1Lt..........................            2  ...........  ...........
        Capt.........................            4            2  ...........
        Maj..........................  ...........            1  ...........
        Lt Col.......................            3  ...........  ...........
        Col..........................            1  ...........  ...........
                                      --------------------------------------
          Total......................          166           40          206
                                      ======================================
    1995:
        AB...........................            4            2  ...........
        Amn..........................           15            3  ...........
        A1C..........................           31           13  ...........
        SrA..........................           64           14  ...........
        SSgt.........................           37            1  ...........
        TSgt.........................           14  ...........  ...........
        MSgt.........................           14  ...........  ...........
        SMSgt........................  ...........            1  ...........
        CMSgt........................            1  ...........  ...........
        1Lt..........................            1  ...........  ...........
        Capt.........................            7  ...........  ...........
        Maj..........................            2  ...........  ...........
        Lt Col.......................            2  ...........  ...........
                                      --------------------------------------
          Total......................          192           34          226
                                      ======================================
    1996:
        AB...........................            4            4  ...........
        Amn..........................           19            3  ...........
        A1C..........................           38           15  ...........
        SrA..........................           70           23  ...........
        SSgt.........................           49            8  ...........
        TSgt.........................           16            1  ...........
        MSgt.........................           14            3  ...........
        SMSgt........................            1  ...........  ...........
        CMSgt........................            5  ...........  ...........
        2Lt..........................            1            1  ...........
        1Lt..........................            1  ...........  ...........
        Capt.........................           10            3  ...........
        Maj..........................            3  ...........  ...........
        Lt Col.......................            3  ...........  ...........
        Col..........................            2  ...........  ...........
                                      --------------------------------------
          Total......................          236           61          297
    ------------------------------------------------------------------------

        Question. Why does the Air Force spend so much time and resources
    addressing the adultery question? Does the Air Force judicial system
    have enough resources to handle all judicial or moral problems facing
    the Air Force? Please provide, for the record, the number of personnel
    that have been assigned to investigate and handle the legal
    deliberations for cases of adultery and related charges? What is the
    financial cost for the investigation and legal work related to adultery
    cases and related charges?
        Answer. The Air Force judicial system does have sufficient
    resources to handle disciplinary problems. It is not designed for nor
    tasked to handle ``moral'' problems. Adultery is a matter of command
    concern, and is punishable under the Uniform Code of Military Justice,
    only when the conduct, under the circumstances, is to the prejudice of
    good order and discipline in the armed forces or is of a nature to
    bring discredit upon the armed forces.
        No investigative or legal personnel are assigned specifically to
    handle adultery cases; they are handled, as necessary, by the Air
    Force's existing command, investigative and legal resources. There is
    no way to isolate the cost of processing such cases, but they make up a
    very small proportion of total disciplinary actions--cases in which
    adultery was the only charge comprise about one-tenth of one percent of
    courts-martial.
        Commanders don't normally seek out information regarding adultery.
    When information comes to the attention of a commander about an
    adulterous relationship that could impact morale and discipline the
    commander addresses the behavior. In most cases, efforts to correct the
    behavior through verbal or written counselings or orders to refrain
    from contact are successful, and further disciplinary action is
    unnecessary. Those few cases in which disciplinary action may be
    necessary usually involve other charges in addition to adultery.
                          f-22 air force publications
        Question. In keeping with Congress' oversight function, I would
    like to ask a couple of questions regarding the Air Force's role in
    publicizing the F-22 program. I would like to know the costs of other
    efforts by the Air Force to publicize the F-22 program, including the
    recent publication ``F-22 Raptor: The Keystone of Air Dominance for the
    21st Century.'' Under what authority does the Air Force publicize an
    aircraft, including the aforementioned publication? How many similar
    publications on individual weapon systems or programs does the Air
    Force publish each year? During the past five years?
        Answer. The objective of the brochure ```F-22 Raptor: The Keystone
    of Air Dominance for the 21st Century'' is to increase public awareness
    of how the F-22 supports the Joint Vision 2010 established by the
    chairman of the Joint Chiefs of Staff, and the Air Force mission of
    providing air superiority and air dominance for our military forces.
    Three thousand brochures were printed at a cost of $12,200. The F-22
    Raptor is the only AF brochure solely dedicated to the F-22.
        Air Force Policy Directive 35-2, which governs Air Force public
    affairs, states ``The Air Force will conduct comprehensive, active
    public communication programs at all levels of command to earn the
    public understanding, acceptance, and support of the Air Force
    mission.'' The number of similar publications published by the Air
    Force in the past five years is not readily available. The Air Force
    sponsors many different types of publications on an annual basis in
    support of local community air shows, displays, demonstrations, and the
    Air Force recruiting mission.
                               f-22 program costs
        Question. I understand that the Quadrennial Defense Review
    advocated that the Air Force scale-back the F-22 purchase from 438 to
    339 planes. Given the fact that the total purchase number of F-22's has
    been cut by the QDR, will the cost per plane now go up? How much will
    the per unit cost be? Will this put additional pressure on the Pentagon
    to push for overseas sales of the aircraft? If the goal of the F-22
    program is for the U.S. to be the pre-eminent fighter force in the
    world, wouldn't overseas sales be contradictory?
        Answer. Due to the reduction of the total purchase of F-22's, the
    unit cost will increase. An F-22 program restructure team has been
    formed to determine the specific cost and schedule impacts of the
    Quadrennial Defense Review (QDR) revisions, namely a decreased total
    buy from 438 to 339 aircraft, a maximum production rate decrease from
    48 to 36 aircraft per year, and a slower production ramp. The F-22 per
    unit cost increase as a result of the QDR will not put additional
    pressure on the Pentagon to pursue Foreign Military Sales (FMS). We are
    assessing the feasibility of F-22 foreign sales and formulating an Air
    Force position on F-22 FMS which will ensure that the F-22's air
    dominance objective is preserved. Ultimately, the FMS decision will be
    made by the U.S. State Department.
                               b-2 bomber program
        Question. As we all know, the number of B-2 bombers for the U.S.
    Air Force now stands at 21. However, some of our colleagues in the
    House of Representatives are pushing for the purchase of additional B-2
    bombers. Some want as many as nine additional bombers. Do you agree
    with the QDR analysis that the Air Force is better off by not buying
    more B-2's? If Congress does force the Air Force to buy more B-2's,
    what types of programs would you cut to fund the additional planes?
        Answer. The Air Force believes the B-2 to be an extraordinary
    bomber--especially valuable in deterring and defeating distant armed
    aggression. However, funding for additional B-2's within the Air Force
    topline would unbalance the Air Force budget and deprive future Joint
    Force Commanders of other needed capabilities. The Air Force would not
    expect to fund additional B-2's at the expense of other Air Force
    programs.
                                civil air patrol
        Question. The Civil Air Patrol has proven both a valuable and cost-
    effective program. As recently demonstrated during the search for the
    missing A-10, CAP planes performed much of the search. The volunteer
    pilots' contribution of flying time saved the Air Force a lot of scarce
    funds. In fact, CAP performs about 85 percent of all search missions.
    The Iowa CAP and the Congressional Squadron based at Andrews Air Force
    Base are good examples of useful and effective CAP units. Does the Air
    Force plan to continue its long history of cooperation and support with
    the Civil Air Patrol? How can Congress assist the Air Force in working
    with and supporting CAP?
        Answer. Yes, the Air Force plans to continue its cooperation with
    the Civil Air Patrol. The Air Force appreciates Congress' strong
    support of this program. Continued financial support for Civil Air
    Patrol programs and public advocacy of Civil Air Patrol missions are
    invaluable.
                    quality of life for air force personnel
        Question. Quality of Life for Air Force Military Personnel is a key
    element of readiness. However, I think it is clear that there are some
    substantial shortfalls in our troops quality of life, including
    inadequate housing, shortfalls in the military medical system and even
    the thousands of troops forced to turn to food stamps and other forms
    of federal assistance due to inadequate pay. At the same time, I notice
    that the AF is considering a move to increase the number of generals by
    15. Yet, I have seen no specific Air Force proposal to reduce the
    number of military families forced to draw on federal assistance
    programs. Do you consider the number of Air Force families who turn to
    federal assistance programs such as food stamps a serious problem? What
    are your plans to address the problem of Air Force families whose
    incomes places them at or near the poverty level?
        Answer. Data regarding actual number of military members receiving
    food stamps is unavailable. It's not maintained by the United States
    Department of Agriculture (USDA) or Department of Defense (DOD). The
    results of a 1995 Office of the Secretary of Defense food stamp survey
    found that approximately 11,900 active duty DOD military personnel (0.8
    percent) are eligible to receive food stamps. Based upon the DOD
    estimate, the Air Force estimated that approximately 1,200 active duty
    Air Force members (0.3 percent) may be eligible to receive food stamps.
    More than half of the members eligible to receive food stamps are only
    eligible because USDA does not include in-kind housing (forfeited Basic
    Allowance for Quarters/Variable Housing Allowance (VHA)) as cash
    income. If on-base families were excluded, the food stamp population
    would be reduced from 0.8 percent to 0.3 percent of the total DOD force
    (from 11,900 to 4,500 members) and from 0.3 percent to less than 0.1
    percent of the Air Force population (from 1,200 to 400 members).
    Typically, those eligible for food stamps are junior enlisted members
    with larger-than-average families. While this is an issue which
    warrants attention, we do not consider it a serious problem at this
    time.
        No data or study exists as to the actual or estimated number of
    members who fall below the poverty line. Based on the number of
    personnel who qualify for food stamps (qualification is 130 percent
    above the poverty level) we can hypothesize that considerably less than
    0.3 percent of our members are at or below the poverty line.
        The Air Force has always emphasized a full range of quality of life
    programs to provide for a reasonable standard of living for all ranks.
    Most recently, we successfully sponsored VHA locality floors to assist
    our younger members with their housing expenses in high-cost areas. We
    have maintained a mix of community programs to help our enlisted
    families meet financial challenges, such as spouse employment placement
    and personal financial management programs within our Family Support
    Centers in addition to the interest-free loans and grants available
    through the Air Force Aid Society. Also, our fee structure for such
    things as child care and youth before- and after-school programs are
    adjusted, based on total family income, to make such essential services
    affordable for everyone. Another area where our younger families face
    steep expenses is when they are reassigned through a Permanent Change
    of Station and we have taken deliberate steps to ease their financial
    burden by providing tiered temporary lodging facility rates and by
    waiving the surcharges for family members in our enlisted dining
    facilities. Finally, in addition to the quality of life initiatives,
    military personnel must continue to receive annual statutory pay
    increases or higher to keep pace with private sector wage growth.
        Question. How does the Air Force justify the increase in the number
    of generals considering the ``draw down'' in the number of Air Force
    personnel? Considering the increase in cost for pay and benefits, what
    are the budgetary implications of adding more Air Force generals?
    Couldn't these funds be better spent on addressing the problem of
    military families on federal assistance?
        Answer. Today's Air Force is more sophisticated and operates in a
    much different environment than in the past. Our force is smaller, but
    more complex and lethal. As history has shown, general officer
    requirements are not tied directly to personnel strength. Our general
    officer requirements are based on missions, organizational complexity,
    and command structures which have changed dramatically over the last 10
    years. The number of contingency operations, as well as the overall
    operations tempo, has increased significantly. This resulted in a need
    for more general officers to serve in commander, staff, and task force
    positions to provide leadership, oversight, and management. To provide
    general officers for these new requirements we have been forced to fill
    some wing commander and important staff positions with colonels, even
    though the positions are validated as general officer positions.
        The budgetary implications of providing adequate general officer
    leadership are relatively small when compared to the cost of possible
    mission failure and loss of life from inadequate leadership.
        Providing a reasonable standard of living for our troops is a
    priority for the Air Force, and we will continue our efforts to take
    care of Air Force people and their families. Our primary purpose,
    however, is protecting the national interests of the United States.
    This requires that we have high quality visionary leadership.
                                     ______

                 Questions Submitted to Gen. Ronald R. Fogleman
                   Questions Submitted by Senator Ted Stevens
                    f-22 first flight and development status
        Question. General Fogleman, can you give us an update on Air Force
    plans for the First Flight of the F-22?
        Answer. The F-22 contractor continues to make progress towards
    First Flight of the F-22 in Marietta, GA. However, a single fuel leak
    in the F-1A fuel tank, behind the pilot's seatback, and an unsuccessful
    Auxiliary Power Unit (APU) run delayed First Flight beyond the planned
    May 29, 1997 date. The F-22 team has moved ahead with other ground
    testing and has since repaired the F-1A fuel tank leak and corrected
    the problem with the APU. The team has optimized the schedule to ensure
    the F-22 First Flight experiences a minimal delay while ensuring a safe
    flight.
                                f-22 performance
        Question. General Fogleman, the Navy has testified that the F-18E/F
    can carry it into the future. Why does the Air Force need the added
    capabilities of the F-22?
        Answer. America needs the F-22 because it will serve as a powerful
    deterrent, and, if necessary, shorten conflicts, reduce friendly
    equipment losses, and minimize the loss of her most precious resource
    our soldiers, sailors, and airmen. From a mission perspective, the need
    for the F-22 is driven by the state of air superiority required to
    realize Joint Vision 2010, and the total threat picture that must be
    overcome to achieve that state. The chairman's goal of full-spectrum
    dominance requires air dominance the total control of the enemy's
    airspace. The challenges to air dominance include advanced surface-to-
    air missiles (SAM's), fighter aircraft, and air-to-air missiles. The
    proliferation of ``double digit'' SAM's has created an environment in
    which current aircraft like the F-15 are unable to operate without a
    protracted and potentially costly roll-back campaign. The result is a
    sanctuary for the enemy, allowing him to harbor weapons of mass
    destruction and key strategic targets--the very targets that must be
    serviced quickly to minimize total force risk and shorten the conflict.
    The Defense Intelligence Agency (DIA) estimates the number of countries
    with this SAM capability will nearly double from 1995 to 2005, from 14
    to 22. The F-15 is at rough parity today with the SU-27 and Mig-29; by
    2004, it will be at a disadvantage with the fielding of the SU-35 and
    export versions of the Rafale and EF-2000, and the proliferation of
    advanced air-to-air missiles such as the AA-11, AA-X-12, and the MICA.
    DIA expects over 60 countries will possess these advanced aircraft in
    2005; and 25 countries will possess advanced air-to-air missiles
    comparable to our best missile the AIM-120 Advance Medium Range Air-to-
    Air Missile. The F-22 has been designed from the ground up to answer
    both these near term challenges and future challenges well into the
    21st century. While the Navy believes the F-18E/F meets their
    requirements, the F-22 has been designed to fulfill the needs of the
    Air Force providing air dominance for the entire joint battlefield. The
    F-22's attributes of stealth, supercruise, and integrated avionics
    allow it to operate throughout enemy airspace from day one. It will
    dominate the air threat creating a permissive environment for less
    capable aircraft.
               joint air-to-surface standoff missile requirements
        Question. General Fogleman, do you believe that the JASSM
    requirements should be reviewed; reevaluating whether modest upgrades
    of existing systems can meet most of the JASSM requirements?
        Answer. The acquisition process in place for major development
    programs analyzes system requirements prior to periodic Milestone
    reviews. Each acquisition phase culminates in a Milestone review which
    must be accomplished before the system can proceed to the next
    development phase. The Milestone I review for Joint Air-to Surface
    Standoff Missile's (JASSM's) entry into the Program Definition and Risk
    Reduction phase was accomplished in June 1996. The Milestone II review
    for JASSM's entry into Engineering and Manufacturing Development will
    be accomplished in July 1998 and the Milestone III production review is
    scheduled for April 2001. The Milestone review process is sufficient
    for the JASSM program.
        Evaluation of existing systems for the JASSM development is
    accomplished as part of the Analysis of Alternatives (AoA) process
    prior to each Milestone review. The AoA is now in progress and will be
    available in July 1998 for the JASSM Milestone II decision. This AoA
    will provide a technical and performance comparison of the JASSM and
    SLAM-ER+ (Standoff Land Attack Missile-Extended Range Plus (SLAM-ER+)
    (upgraded SLAM-ER to meet JASSM requirements) concepts to include
    standoff range, missile mission effectiveness and a comparison of cost
    effectiveness. At the Milestone II decision, the government will select
    the best solution to the JASSM need based on ``Best Overall Value''. It
    is noted that the SLAM-ER+ is produced by McDonnell Douglas. In
    competing for the JASSM contract, McDonnell Douglas chose not to offer
    the SLAM-ER+ as the solution for the JASSM requirement, but rather to
    offer a different design to meet the need.
                 joint air-to-surface standoff missile--slam-er
        Question. General Fogleman, what do you believe are the specific
    deficiencies to SLAM-ER in meeting the JASSM requirement?
        Answer. In defining the Joint Air-to-Surface Standoff Missile
    (JASSM) requirements, the Key Performance Parameters were kept to a
    minimum to allow the two competing contractors maximum flexibility in
    designing a solution to the JASSM need. As such, there are three Key
    Performance Parameters--Missile Operational Range, Missile Mission
    Effectiveness (or the expected number of missiles to kill one of each
    target types) and Carrier Operability in the JASSM Operational
    Requirements Document (ORD). The contractor may trade other items in
    the ORD; however, each significant trade of a functional/performance
    requirement is assessed as to its impact on the mission execution
    capability and the operational limitation. Specific criteria to
    determine if the system performance meets the needs of the jointly
    developed JASSM requirements are mission planning; integration with the
    threshold aircraft; compatibility with the objective aircraft;
    projected launch, carriage and jettison envelopes for objective and
    threshold aircraft; autonomy; insensitive munition requirements; time
    on target; and bomb impact assessment. In addition, affordability is a
    key driver in this program with the Average Unit Procurement Price
    (AUPP) included in the system performance specification for the JASSM.
        The Standoff Land Attack Missile-Extended Range Plus (SLAM-ER+)
    version is a proposed modification to the SLAM-ER to meet JASSM
    requirements and be suitable for Air Force use. These modifications
    include shortening the weapon by four inches for carriage in the B-1B,
    a fuel tank surface tension screen and folding fins for carriage on
    rotary launchers, and strengthened fins for external carriage on the B-
    52H.
        The SLAM-ER+ is projected to barely meet the minimum acceptable
    operational range requirement. JASSM will have an operational range
    well beyond the minimum, providing the warfighter with greater
    operational flexibility in employing the weapon.
        The SLAM-ER+ does not equal JASSM in the area of Mission Missile
    Effectiveness. The JASSM will have a 1,000 lb.-class warhead versus a
    500-750 lbs.-class warhead for the SLAM-ER+. The JASSM has better
    penetration and blast/fragmentation, stealthy design, and capability
    against Global Positioning System jamming. In addition, JASSM is
    designed to defeat the 2010 surface-to-air missile threat. These JASSM
    features result in a Mission Missile Effectiveness that is
    significantly better than that of the SLAM-ER+. The SLAM ER+ would
    require many more missiles and increased sorties to accomplish the
    mission.
        The JASSM must have an expanded carriage and launch envelope in
    order for it to be employable from a diverse group of platforms such as
    F-16's and B-2's. SLAM-ER+ release limits do not meet these
    requirements.
        The JASSM ORD has a requirement that the missile be an all up
    ``wooden round'' with an expected 20 year service life. The JASSM
    contractors will provide a 15-20 year warranty to cover the costs of
    all failures including redesign and retrofit. The JASSM system will
    require no Government maintenance. In contrast, the SLAM-ER+ will
    require spares and recurring Government depot repair. The SLAM-ER+ has
    an estimated life of only 10 years with a follow-on weapon required in
    2010 timeframe.
        Most important is the JASSM concept of cost as an Independent
    Variable. To date this concept has resulted in a reduction from
    $600,000 to less than $360,000 as an Average Unit Procurement Price for
    the JASSM. In the Engineering and Manufacturing Development phase, the
    selected contractor will be further incentivized to reduce costs and
    move the schedule to the left through the use of a Cost Plus Incentive
    Fee arrangement. In contrast, the AUPP for the SLAM-ER+ is estimated to
    be a higher figure than the JASSM objective requirement of $400,000.
    With a lower AUPP, a predicted lower life cycle cost (which includes a
    warranty for the life of the system), and its anticipated superior
    effectiveness, the JASSM projects to be the overall better alternative.
                       reengining cost versus capability
        Question. General Fogleman, can the B-52 and AWACS aircraft meet
    their current mission requirements with existing engines?
        Answer. Yes, the B-52 and AWACS aircraft can meet their current and
    projected mission requirements using the existing TF33 engines. There
    are operational/mission benefits to re-engining the B-52 and AWACS such
    as increased time on station/loiter time, fuel efficiency, reduced
    engine removals, increased radar surveillance coverage (AWACS).
    However, studies on B-52 and AWACS re-engining submitted in April 1997
    showed that there was no expected payoff over the life of the B-52
    (2040) and AWACS (2025).
        Question. General Fogleman, does the capability added by re-
    engining the B-52 justify the upfront cost of leasing new engines
        Answer. No. The Air Force was interested in leasing engines for the
    B-52 because of the significant improvement to the B-52's operational
    capability, and the precedence it would have set for long-term leasing
    of military equipment, and solutions to issues such as budget scoring,
    indemnification, and termination liability that this long-term lease
    would present. However, the improvements to the B-52's operational
    capability do not warrant the $1.3 billion increased costs over our
    projected, risk adjusted B-52 budget.
        Question. General Fogleman, we are re-engining the KC-135 tankers.
    What is the difference between the KC-135 and the B-52 and AWACS cases?
        Answer. The KC-135 was re-engined because the cost to re-engine the
    airplane was less than the cost to buy new tanker aircraft to cover the
    shortfall in tanker assets. The primary difference between the KC-135
    and the AWACS with regards to re-engining is that economies of scale do
    not favor the extensive engineering manufacturing and development (EMD)
    work required to re-engine a small fleet such as the AWACS (32
    operational + 1 test aircraft). The B-52 program was able to absorb the
    EMD into the proposed program, however the proposed lease and
    contractor logistics support costs exceeded the cost to fly and
    maintain the current TF33 engines.
                              nmd minuteman option
        Question. General Fogleman, do you believe that the Minuteman
    booster is a viable competitor as a booster for the National Missile
    Defense ground based interceptor?
        Answer. Yes. A number of technical analyses, including studies
    completed by the Air Force, Ballistic Missile Defense Organization
    (BMDO), and RAND, have concluded that modified Minuteman ICBM's could
    perform effectively in a National Missile Defense (NMD) ground-based
    interceptor role. The existing Minuteman missile stages and guidance
    system have the capability to provide all required NMD interceptor
    booster functions. Minuteman-derived interceptors could be configured
    with any of the various front-end kill vehicles being considered for
    the NMD mission.
        Minuteman has a record of proven reliability demonstrated in over
    35 years of deployed alert service, as well as hundreds of operational
    flight tests. The Minuteman system's expected life span continues
    through at least 2020, with funded programs for replacement of aging
    propellants as well as guidance system upgrades.
        Under the Department of Defense's ``3+3'' Deployment Readiness
    Program acquisition strategy, the NMD Joint Program Office has hired
    Lead Systems Integrator teams to conduct cost and performance analyses
    of alternative ground-based interceptor designs. These studies must
    specifically examine options based on Minuteman boosters. The Air Force
    believes the study results will confirm that Minuteman provides an
    attractive, cost-effective solution to the NMD interceptor requirement.
                       nmd minuteman option--flight tests
        Question. General Fogleman, do we need flight tests of the
    Minuteman booster to make an informed decision on how Minuteman would
    perform as the booster for National Missile Defense?
        Answer. Based on Minuteman's demonstrated reliability and
    performance in more than 35 years of flight testing, the Air Force has
    great confidence in the ability of the system to perform National
    Missile Defense (NMD) boost functions. Of course, if a Minuteman-
    derived design is selected for development by the Joint Program Office,
    it would be necessary to conduct additional integrated testing of
    Minuteman with the NMD kill vehicle and modified command and control
    elements prior to deployment. Such testing would be needed with any of
    the ground-based interceptor alternatives now under consideration as
    well.
                              nmd minuteman option
        Question. General Fogleman, will the existing Minuteman command and
    control infrastructure provide an adequate building block for the
    National Missile Defense command and control system?
        Answer. We believe most of the Minuteman infrastructure, including
    existing command and control elements, could contribute significantly
    to a National Missile Defense (NMD) architecture. Minuteman employs
    multiple communications systems that link the National Command
    Authorities, through the Commander in Chief, U.S. Strategic Command, to
    the missile launch control centers (LCC's). Within the Minuteman
    squadrons, a redundant, hardened communications network furnishes
    secure command and control communications, remote targeting,
    operational testing, and missile launch capability. The Rapid Execution
    and Combat Targeting console in the LCC, the duty station of the
    missile launch crew, provides the requisite interface between higher
    authorities and squadron command networks. In addition, Military
    Strategic and Tactical Satellites offer a jam-resistant nuclear
    hardened communications link to support kill vehicle guidance.
        Depending on the specific architecture system design, our analyses
    indicate most of these elements could be adapted to an NMD role. The
    Air Force is currently conducting a series of operational evaluations
    of NMD battle management command control and communications concepts.
    These tests, capitalizing on scheduled ICBM operational flight tests,
    have thus far shown promising results which indicate Minuteman command
    and control systems could be modified to meet the timelines and other
    operational requirements of an NMD system.
                                     ______

                Questions Submitted by Senator Pete V. Domenici
                    gerald champion memorial hospital [gcmh]
        Question. On March 17, 1997, I wrote to you about an idea that I
    believe fit nicely into the Air Force's privatization efforts and would
    save the Air Force millions of dollars. As you know, Gerald Champion
    Memorial Hospital in Alamogordo, New Mexico, proposes creating a shared
    hospital facility with Holloman Air Force Base. At your direction the
    Surgeon General has been meeting with officials from Gerald Champion
    and has been examining this proposal very carefully for some time. Can
    you tell us whether any agreement has been reached about the merits of
    this proposal and your personal views about why this proposal will be a
    great benefit to the Air Force at Holloman?
        Answer. We continue to work with Gerald Champion Memorial Hospital
    to develop a mutually beneficial sharing arrangement. I believe their
    most recent proposal provides the basis for agreement; however, we must
    complete our legal review before I can offer my full endorsement.
    Further, the 1998 President's Budget does not include the proposed
    grant funds. So while the proposal may pass the legal review, I cannot
    commit to initiating this proposal until funding is made available.
        With this sharing arrangement, the Air Force benefits both
    financially and operationally. To summarize the proposal, Gerald
    Champion would receive a $7 million grant towards construction of the
    shared hospital and, in return, provide us a 37 percent discount off of
    their billed charges. Our healthcare providers would operate on and
    care for our beneficiaries in the new shared hospital while providing
    outpatient care in a clinic on Holloman AFB, NM.
                              airborne laser [abl]
        Question. The President's budget contains $157 million for the
    Airborne Laser Program (Managed by the Phillips Laboratory). The ABL
    will attack theater ballistic missiles, which are already in the hands
    of several Third World states, in the most vulnerable stage of flight,
    the ``boost-phase.'' The ABL will also enhance terminal defenses by
    reducing the number of objects presented to the warfighter in those
    final stages. Some have said that the ABL will change the face of
    warfare forever. Can you tell us why the ABL is so important to the Air
    Force and the United States national security interests?
        Answer. The Airborne Laser (ABL) will provide the warfighter a
    needed Theater Ballistic Missile Defense (TBMD) capability that, as
    alluded to in your question, complements our sister Services' terminal
    and midcourse systems. It is also in keeping with our desire to pursue
    leading edge technologies as a means to maintain our combat edge in a
    time of shrinking budgets and forces. In terms of our National Security
    interests, ABL's rapid deployment and stand-off employment
    characteristics will afford our civilian and military leaders flexible
    response options in times of crisis. In addition, ABL will confront a
    potential enemy with the prospect of his Theater Ballistic Missiles,
    possibly tipped with Weapons of Mass Destruction, falling on his own
    territory forcing him to think twice before launching them in the first
    place. It follows, therefore, that the development and ultimate
    fielding of ABL has inherent counter-proliferation value--a potential
    enemy may not want to invest in a weapon he could not employ without
    fear of it, in effect, being used against him.
                       ef-111 replacement with the ea-6b
        Question. The Department of Defense has made a decision to replace
    the EF-111 with the EA-6B Prowler. This Committee has had significant
    reservations about the time of this replacement, and also about the
    upgrades. It is well known that currently 20 EA-6B's are subject to
    embrittlement of the center sections of their wings (a molecular
    anomaly in the aluminum stock when combined with use of that material
    in high stress environments such as flying, causes stress corrosion
    cracks). Replacement center sections in the wings of 20 aircraft
    manufactured prior to 1976 need to be installed. The Navy has no money
    in its fiscal year 1998 budget addressing this embrittlement issue. The
    Navy is taking a risk to the operational readiness of the EA-6B. Why
    doesn't the Navy have the $100 million required to address the
    embrittlement of 20 EA-6B center wing sections in its fiscal year 1998
    budget, and how does this square with their commitment to ensure that
    it will be able to adequately handle the Air Force's electronic warfare
    requirements?
        Answer. The Air Force is aware of the Navy's program to re-wing
    some of the EA-6B fleet; however, it does not appear this program will
    stop the Navy from meeting its Electronic Warfare responsibilities.
    Information made available to the Air Force indicates that the Navy has
    already purchased 20 sets of EA-6B center wing sections (CWS); 10 CWS
    were ordered in fiscal year 1995 for delivery late in calendar year
    1997; and 10 CWS were ordered in fiscal year 1997 for delivery in
    fiscal year 1999.
        The Air Force's interest in the health of the EA-6B program has
    been clearly expressed to the senior leadership in the Navy. EA-6B
    program reviews and compliance with the Tri-Service Memorandum of
    Agreement on EA-6B support are regularly scheduled to ensure the EA-6B
    can accomplish the Department of Defense radar jamming mission.
                              manpower reductions
        Question. Under the QDR, the Air Force will reduce active duty
    manpower and the National Guard. What assurance can you give us that
    these reductions will occur only in headquarters or other bureaucratic
    functions and not in combat units.
        Answer. The majority of the Air Force Quadrennial Defense Review
    active duty reductions will be achieved through outsourcing
    infrastructure functions where historically the Air Force saves over 30
    percent through the public/private sector competition process. The
    remaining reductions will be achieved through force structure
    consolidations/restructure and streamlining overhead functions. The Air
    National Guard manpower reductions are driven by force structure
    changes which will convert dedicated Air Defense units to the general
    purpose mission and modernizes Air National Guard fighter units with
    newer aircraft and increased capability. The conversion to the general
    purpose mission and aircraft modernization require less maintenance and
    associated support.
                                     ef-111
        Question. In your prepared statement you state that ``electronic
    combat aircraft'' are among those that are ``most stretched'' in terms
    of deployment time for peacekeeping and other foreign missions. As you
    know, this would include EF-111 aircraft such as those that are
    stationed at Cannon Air Force Base and are to be retired in 1998. If
    these assets are so important for peacekeeping and other foreign
    missions, and if this type of aircraft is among the most deployed, why
    are the EF-111's being retired before their useful life-cycle has
    expired?
        Answer. We acknowledge that the EF-111 is among the high demand,
    low density assets within the Department of Defense (DOD) inventory,
    and as such have maintained an above average OPSTEMPO. The Air Force is
    complying with DOD direction, Program Direction Memorandum 1, dated
    August 1995, to retire these aircraft prior to the end of fiscal year
    1998. The Air Force is satisfied that efforts by the Department of the
    Navy will meet all DOD radar jamming requirements previously addressed
    and agreed to during the 1995 Defense Resource Board.
        Question. Won't the remaining electronic warfare assets be even
    more ``stretched'' if the EF-111's are retired early in 1998?
        Answer. No. Prior to the Office of the Secretary of Defense Program
    Direction Memorandum 1 (PDM 1) in 1995 the Navy EA-6B force structure
    was drawing down to 80 Primary Authorized Aircraft (PAA) and the Air
    Force EF-111 force structure was 24 PAA. During the time from the 1995
    Defense Resource Board and PDM 1 until the EF-111 retires, the total
    number of radar jamming Electronic Warfare (EW) aircraft will not
    change from 104. The issue of how to best support EW aircraft
    requirements and reduce OPTEMPO for these aircraft is currently under
    study by the Joint Staff.
                             stress for deployments
        Question. General Fogleman, the Air Force continues to operate in
    peacekeeping and other international operations at a historically high
    rate. What indicators do you use to register the stress that this high
    operating tempo puts service men and women under? What measures do you
    use to measure the stress for families? What do the data show?
        Answer. The Air Force monitors several indicators for adverse
    impacts to personnel resulting from high operation tempo. One measure
    is personnel tempo (PERSTEMPO), which reflects the average number of
    days a member spends on Temporary Duty in a 12 month period, for any
    reason (contingencies, exercises, Professional Military Education,
    etc.). The Air Force's maximum desired PERSTEMPO is 120 days per year.
    Since implementing this standard in 1994, the Air Force successfully
    reduced the number of weapons systems exceeding the benchmark from 13
    to four in fiscal year 1996. However, recent data reflects the numbers
    are once again on the rise with nine at or above 120 days for the 12
    month period ending in March 1997.
        Another indicator of stress to service members is retention rates.
    Our first term reenlistment rates are running approximately 59 percent,
    which is lower than in recent years but still above the Air Force goal
    of 55 percent. Enlisted accessions are on target for this year, but our
    recruiters tell us that it is getting harder to meet their goals. One
    area of growing concern is our rated retention numbers, which are down
    across the board, but most significantly for pilots. Over the next five
    years, airline hiring is expected to be dramatically higher than
    previously and the bonus take rate is down below 40 percent this year.
    Clearly, we cannot compete with the airline pay scale or family
    stability and must therefore seek alternative incentives to keep these
    valuable resources onboard.
        The Air Force collects data on divorce rates, reported incidents of
    spousal abuse, juvenile crime, etc., and no conclusive relationship has
    been shown to exist between high Operations Tempo/PERSTEMPO and changes
    in those indicators.
                            stress from deployments
        Question. Are you familiar with the results of recent surveys taken
    at Hill, Pope, Shaw, and Seymour Johnson Air Force Bases that show the
    problem of stress from deployments, lack of real training, and other
    issues to be extremely serious?
        Answer. Yes, we have seen the feedback from the surveys you
    mention. Even before they were done, we had initiated several measures
    which we feel confident will improve many of the areas highlighted in
    these surveys. Following recent senior leadership meetings at Nellis
    AFB, NV, most of the Air Force Major Commands instituted post-
    deployment standdown policies to allow personnel an opportunity to
    recuperate and reacquaint themselves with family following long
    deployments. The Air Staff is investigating several other issues
    including options for improving aircrew continuation training during
    deployments. U.S. Air Forces, Central Command hosted a conference in
    late May to identify shortfalls and propose changes necessary to
    enhance training opportunities in Southwest Asia (SWA). Additionally,
    we are working to reduce the length of unit deployments to SWA. Global
    sourcing is implemented wherever feasible to share contingency
    taskings. An Air Combat Command Aircrew Retention Tiger Team is
    reviewing reported factors in lowered retention and means of reversing
    the current trend.
                            f-22 radar cross section
        Question. Will there be measurement of F-22 RCS by operational
    threat radars of a combat loaded F-22 in flight?
        Answer. Yes, the F-22 will be tested in the baseline configuration
    (internal weapons carriage only--no external stores) during
    developmental testing and operational testing using Air Force-owned
    operational threat air-to-air radars and surface-to-air radars.
                                     ______

                   Question Submitted by Senator Dale Bumpers
                                b-2 maintenance
        Question. Is it true that the average B-2 flies for one day and
    then is down for six days while it is repaired and maintained?
        Answer. The 509th Bomb Wing has planned its B-2 flying schedule
    based upon a fly one day (scheduling 3 flights per aircraft into that
    one fly day), and then scheduling down for six days for low observable
    systems maintenance. This was initiated to support maintenance of the
    B-2's low observable systems, and generated by the wing's Interim
    Operational Capability requirements. Aircraft have been, and will
    continue to be, returned to the flying schedule early from maintenance
    as repairs are completed. In the future, improvements in B-2 scheduling
    will result with the fielding of Block 30 full production aircraft
    (which provide improved designs in low observable systems), application
    of more durable low observable materials, incorporation of diagnostic
    support equipment into the B-2 maintenance concept to support
    maintainability of low observable systems, and planned construction of
    a new two-bay paint facility at Whiteman AFB, Missouri to enhance low
    observable systems' maintenance production. In the interim, the 509th
    Bomb Wing is evaluating the fly one, fix six day scheduling policy for
    possible adjustments based upon current operational taskings and
    experience to date in maintaining the B-2's low observable systems.
                                     ______

                   Questions Submitted by Senator Tom Harkin
                        f-22 justifications for aircraft
        Question. I note that the Lockheed-Martin Corporation justifies the
    F-22 based on the fact that we live in a ``dangerous world.'' The
    Lockheed-Martin Corporation prepared a chart last year that describes
    threats to the U.S. of tactical aircraft. I notice that on this chart,
    they list a number of high-performance planes in the hands of enemy
    nations. This includes the F-15 and the F-16. These nations include
    Canada and some nations that the Administration wants to include as
    part of an expanded NATO. What are the threats that the F-22 is
    designed to counter? Do these threats include nations which now use
    U.S. designed aircraft? Do you agree with the Lockheed-Martin
    characterization of the threat?
        Answer. Senator, let me begin by answering your last question
    first. Yes, I do believe we are living in a dangerous world a world
    where regional peace has evolved where it did not previously exist. Yet
    several other regions in the world have undeniably become unstable and
    unpredictable. The Secretary of Defense addresses this very issue of
    regional instability and unpredictability in his opening remarks in the
    May 1997 Report of the Quadrennial Defense Review. I believe it is a
    dangerous world now and probably will be in the future. We must be
    prepared to fight for national interests. We must equip our forces to
    make our next fight a decisive victory.
        The F-22 is designed to ensure theater air superiority by
    dominating the enemy in his air space at the outset of battle. The need
    for this capability is driven by the state of air superiority required
    to realize Joint Vision 2010. The chairman's goal of full-spectrum
    dominance requires air dominance the total control of the enemy's
    airspace. To do so requires an aircraft not only superior to the air
    threat, but an aircraft capable of operating effectively in a highly
    integrated air defense environment.
        Let me address operations in a highly integrated air defense arena
    first and then I will comment on air-to-air threats. The proliferation
    of state-of-the-art Surface-to-Air Missiles (SAM's) has created an
    environment in which our current air superiority fighter, the F-15, is
    unable to operate without a protracted and potentially costly roll-back
    campaign. The result guarantees the enemy a sanctuary within his
    territory, allowing him to harbor weapons of mass destruction and key
    strategic targets the very targets that must be serviced quickly to
    minimize total force risk and shorten the conflict. The Defense
    Intelligence Agency (DIA) estimates the number of countries possessing
    this SAM capability will nearly double between 1995 and 2005, from 14
    to 22.
        With respect to the air threat, the F-15 is at rough parity today
    with the SU-27 and Mig-29; by 2004, it will be at a disadvantage with
    the fielding of the SU-35, export versions of the Rafale, the EF-2000,
    the fielding and proliferation of advanced air-to-air missiles such as
    the AA-11, AA-X-12, Future Medium-Range Air-to-Air Missile (FMRAAM),
    and the MICA air-to-air missile. DIA expects over 60 countries will
    possess these advanced aircraft in 2005 and 25 countries will possess
    advanced air-to-air missiles with lethality comparable to our best
    missile the AIM-120 Advance Medium Range Air-to-Air Missile. F-22 has
    been designed from the ground up to answer both these near term
    challenges and future challenges well into the next century.
        The F-22 will serve America well into the 21st Century. Who our
    friends and enemies will be in the future is uncertain. As a result, we
    could very well face advanced western equipment, including F-15's and
    F-16's. Iran, with their F-14's, is but one example.
                              inventory management
        Question. I recognize that the Air Force is striving for better
    efficiency in its inventory management. However, I believe more can be
    done. I was surprised to see that a recent General Accounting Office
    report noted that the Air Force has more than $19.1 billion in unneeded
    inventory. For some of these inventory items, there is more than a 50
    year supply. Why does the Air Force continue to buy items for which it
    has more than a 50 year supply?
        Answer. The Air Force does not continue to buy items which are in
    long supply. In fact, the system that, quarterly, computes our
    requirements and determines where we are short and where we have
    overages takes into account all items already in our inventory and on-
    order and does not compute buys for items in long supply. The real
    issue being addressed in the General Accounting Office (GAO) report and
    the area of primary disagreement between the Department of Defense
    (DOD) and the GAO has to do with how to categorize inventory being held
    beyond that needed for immediate use--essentially two years of
    operations. The DOD holds inventory already owned beyond that needed
    for the next two years if we can foresee a future potential need. For
    example, until the late 1980's we operated over 200 B-52 bombers with
    an inventory of parts sufficient to support their operations. Today, we
    operate less than half that number but we intend to operate them well
    into the foreseeable future. It wouldn't make sense to throw away all
    of the old inventory we hold today just to have to try to buy it back
    at some future point in time. That is why we disagree with the GAO's
    categorization that all of the inventory we are holding beyond that
    needed for the next two years is ``excess''. Even the GAO has
    previously testified that they wouldn't propose throwing away all of
    this old inventory nor are there great potential savings in disposal.
    What we do buy are parts that have a projected future shortage. For the
    most part you simply can't use old B-52 or F-4 parts on B-2's or F-
    15E's. The bottomline is that the Air Force doesn't knowingly buy
    unneeded items. At the time we buy them we have a valid computed need
    for the item as best as we can determine.
        Question. Has the Air Force considered changing its purchasing
    practices and adopting so called ``best practice'' standards, such as
    those employed by the private sector?
        Answer. The Air Force has a very aggressive program designed to
    take advantage of commercial practices wherever we can in both the
    purchase and management of our inventory. In fact, we have assumed $798
    million in savings in the fiscal year 1997-2001 period due to our
    ``Lean Logistics'' initiatives. These initiatives involved three major
    thrusts. First, we re-engineered the process for handling the inventory
    we own. This re-engineering features commercial like expedited movement
    of materiel, streamlined processing, and rapid on demand repair in
    order to reduce inventory. Second, we are moving to take advantage of
    commercial type contracting arrangements such as Direct Vendor Delivery
    orders, third party sources, and catalog type contracts wherever
    possible. Third, we are adapting ``Acquisition Reform'' practices to
    spares purchases. We have eliminated base service stores across the Air
    Force and told the customers to rely on increased usage of the
    International Merchant Purchase Authorization Card purchase procedures.
    We have also implemented programs to eliminate mil-standards and are
    moving to performance type specifications whenever possible. We believe
    that we are moving very aggressively to implement ``best commercial
    practices'' in every facet of our inventory management activity.

                              subcommittee recess

        Senator Inouye. And this subcommittee will stand in recess
    until Wednesday, June 4. At that time we will receive testimony
    from public witnesses. Thank you very much.
        General Fogleman. Thank you.
        Dr. Widnall. Thank you very much, Mr. Chairman.
        [Whereupon, at 12:38 p.m., Wednesday, May 21, the
    subcommittee was recessed, to reconvene at 9 a.m., Wednesday,
    June 4.]

           DEPARTMENT OF DEFENSE APPROPRIATIONS FOR FISCAL YEAR 1998

                                  ----------

                            WEDNESDAY, JUNE 4, 1997

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 8:58 a.m., in room SD-192, Dirksen
    Senate Office Building, Hon. Ted Stevens (chairman) presiding.
        Present: Senators Stevens, Cochran, and Inouye.

                           NONDEPARTMENTAL WITNESSES

    STATEMENT OF WILLIAM C. HOWELL, Ph.D., AMERICAN
                PSYCHOLOGICAL ASSOCIATION

                     OPENING STATEMENT OF HON. TED STEVENS

        Senator Stevens. Let me welcome all of the witnesses who
    have come here today. We have a large number of organizations
    and we must ask that you recognize we have to limit your
    remarks this morning, unfortunately, to 3 minutes or less. We
    have a special function today in honor of Senator Thurmond and
    all Senators will be there. So we will have to conclude the
    hearing by 10:15.
        I am sorry for this problem. It is one of the things that
    happens when leadership tells you that you will be there. So we
    will be there. We want you to know that we will print your
    statements in the record.
        We have a great many witnesses today. They are raising
    concerns about the Defense Health Program. We are working very
    hard on this problem to insure that active and retired military
    personnel and their dependents will continue to receive the
    best medical care we can make available.
        I want you to know that at the beginning. We thank you for
    coming.
        If you have any particular questions after the hearing is
    over, I would be pleased to have your comments to a member of
    the staff and we will respond. I will respond to you
    personally. But I do hope the you will understand the
    limitations on us today.
        We expect Senator Inouye soon. But he said to continue. So
    I welcome you, Dr. Howell, as the first witness.
        Dr. Howell. Mr. Chairman, I am Dr. William Howell, science
    director for the American Psychological Association speaking on
    behalf of that organization. As a former Air Force chief
    scientist for human resources and current member of several DOD
    technical advisory boards, I also have a deep personal interest
    in military behavior research investment.
        I am concerned that it is shrinking at a time when the
    demands on our warfighters are increasing exponentially.
        As I am sure you are aware, our military is facing a host
    of new challenges. Forces are downsizing, women are playing an
    increasingly prominent role, an entirely new function,
    peacekeeping, has been added to the mission, the sophistication
    of weapons and information technology has dramatically changed
    skill requirements, and so on.
        What has not changed is that success in military operations
    still depends on people--in every level, in every unit. The Air
    Force alone loses the equivalent of one fighter squadron a year
    through accidents. Around 80 percent of those involve human
    error. It is not because we don't have the world's best and
    most highly trained aviators. It is simply because we have
    allowed hardware and software to get too far ahead of
    humanware.
        Similarly, teams and leaders are facing new demands that we
    are only beginning to understand. Need I mention gender
    integration issues?
        The situation will not improve without serious investments
    in behavioral and social research, and currently that
    investment is appalling. Consider that personnel and training
    costs account for one-third of DOD's total budget. Yet DOD
    invests less than 1 percent of its science and technology
    budget in personnel and training research.
        To put it another way, for every $4 we spend on equipment,
    we spend $1 on R&D to make it better. For every $4 we spend on
    people, we invest about 3 cents.
        Nowhere is this more apparent than in the case of the Army
    Research Institute for the Behavioral and Social Sciences, ARI.
    This organization was established explicitly to conduct
    research on the kinds of issues that are of concern, and it is
    the principal source of expertise for all of the services in
    these critical areas. Yet the Army continues the major
    downsizing of ARI. In the past 2 years their budget has been
    cut one-half, from $50 million in 1995 to less than $24 million
    in 1997.
        We appreciate the efforts of this committee to save ARI.
    That has been very helpful.
        The ARI crisis is just the most immediate and vivid example
    of what we consider DOD's underfunding of human-oriented
    research. Our written statement includes specific requests for
    ARI as well as other important Army, Navy, and Air Force
    programs in the behavioral and social sciences.
        Finally is the matter of the psychopharmacology
    demonstration project, which has come under some unjustified
    criticism recently.
        As you know, DOD undertook this project to see if
    psychologists specially trained in prescribing mental health
    drugs could be used to increase access for military personnel
    to appropriate high quality mental health care at lower cost.
    According to a May 1996 report by Vector Research, commissioned
    by DOD, the answer was an unequivocal yes. For a fuller
    description of that report, I refer you to our written
    statement.
        A recent General Accounting Office report unfortunately
    missed the point on this. GAO admitted that clinical
    psychologists could be trained to prescribe and that this would
    save DOD money. But the report claimed there was no shortage of
    psychiatrists in the military, so there was no need for
    psychologists to prescribe drugs. It also grossly
    misrepresented the costs.
        The fact is that the Air Force and Navy have both reported
    serious shortages of psychiatrists. But, more to the point, DOD
    is running a health care business. The bottom line should not
    be the number of military psychiatrists available but whether
    psychologists, trained to prescribe, can increase the
    availability of quality mental health service at reduced cost.

                               prepared statement

        The demonstration project clearly showed this to be so as
    both the Vector report and an analysis by Coopers and Lybrand
    document. Therefore, APA urges the committee to support making
    such training a permanent option for psychologists in the
    military.
        Thank you, sir.
        [The statement follows:]
                    Prepared Statement of William C. Howell
        This testimony is submitted to the Subcommittee by the American
    Psychological Association (APA), a professional and scientific
    organization of 151,000 members and associates, many of whom conduct
    behavioral research relevant to the military. This statement addresses
    three issues of relevance to the Subcommittee: the continuing need to
    invest in psychological research in the Department of Defense; the need
    to sustain support for the Army Research Institute for the Behavioral
    and Social Sciences; and the APA's continuing support of the
    Department's demonstration program that is training psychologists to
    prescribe psychotropic medications.
        DOD's support of psychological research dates from WWII when the
    efficient testing and classification of new recruits was critical to
    the rapid buildup of U.S. forces after Pearl Harbor. Today, the
    contribution of psychological research ranges from improvements in the
    selection and assignment of personnel, to the training and maintenance
    of skills, to the design of the human-machine interface, to the
    efficient and safe operation of complex systems. As our military forces
    streamline, downsize, and become more diverse, data-based ways in which
    to enhance human performance, train for complex tasks, and identify and
    build leadership, become even more important. For that reason, APA
    supports maintaining or increasing spending on behavioral research in
    the Department of Defense.
                                the rdt&e budget
        Maintenance of DOD's technology base must include 6.1 (basic), 6.2
    (exploratory development) and 6.3A (advanced development) research on
    manpower, personnel selection, training, human factors, cognitive
    science, and other areas of behavioral research. Although less widely
    publicized than advances in military hardware, these contributions have
    been critical to sustaining our combat superiority. They have been
    possible only because the services have maintained closely coupled 6.1,
    6.2, and 6.3A research programs on key human resources, training, and
    human factors issues. With systems growing more sophisticated and
    demands on the human operator more complex, we can ill afford to cut
    back on the research that is necessary to preserve our ``combat edge.''
    With the support of this Subcommittee, U.S. leadership in these crucial
    areas of behavioral research--in the service laboratories and in the
    nation's universities--will be assured.
        We want to highlight the 6.1 portion of the RDT&E budget, and those
    programs in the Army, Navy and Air Force that support psychological
    research. This research fuels equally valuable 6.2 and 6.3A programs
    which are managed and conducted by the service laboratories.
                              basic research (6.1)
        The 6.1 budget has dropped for the past two fiscal years. This has
    led to the curtailment of promising research programs and increased
    uncertainty about the commitment to long-term research projects. APA
    realizes these cuts might have been deeper without the support of this
    Subcommittee, and would like to thank you for your support of these
    programs. We urge you to support the fiscal year 1998 request for 6.1
    research of $1.164 billion--a much-needed 7.8 percent increase over the
    fiscal year 1997 level.
        The 6.1 budget funds basic research to support our national defense
    needs--current and future. Right now we are enjoying the fruits of
    research conducted in the late 1970's through the 1980's, when support
    for DOD research was expanding. It is not possible to maintain this
    growth rate, but it is important to maintain DOD's capacity to respond
    to future needs. More than ever, careful and prudent planning for
    future defense needs must be done. DOD supports research that other
    federal agencies or industry cannot fund, but which is essential to
    maintaining the world-class status of our military.
        The Army, Navy, and Air Force each support basic psychological
    research to meet their particular needs. The services cooperate to
    eliminate unnecessary duplication of research efforts and actively
    share research results.
    Air Force Office of Scientific Research (AFOSR)
        APA urges the Subcommittee to support, at a minimum, the 7.6
    percent increase to $226.8 million requested for basic research in the
    fiscal year 1998 DOD request for the Air Force. This money supports
    AFOSR, which contains five research directorates that fund basic
    research both in the Air Force laboratories and through grants to
    academic institutions and other contractors. The Air Force laboratories
    compete for these funds through the submission of research proposals
    that are evaluated in competition with proposals from the civilian
    sector. This ensures that the best and most relevant research is
    funded.
        The Human Performance Project.--The fiscal year 1998 plans for
    AFOSR include $9 million for the Human Performance Project, an increase
    of $.3 million over the 1997 level. Through a broad-based research
    program, the Human Performance Project supports Air Force personnel
    readiness and technology development for Command and Control and
    Information Systems. This research focuses on how individuals and small
    teams process information to learn, solve problems, and make decisions.
    The work has several objectives. One is the development of models that
    can accurately predict the limits and potential of individual recruit
    performance. Other objectives include: improved computer-based training
    systems; research on communication and decision-making in teams to aid
    the automation of command and control functions; and development of
    models of human vision and hearing to improve the human/machine
    interface in the complex technology of the modern Air Force.
        An example of the work being supported through the Human
    Performance Project is research on developing ``intelligent,'' or
    interactive, tutoring systems. The Air Force and other services train
    thousands of men and women each year to perform vital and complex
    technical tasks--tasks that allow no room for error. The development of
    intelligent tutoring systems not only allows this training to take
    place in remote locations, but most importantly, improves human
    learning by ``interacting'' with the trainee in ways that conventional
    computer aids cannot. This research is not only contributing to
    improvements in military training, but has the potential for
    applications in the civilian sector as well.
    Office of Naval Research (ONR)
        The Navy's current investment in basic research is $352 million.
    APA supports the Administration's request for an 8.5 percent increase
    to $382 million. This increase would help restore previous funding cuts
    and sustain vital ONR research programs.
        The Cognitive and Neural Sciences Division (CNS) in ONR was
    particularly hard hit by the fiscal year 1996 and 1997 reductions in
    the Navy's 6.1 budget. Its budget, like other research programs under
    the RDT&E portion of DOD's budget, was tapped to help pay for overseas
    campaigns in Bosnia. APA urges the Subcommittee to recommend $16
    million for CNS's fiscal year 1998 budget--which would not account for
    losses due to inflation, but would maintain spending at the current
    level.
        CNS supports research to increase the understanding of complex
    cognitive skills in humans; aid in the development and improvement of
    machine vision; improve human factors engineering in new technologies;
    and advance the design of robotics systems. An example of CNS-supported
    research is the division's long-term investment in artificial
    intelligence research. This research has led to many useful
    ``products,'' including software that enables the use of ``embedded
    training.''
        Many of the Navy's operational tasks, such as recognizing and
    responding to threats, require complex interactions with sophisticated,
    computer-based systems. ``Embedded training'' allows shipboard
    personnel to develop and refine critical skills by practicing simulated
    exercises on their own workstations. Once developed, embedded training
    software can be loaded onto specified computer systems and delivered
    wherever and however it is needed.
        Embedded training is particularly valuable for the Navy because
    naval personnel are often required to maintain high proficiency and
    readiness levels during lengthy, uneventful deployments at sea--far
    from land-based training facilities. One example of this training
    technology is the shipboard Combat Information Center (CIC), where a
    team of experts, supported by complex technology, is charged with
    identifying and responding to every perceived threat. Such threats
    arise only rarely, but must be handled with great skill when they do.
    Embedded training is used to sustain both the individual and team
    skills needed in critical situations.
    Army Research Institute for the Behavioral and Social Sciences (ARI)
        APA recommends a fiscal year 1998 funding level of $21.4 million
    for ARI and the allocation of 165 full-time equivalent positions. While
    this is $3.65 million and 46 positions more than requested for fiscal
    year 1998, it is lower than the 1997 funding level of $23.7 million.
    Despite ARI's strong record in funding research essential to the
    training and performance of Army personnel, the Institute's funding
    continues to erode. We urge the Subcommittee to stop this erosion in
    fiscal year 1998.
        About half of the Army's budget, about $45 billion, is spent on
    personnel. But less than $18 million is now spent on research to help
    those personnel work more effectively. In comparison, $16.2 billion is
    spent on material procurement and about $4.3 billion on research to
    make the equipment operate more effectively. It appears shortsighted to
    invest such a disproportionately small amount in the Army's human
    resources. ARI works to build the ultimate smart weapon: the American
    soldier. And its efforts deserve your support.
        The ARI was established to conduct personnel and behavioral
    research on such topics as minority and general recruitment; personnel
    testing and evaluation; training and retraining; and leadership.
    Reliable data about these issues is critical, as you know from today's
    headlines. While the Army seeks to solve the problem of sexual
    harassment within its ranks and establish workplace ethics and
    procedures that bring out the best from a diverse workforce, good data
    collected for the Army from scientists who understand how the Army
    works, will help the Army plan and execute reasonable policies.
        ARI is the focal point and principal source of expertise for all
    the military services in leadership research, an area critical to the
    success of the military. Research that helps our armed forces identify,
    nurture, and train leaders is critical to their success.
                    psychopharmacology demonstration project
        APA remains strongly supportive of psychopharmacology training for
    psychologists in the Military Health Services System. We bring to the
    Committee's attention a DOD-funded report that found such training to
    be cost-effective and to enhance the quality of care for military
    personnel and their families.
        In a May 1996 report commissioned by DOD, Vector Research, Inc.
    extensively analyzed the Psychopharmacology Demonstration Project
    (PDP). The PDP is a project within DOD that has trained a small number
    of military psychologists to prescribe ``psychotropic,'' or mental
    health-related, medication when appropriate. Vector showed the benefits
    of having ``pharmacopsychologists'' in the military, 10 of whom will
    have graduated from the two year fellowship by mid-1997.
        Vector stated, ``[I]f pharmacopsychologists are utilized as
    prescribing psychologists more than 59 percent of their time after
    entering PDP training they are less expensive than the combination of
    clinical psychologists and psychiatrists that would be necessary to
    provide the same mental health care as the pharmacopsychologists'' (at
    ES-5, 2-38; amended by Addendum of 28 June 1996).
        ``If pharmacopsychologists are utilized in lieu of some physicians
    on deployment, their contribution would be the safe and effective
    treatment of service members with psychotropic medications at a lower
    cost than could be achieved by utilizing physicians in that role'' (at
    4-4).
        ``The most frequent benefit cited by respondents was increased
    access for mental health care treatment, both to active duty personnel
    and their dependents as well as in more remote locations worldwide''
    (at 3-15).
        A recently released General Accounting Office (GAO) report
    unfortunately missed the point, ignoring the beneficial effect on the
    military health system overall of psychologists prescribing
    psychotropic drugs. APA has serious concerns with the methodology used
    in this study, and with the fact that GAO ignored its own evidence that
    contradicted its conclusions.
        GAO admitted in its report on the demonstration project (PDP) that
    clinical psychologists could be trained to prescribe psychotropic
    medications and that this could save DOD money. In fact, GAO's own cost
    analysis of the demonstration project showed that when the original
    start-up costs were removed and it was assumed the training program
    would become stable, the use of pharmapsychologists was cost-effective
    if they could prescribe 84 percent of the time (p. 21).
        According to a Coopers & Lybrand analysis using data in the GAO
    report, training 10 classes of psychologists to prescribe would yield
    net savings to DOD of $3.3 million, based on the lower costs of
    maintaining pharmacopsychologists in the DOD. Using Vector data, which
    calculated lower training costs than GAO at the Uniformed Services
    University of the Health Sciences (USUHS) in the same case scenario,
    there would be a projected higher net savings of $8.57 million.
        GAO's assessment that there is no shortage of psychiatrists in the
    military, and hence no need for prescribing psychologists in the
    military, completely missed the point and did not respond to Congress'
    charge. DOD is running a health care business, and the bottom line is
    what skills are needed and which providers can most efficiently provide
    those skills. GAO should not have asked only whether there were enough
    psychiatrists, but whether psychologists trained to prescribe could
    provide quality mental health treatment at less cost than
    psychiatrists. The Vector study said yes. The GAO report failed to
    address this central question in any depth, although the agency
    acknowledged that potential savings could result (p. 22).
        The GAO report repeatedly painted pharmacopsychologists as ``non-
    psychiatrists'' and, therefore, found fault with the PDP. The fact is
    that pharmacopsychologists were never intended to be psychiatrists, but
    GAO forced this comparison repeatedly. The GAO report was replete with
    irrelevant statements that inappropriately compared prescribing
    psychologists to psychiatrists when equality between the two
    professions was not the purpose of the PDP.
        As with the pharmacopsychologists, the prescribing ability of
    nurse-practitioners, physician assistants, and optometrists in the
    military (all of whom have less training than PDP graduates) is not
    intended to replace physician services, but to supplement military
    medical capabilities while delivering quality care. In fact, the PDP
    clearly demonstrated that military medical mental health services could
    be supplemented with quality care at a lower cost. The PDP's goal to
    train psychologists to ``issue appropriate psychotropic medications
    under certain circumstances'' was met, a point GAO conceded (p. 22).
        APA urges Committee members to recognize the value to the Military
    Health Services System of psychopharmacological training and to support
    making such training a permanent option for psychologists in the
    military.
                          summary and recommendations
        It is sometimes easy to overlook the important contributions of
    behavioral research to the missions of the Army, Navy and Air Force
    because the results usually do not translate directly into new weapons
    systems or hardware. Yet behavioral research has provided and will
    continue to provide the foundation for tremendous savings through
    increased personnel efficiency and productivity. This work is vital to
    the military for identifying critically needed improvements in human
    resources development, training, and human error reduction.
        Increasingly sophisticated weapons systems place more, not fewer,
    demands on human operators. We must ensure that military personnel are
    as well prepared as their machines to meet the challenge. This is not
    possible without a sustained investment in human-oriented research.
    STATEMENT OF SYDNEY T. HICKEY, ASSOCIATE DIRECTOR,
                GOVERNMENT RELATIONS, THE NATIONAL MILITARY
                FAMILY ASSOCIATION
        Senator Stevens. Mr. Hickey is associate director,
    Government relations, of the National Military Family
    Association. Please, begin, sir.
        Ms. Hickey. Good morning, Mr. Chairman, Senator Inouye.
        Senator Stevens. My apology. It is not ``Mister.''
        Ms. Hickey. That's quite all right, sir.
        Mr. Chairman and members of the subcommittee, NMFA and the
    families we serve remain indebted to you for the strong support
    you have given their quality of life. Uniformed service
    families are well aware of the needs of the country and the
    needs of the members' parent services must come often before
    family concerns. However, the current PERSTEMPO and OPTEMPO
    combined with what NMFA has termed ``they only sleep here'' is
    wearing away at the fabric of family life.
        Families are asking how long and are perceiving that it may
    be forever.
        While military spouses are spending more and more time, in
    effect, as single parents, the services are investigating
    contracting out, privatizing, and regionalizing the very
    services that families depend upon to alleviate some of the
    problems and stress occasioned by lengthy and frequent
    separations.
        If family support services are not available at the local
    installation or if the services provided are no longer the
    responsibility of the local commander but overseen by some
    contracting officer hundreds or thousands of miles away, one
    must question how responsive the providers will be to the
    concerns of the military family members.
        To military families, compensation is not only what comes
    into the bank account but what does not have to go out for the
    basics of life, such as food, shelter, clothing, and the care
    of their children. A cut in savings at commissaries, a 20-
    percent increase in child care costs, as envisioned in the
    Navy's program to subsidize bases' and civilian child care
    centers, and housing privatization initiatives where families
    may end up paying out of pocket for some of their costs will be
    viewed as compensation cuts by military families.
        Continuing to depress active duty pay raises will put
    military families further and further behind their private
    sector peers and continue the upward spiral of those eligible
    for food stamps and the WIC Program.
        Health care continues to deteriorate under the TRICARE
    Program. This week, NMFA received calls from recruiters in
    southern Louisiana. They are having to pay the full costs of
    the health care for their children. The physicians are refusing
    to file CHAMPUS claim forms, and when they bring it up their
    chain of command, they are simply told by the line to go back
    and tell those doctors to file the claim forms.
        Well, you cannot force a doctor to file a claim form. There
    are no pediatricians in southern Louisiana that will see our
    children. Our active duty families are either going without
    health care or are paying the full costs themselves.
        NMFA believes that the underlying problem with the DOD
    health care system is that the benefits provided, the costs to
    the beneficiary of those benefits, and the eligible populations
    covered by the benefits are constantly subjected to yearly
    budget battles within the Pentagon.
        NMFA believes that military beneficiaries should have a
    health care plan that is not subject to a single agency's
    budget problems. If, as with the Federal Employees Health
    Benefits Program, a economic change is necessary, the change
    should be debated in the Halls of Congress and not the halls of
    the Pentagon.

                               prepared statement

        Therefore, NMFA continues to support having an FEHBP option
    for all beneficiaries with the exception of active duty
    members.
        Thank you, Mr. Chairman.
        [The statement follows:]
                     Prepared Statement of Sydney T. Hickey
        The National Military Family Association (NMFA) is the only
    national organization whose sole focus is the military family and whose
    goal is to influence the development and implementation of policies
    which will improve the lives of those family members. Our mission is to
    serve the families of the Seven Uniformed Services through education,
    information and advocacy.
        Founded in 1969 as the Military Wives Association, NMFA is a non-
    profit 501(c)(3) primarily volunteer organization. NMFA today
    represents the interests of family members and the active duty, reserve
    components and retired personnel of the seven uniformed services: Army,
    Navy, Air Force, Marine Corps, Coast Guard, Public Health Service and
    the National Oceanic and Atmospheric Administration.
        NMFA Representatives in military communities worldwide provide a
    direct link between military families and NMFA staff in the nation's
    capital. Representatives are the ``eyes and ears'' of NMFA, bringing
    shared local concerns to national attention.
        NMFA receives no federal grants and has no federal contracts.
        NMFA has been the recipient of the following awards: Defense
    Commissary Agency Award for Outstanding Support as Customer Advocates
    (1993); Department of the Army Commander Award for Public Service
    (1988); and Association of the United States Army Citation for
    Exceptional Service in Support of National Defense (1988).
        Various members of NMFA's staff have also received personal awards
    for their support of military families.
        The National Military Family Association (NMFA) remains deeply
    grateful to this Subcommittee for its strong support of military
    families and appreciates this opportunity to express its views.
                                  compensation
        Compensation for military families comes from several sources. The
    servicemember's base pay, allowances and special pays or bonuses are
    direct income to the family. So too, is any income derived from a
    ``moonlighting'' job by the member, or income from a spouse's
    employment. Compensation also comes from ``in kind'' sources, such as
    when military housing is provided for the family or health care is
    provided at low or no cost.
        Military families also consider as compensation funds which they do
    not have to spend. Groceries and school supplies procured at reduced
    prices keep more money in the family pocketbook. Child care, dance
    lessons, car repairs and physical fitness programs obtained at reduced
    costs, also help stretch the family's budget. Subsidized life insurance
    and adequate survivor and retirement programs are viewed as
    compensation by families.
        Unfortunately, some military families also depend on Food Stamps,
    the Women's Infants' and Children's Nutrition Program (WIC) and the
    Earned Income Tax Credit for additional family compensation.
        Single servicemembers are likely to be most concerned about the
    amount of dollars deposited in their banking account. Families are more
    likely to look at the entire compensation package--the amounts
    deposited in their bank accounts and the amounts they do not have to
    spend for food, shelter, housing, health care, clothing and financial
    security for future years. Families look at increased costs for, or
    decreased access to, these nonpay compensation items in the same light
    as a decrease in direct pay. Increased costs of health care, closure of
    a commissary, or downgrading the value of retired pay are considered
    pay cuts by most military families.
        Families are also more likely than single members to be affected by
    out of pocket costs when they move due to a permanent change of station
    and when the servicemember is absent from the home.
        Pay Raise.--The proposed 2.8 percent active duty pay raise will put
    servicemembers further behind their private sector peers since it is
    0.5 percent lower than the Economic Cost Index. Only a small percentage
    of the active duty population qualifies and accepts Food Stamps. NMFA
    believes it important, however, to note that the redemption rate at
    Commissaries increased by 7.1 percent last year, the first increase in
    four years. Redemption of WIC vouchers at the Commissary increased from
    fiscal year 1995 to fiscal year 1996 by 13.8 percent. WIC voucher
    redemption has increased each year since it has been tracked (fiscal
    year 1992).
        Housing.--The expected Department of Defense (DOD) proposal to
    consolidate the Basic Allowance for Quarters (BAQ) and the Variable
    Housing Allowance (VHA) into one independently verified housing
    allowance will stop the VHA death spiral. However, without raising the
    actual dollars of the allowance to cover 85 percent of housing costs,
    families will continue to be forced to find housing in the civilian
    sector that is inadequate, unsafe and at significant commuting
    distances.
        The backlog of on-base/post family housing construction continues
    to create lengthy waiting lists. However, the concern most often
    expressed by families is the inability to secure timely and adequate
    repair and maintenance of existing government housing. The current
    condition of government housing attests to DOD's fiscal
    irresponsibility as a landlord. The volume of complaints from family
    members leads to the conclusion that DOD is continuing this practice.
    Families are not living in these homes for free; they forego their
    housing allowances. They should have a responsive landlord.
        Basic Allowance for Subsistence.--The intent of the expected DOD
    proposal to provide all servicemembers with a Basic Allowance for
    Subsistence (BAS) tied to the Department of Agriculture's rate is
    excellent. The anticipated method to accomplish this aim is flawed.
    Suppressing raises in BAS for 800,000 members (including all of the
    career force) to provide 400,000 members, primarily junior personnel,
    with a cash allowance is literally ``robbing Peter to pay Paul.'' Those
    due to lose BAS increases should have their basic pay raised by a like
    amount.
    Health Care:
                Medical Care
        In instituting the Tricare Program, DOD stated that Tricare would
    provide a uniform benefit to the eligible population; increase access,
    decrease and control costs, and eliminate claims hassles for those
    enrolled in Prime; and continue to offer choice through the Extra and
    Standard options.
        Tricare Prime is not offered in all areas of the up and running
    regions, and is not even offered in some areas with significant
    beneficiary populations. Some enrollees in Prime receive almost all of
    their care at military treatment facilities (MTF's) for free. Others
    must enroll in the civilian Prime network and pay copayments of $12 per
    contact ($6 for families of active duty E-4 and below). A family with
    three children, one of whom is diagnosed with a contagious illness such
    as strep throat, may well find itself paying $108 in one month for the
    children's care. The family will incur a $12 doctor visit fee plus $12
    lab fee for the diagnosis of each child and an additional $36 for three
    follow up visits. The goal of a uniform benefit does not appear to have
    been met.
        Many of those enrolled in Prime at MTF's have found their access to
    care has increased. However, the stated access standards for Prime are
    not being met at most MTF's. Beneficiaries enrolled in Prime in the
    civilian network find their access to care has increased if adequate
    networks have been developed. Many family members report being unable
    to find civilian providers within the stated driving time access
    standards. It is interesting to note that for the first time in NMFA's
    history, we are receiving calls from family members stating that the
    servicemember does not have adequate access to care. The goal of
    increased access does not appear to have been met for many
    beneficiaries.
        Family members who were receiving their health care through the
    CHAMPUS program report that many of their physicians have refused to
    accept the discounted Prime reimbursement rates. These family members
    have to make the choice of continuing care with their current provider
    at high out of pocket costs, or choosing another provider from the
    network in order to obtain reduced costs. Sometimes the choice within
    the network has been so limited that families felt they could not
    choose the lower cost option.
        Even families enrolled in Prime find that they are liable for non-
    Prime costs when providers within a network hospital are not all Prime
    providers. It seems a bit ludicrous to require families to ascertain if
    pathologists and anesthesiologists used by a network hospital are also
    Prime providers. Beneficiaries enrolled in Prime also report being
    charged expensive ``point of service'' fees even when they have been
    referred to specialists by their primary care manager.
        Beneficiaries executing permanent change of station orders must
    disenroll from their current region and are unable to enroll in the new
    region until they have checked in at the new duty station. These
    families are left at financial risk for costly deductibles and
    copayments while in transit or on leave. Families enrolled in Prime who
    make extended visits to family members when the servicemember is
    deployed, find themselves tied to a 1-800 number for care or facing the
    ``point of service'' copayments. Retirees who have family members (e.g.
    college students) who do not live in the same region are paying two or
    more family enrollment fees to cover all their dependents. The goal of
    decreasing and controlling costs (at least for the beneficiary) appears
    not to have been met for many beneficiaries.
        Prime enrollees report having to continually fight the battle when
    they have been erroneously charged ``point of service'' copayments or
    when their providers claims are not paid in a timely manner. Certainly,
    claims hassles for some have not been eliminated.
        Limiting physician payment to 115 percent of the CHAMPUS Maximum
    Allowable Cost (CMAC) even when the beneficiary has primary insurance;
    requiring all providers to submit claim forms; and CMAC's below
    Medicare and Medicaid payments have led many providers to refuse to see
    CHAMPUS patients. A retired Naval officer called NMFA last week. His
    wife has seen the same opthamalogist for fifteen years. She now needs
    cataract surgery. The opthamalogist refuses to file CHAMPUS claim
    forms. The officer has been told that the doctor has therefore been
    dropped from the list of authorized CHAMPUS providers. The continuing
    requirement to obtain nonavailability statements for inpatient
    treatment limits a Tricare Standard beneficiary's choice. No one wants
    to be forced to change physicians when they are sick enough to be
    admitted to a hospital or need surgery. The goal of providing choice
    through the Extra and Standard options is not being met for many
    beneficiaries.
        Public Law 104-106 effective February 10, 1996, allowed DOD to
    cover well-baby visits up to age 6 vice age 2 under Tricare/CHAMPUS.
    Sixteen months later the coverage is still not available. Is
    implementation of the Tricare Support contracts allowing DOD to stall
    or thwart the will of Congress and deny Congressionally approved
    benefits to military families?
        Even if Tricare were meeting all of its goals, the oldest and
    sickest segment of the military beneficiary population would still
    remain out in the cold. Tricare was designed to exclude the dual
    Medicare-military beneficiary. Many of these beneficiaries are
    veterans, or survivors of veterans, of World War II, Korea and Vietnam.
        How can an institution purposely design a health care program that
    leaves out its oldest members and does not offer portability and
    reciprocity for a known mobile population?
        NMFA's greatest concern for the health care program has remained
    the same since 1992. The health care benefit, and the population to
    which it will be offered, will be subject to annual budget debates
    within DOD. The shortfall in the medical budget as presented last year
    and the one again this year, reinforce this concern. As the budgets for
    readiness and modernization are squeezed, every likelihood is that the
    health care benefit and/or the populations offered the benefit will be
    negatively affected. It is for this reason, in 1992, NMFA first
    proposed that military beneficiaries be offered the option of enrolling
    in the Federal Employees Health Benefits Program (FEHBP).
        In 1992, we were the sole voice calling for such an option; most
    other military associations were still asking for free health care for
    life. In the ensuing years a significant number of other associations
    have joined NMFA in supporting the FEHBP option for all but active duty
    members. The Military Coalition and the National Military/Veterans
    Association both support the FEHBP option for the dual Medicare-
    military eligible population. NMFA's proposal would require DOD to
    budget for medical readiness including what is necessary for Graduate
    Medical Education, overseas rotation base, recruiting and retention
    incentives and peacetime health care for the active duty force. Once
    the size of the structure necessary for readiness is determined, the
    number of nonactive duty beneficiaries who can be treated can be
    ascertained. Those not able to be treated within the readiness
    structure and/or those wishing choice can be offered a plan within the
    FEHBP. Active duty families should be provided a health care allowance.
    The allowance should be enough to cover a basic HMO premium which would
    be forfeited when beneficiaries enroll in an MTF plan. Retirees and
    their family members should pay the same level of premium as their
    federal civilian retiree peers.
                Dental Care
        NMFA notes with interest the February 1997 General Accounting
    Office report on the Family Member Dental Plan. The report indicates
    the contractor, United Concordia Companies, Inc., despite some initial
    start up problems, is currently meeting the requirements of the
    contract. The report seems to indicate that meeting the requirements is
    not too difficult, since not many specific requirements are included in
    the contract. DOD's oversight of the contract is described in the
    report as ``hands off.'' The contents of the report, and the slippage
    of the date for the reserve dental contract to October of 1997 from the
    original date of October 1996, leaves NMFA to wonder if the retiree
    dental insurance plan will ever come on line. If it does, what kind of
    oversight will DOD perform on a plan that it does not subsidize, since
    it considers a ``hands off'' oversight adequate for a plan it does
    subsidize?
        Commissaries.--The current projected shortfall in commissary
    funding, reported as $23 million to $48 million, certainly appears to
    be another attack on the benefit from within DOD. Proposals to close
    commissaries at active installations or to turn them into BXMarts are
    viewed by military families as proposals to reduce compensation.
    Suggesting that families living at one active duty station should drive
    one hour to another to do their grocery shopping is unacceptable. NMFA
    supports BXMarts at closed installations only as an alternative to
    having no facility available. BXMarts, which increase the costs of
    nonfood items from commissary prices to exchange prices, should never
    be considered as replacements for full service commissaries at active
    installations. Since approximately 40 percent of the items on a normal
    commissary shopping list are not ``items edible by humans,'' the loss
    in compensation would be 40 percent or more of a family's grocery
    budget.
        Active duty families, as well as retirees and their families, view
    a retiree's access to the commissary as part of retiree compensation.
    Suggestions to limit or eliminate such access are seen as attempts to
    reduce promised retiree compensation.
        Exchanges.--During a March 25th on-line military family ``chat
    room,'' a heated discussion was held on the savings available at
    exchanges. Some were adamant that the exchange had the best prices in
    town, others felt discount stores could beat some of the prices. It was
    fairly obvious however, that at remote stateside installations and
    overseas, the exchanges are absolutely necessary. Most also recognized
    that the profits from these ``company stores'' went back into the
    military community to enhance and reduce costs for Morale, Welfare and
    Recreation activities.
        NMFA also supports lifting some of the fifty year old restrictions
    on what the exchanges can carry. The Army and Air Force are recruiting
    members with families. An E-1 with dependents has a household goods
    weight allowance of 5,000 lbs. These newly recruited families often
    must sell all of their furniture to meet the 5,000 lbs. weight limit.
    Both the new recruit's family and the young servicemember getting
    married should be able to buy durable furniture at the ``company
    store.'' When, as in the course of most moves, a piece of furniture is
    destroyed the family would be able to replace it at the exchange.
    Furniture bought at a local store may not be replaceable at the new
    duty station.
        Morale, Welfare and Recreation.--NMFA understands the necessity to
    be ``business wise'' with many of these activities, but cautions that
    the Morale and Welfare of the servicemembers and their families should
    not be overlooked in the struggle to make business decisions. Recently,
    some commanders have found it financially necessary to close their
    installation libraries. NMFA is concerned that the safety of the area
    where the off installation library is located should be of paramount
    concern in such decisions. We are also concerned that single
    servicemembers without cars, and families with only one car, will be
    barred from using such facilities. Servicemembers are strongly
    encouraged to further their education. Limiting access to educational
    resources creates an unnecessary obstacle in their pursuit of this
    goal.
                               military community
        As the September 1996 issue of The Research Digest, published by
    the Military Family Institute of Marywood College, so eloquently
    stated: ``Housing is more than just physical structures made of so much
    brick and mortar. Housing anchors people in a broader environment which
    contains various services through which people access material
    necessary for living. This environment includes the people,
    organizations and institutions that provide sustaining social
    relationships and support, and a sense of community.''
        A military community is not just brick and mortar but a living
    organism. At a hearing regarding commissaries in 1994, a young Navy
    spouse, married to an enlisted member, was describing what the
    commissary meant to her. She spoke of the military installation as her
    ``home,'' and taking away the commissary as ``taking away the walls of
    my home and leaving me vulnerable to the elements.'' This Navy spouse
    had never lived on an installation and was in the process of
    transferring to another duty station where she would again not live in
    Navy housing. Having the stability of this ``home'' at the end of each
    permanent change of station move is extremely important to a constantly
    mobile population, whether or not they actually live on the
    installation. The value of having this ``home,'' and the institutions,
    organizations and people of which it is made, increase as the
    Personnel/Operational TEMPO increase.
    The Installation
        The chapel, Child Development Center, library, fitness center,
    playgrounds, homes, sports fields, youth services, auto hobby shop,
    arts and crafts center, school, and the hospital or clinic are the
    institutions found at military installations. Army Community Service,
    Navy and Marine Corps Family Service Centers, and Air Force Family
    Support centers are paramount among the organizations which serve the
    unique needs of the military community. And military communities are
    unique. As General George A. Joulwan, USA, Commander-in-Chief, United
    States European Command, stated in testimony on March 19, 1997: ``In
    USEUCOM, military communities serve as both our operational spearhead
    and as our home.'' NMFA believes it would be rather unusual to find a
    civilian community that thought of itself as the ``operational
    spearhead.''
    The Children
        The overriding concern for military parents, just as for parents in
    the civilian community, is the well being of their children. While
    children are affected by total well being of the family, certain
    aspects of the military community affect them more.
                DOD Schools
        DOD schools, whether overseas or stateside, provide education for
    military children. The drawdown overseas has created many small schools
    struggling to provide reasonable course offerings. As MTF's in overseas
    areas have closed, the school nurse and school counselor have become
    community assets. As these professionals struggle to serve the wider
    community, the time they have to devote solely to school related
    concerns is shortened. The Department of Defense Educational Activity
    has several ongoing initiatives to attempt to meet some of these
    concerns. School based management and school home partnership
    initiatives will allow decision making at the lowest level and
    encourage parents to be part of the process. Implementation of the
    Department of Defense Education Activity's Technology Plan will
    increase student access to information available to stateside peers
    through the Internet. With improved technology, overseas schools can
    also expand long distance learning programs designed to ameliorate the
    problem of limited course offerings in small schools.
        DOD is implementing a new program for stateside schools in three
    states. Instead of having a superintendent at each installation, one
    superintendent will serve the schools in the entire state. The question
    arises of how the current parent elected installation school boards
    will function in this kind of situation. The three states currently
    implementing the program each have one installation with one very small
    school and one installation with several schools. NMFA does not object
    to the concept of one school superintendent in these particular
    situations. However, we have seen no guidance on how the school boards
    are to function. Do they become a state school board? Will DOD provide
    travel and transportation for state school board meetings? How will
    state school boards be elected? If the school boards are to remain
    local, can they institute policy for their school(s) that don't affect
    the school(s) in another part of the state that are under the guidance
    of the same superintendent? How will the selection of a new
    superintendent be accomplished? Will the school board from the
    installation with the one small school have as much input as the school
    board from the installation with several schools?
        NMFA also has concerns on how this program will be implemented in
    states that have more than one installation with several schools. We
    suggest the concerns of school boards and parents must be addressed
    before any extension of this program is contemplated.
                Impact Aid
        Most military children attend public schools located either in the
    civilian community or on the military installation. The local education
    agency (LEA) receives Impact Aid funding from the federal Department of
    Education for these children. Impact Aid funding is to meet the federal
    obligation for educating military children since the installation pays
    no real estate taxes and military personnel are excused from many local
    taxes because of the Soldiers' and Sailors' Civil Relief Act. Children
    who reside on the installation with their military sponsor are
    considered ``a'' or ``1'' children. LEA's significantly impacted with
    ``a'' children receive approximately $2,000 per child. LEA's receive
    only $200 per child for children who reside off base with their
    military sponsor, ``b'' or ``.1'' children. While the impact of ``a''
    children is recognized in the administration's budget, albeit at a
    level much lower than the authorization requires, the impact of ``b''
    children is consistently denied.
        Privatization initiatives for military family housing may
    significantly increase the current problem of underfunding Impact Aid.
    If the underlying land on which military homes are built is not owned
    by the federal government, the children residing in them will be
    considered ``b'' children. Since the privatization initiative's stated
    goal is to more quickly alleviate the shortfall in military
    construction of family housing, these children should be considered
    ``a'' children. Without Congressional intervention, NMFA is very
    concerned that housing will be built through privatization initiatives
    without thought to the education of military children. In fact,
    military families living in new housing projects not built on federal
    land, may find themselves thought of as very undesirable neighbors by
    the tax paying civilians in the community.
        NMFA has consistently supported full funding of the Impact Aid
    program out of the Department of Education's budget. We are most
    grateful, however, to this Subcommittee for making up the deficit out
    of DOD funds when DoEd's funding has fallen short. We do not view
    Impact Aid as a DOD obligation, but realize that the quality of
    education military children receive has been dependent for many years
    on supplemental DOD funding. In addition to being grateful for the sake
    of the children, NMFA is also aware that current demographic statistics
    would indicate that these children are more likely to be part of the
    military force of the future than are other children. DOD should have a
    concern for the education of a significant portion of its future force.
    If DOD became a stronger advocate for the program at the highest levels
    of the government, perhaps it would not need to provide supplemental
    funds.
                Child Care
        The Military Child Care Act has guaranteed that military Child
    Development Centers (CDC's) are among the best in the country. By
    subsidizing the center fees, DOD is able to offer its workforce quality
    childcare at affordable prices. NMFA is aware the Navy is acting as
    DOD's executive agent to explore contracting out child care. Extreme
    caution must be used when evaluating the cost effectiveness of such an
    enterprise. It is NMFA's understanding that the only bids that have
    been received are for preschool care. The care for infants and toddlers
    is the most expensive care to provide. In military CDC's this expensive
    care is subsidized by the less expensive care provided to preschoolers.
    If the only care that can be cost effectively contracted out is care
    for preschoolers, the military CDC's will have to start charging
    exorbitant rates for infant and toddler care. In addition, the Navy has
    stated in Congressional testimony that such contracted care may cost
    military members up to 20 percent more than care in DOD facilities.
        NMFA is extremely pleased with the emphasis the Army has placed on
    hourly care. The alternatives to care in centers offered at most Army
    Posts are quite extensive. The Army is considering additional resources
    to provide this necessary care for its volunteers, for those with
    medical appointments, and for respite care. NMFA is disappointed that
    the Air Force remains the only service that is not subsidizing its
    family day care providers. The subsidy provided by the other services
    allows in home provider charges to be competitive with the fees in the
    CDC's.
                Youth Services
        The number of military children in the 6-12 age group has escalated
    in recent years. Concerns have increased regarding latch key children
    and the growing problem of youth violence on military installations.
    DOD is moving to address both of these issues, through installation
    level regulations concerning children at home alone, and pilot
    demonstration programs for youth activities. NMFA fully supports these
    initiatives.
    The Challenges
        A military family's life is full of challenges.
        Children are forced to constantly leave old friends and make new
    ones. The ``new'' math they took at their last school is not the
    ``new'' math at their current one.
        With each move military spouses return to the bottom of the
    employment ladder. Unemployment among military spouses in general is
    more than twice that of their civilian peers, and up to four times as
    high for the spouses of the most junior personnel.
        Cherished family heirlooms are damaged or lost in moves. The time
    and paperwork to make a claim is almost never worth the small
    reimbursement.
        Military orders to that perfect job overseas require wrenching
    family decisions. Do we go together to stay together, or do we separate
    so our son who is the starting quarterback as a high school junior has
    an opportunity for a sports scholarship to college? Do we go together
    to stay together, or do we separate because the overseas school does
    not offer the courses our daughter needs to be competitive for a
    scholastic college scholarship? As the drawdown in Europe has ended,
    both DOD and families are faced with small overseas schools that cannot
    offer full sports programs or full academic courses.
        It is not unusual for military spouses to make the next Permanent
    Change of Station (PCS) move by themselves. Up to eleven thousand Navy
    families may be facing that prospect this summer. Shortfalls in PCS
    funding, and the desire to enroll children in school at the new duty
    station before the term begins, are on a collision course.
        Young couples face parenthood for the first time far from the
    support of their own extended family.
    The Separations
        When servicemembers deploy or go on training exercises, the
    uniqueness of the military community becomes even more apparent. The
    military installation becomes a community of ``temporary single
    parents.'' Young spouses may face paying the family bills and balancing
    a checkbook for the first time. Working spouses may be faced with
    finding another child care provider since the couple managed to work
    alternate shifts when the servicemember was home. The spouse may have
    to change jobs in order to meet financial or child care needs. Studies
    show that spouses who are employed during deployments have higher self
    esteem and satisfaction than those who are not. Caring for a new infant
    or meeting the challenges of the independence-seeking-adolescent can be
    formidable when done alone. Long distance care for elderly parents and
    parents-in-law may fall solely on the military spouse's shoulders.
    Decisions on what to do about the flat tire, the broken washing machine
    or the son who is failing math, must be made solely by the military
    spouse. Family reunions after lengthy deployments are not the
    ``honeymoon'' often expected. In fact, incidences of family violence go
    up as deployments end.
        A smaller force has increased the OPTEMPO and PERSTEMPO of many
    active duty personnel. Families also report what NMFA calls, ``they
    only sleep here.'' Servicemembers who are not deployed or away on
    training missions are working longer and longer hours and longer and
    longer weeks. Twelve and even sixteen hour work days are reported as
    routine for many as are six and often seven day work weeks. Spouses
    report their children only see the military parent on Sundays, and
    sometimes not even then. Both increased nights away from home and
    nights when the servicemember is only home to sleep, eventually wear
    away the fabric of family life.
    The Assistance
        Family centers (Army Community Service, Navy and Marine Corps
    Family Service Centers and Air Force Family Support Centers) were
    instituted to assist with the unique needs of the mobile and young
    military population. The need for these services escalates
    significantly when the military mission requires family separation.
        Relocation counselors help families obtain information about the
    new duty station, and assist military spouses forced to make a move on
    their own. Financial counselors provide assistance in learning the
    basics of family budgeting, how to balance the checkbook, and planning
    for the future. Family life counselors offer classes and individual
    assistance dealing with adolescents trying to grow their own wings.
    Information on locating elder care resources thousands of miles away is
    available at family centers. Employment counselors provide job search
    and skill training. At this moment DOD is piloting several
    demonstration programs in an attempt to more effectively meet the
    employment needs of mobile military spouses.
        Deployment briefings give families the tools to handle both
    separation and reunion. When needed assistance is not available at the
    family center, resource and referral counselors marry the needs of the
    family with the resources in the broader community. Child Development
    Services coordinators help families find the right child care in on
    base centers, family care homes or the civilian community. Before and
    after school care and youth services, whether provided by the family
    centers or through MWR activities, address the needs of this somewhat
    neglected population. DOD is piloting several youth programs worldwide
    in order to ascertain innovative and cost effective ways to meet the
    growing concern regarding the safety, educational, and recreational
    needs of these children. New parent support counselors provide the
    education and information needed by new mothers and fathers. When the
    end of the paycheck comes before the end of the month, family
    assistance centers, loan closets and Airmen's Attics are available to
    provide food or other necessary items to tide the family over.
        Family centers teach the skills necessary to enable servicemembers
    and their families to cope with the demands of military life and the
    safety net to assist them when their coping skills are not enough.
        NMFA believes a direct correlation should exist between increased
    separations and funding for the family center programs. When one goes
    up so should the other.
    Privatization and Outsourcing Initiatives
        NMFA believes privatization and outsourcing initiatives may assist
    in providing both needed family housing and services at lower costs to
    the government. However, before rushing to implement these initiatives,
    the full ramifications of such programs should be considered. If either
    initiative begins to destroy the unique community of the military
    installation, the support structure for the military family will
    collapse.
        If family support functions are contracted out, the work performed
    must still be under the supervision of the local chain of command.
    Installation and unit commanders must be able to ascertain the quality
    of the service provided. Commanders must have the authority, as well as
    the responsibility, to provide the services needed by the families
    within their communities.
        If child care spaces are contracted out, the decision must prove
    cost effective for the full range of care. Otherwise, on installation
    centers will be forced to charge unaffordable rates for the more
    expensive infant and toddler care. Contracting out only the less costly
    services will also result in fewer spaces for hourly care needed for
    medical appointments, respite care and volunteer work. If fees charged
    servicemembers for child care in contracted facilities are up to 20
    percent higher than in DOD facilities, who actually benefits from such
    an enterprise? Military families should not bear the cost of
    contracting out.
        Housing areas built under privatization initiatives in the private
    sector must not just be brick and mortar. They need to be recognized as
    military communities and appropriately supported. Particular attention
    needs to be paid to the funding for children's education if such
    housing is not built on federally owned land.
                                   conclusion
        Military families view compensation as both what comes in and what
    does not go out. Therefore, the benefits derived from Commissaries,
    Exchanges, MWR activities, CDC's, on-installation housing and
    affordable health care can be as important to the family's economic
    well being as what is deposited in the bank account.
        The Military Community which includes the installation, the
    organizations, the institutions and the people, is viewed as ``home''
    by military families, whether or not they actually live on the
    installation. It is easy to see how mission oriented commanders faced
    with constrained resources for training and weapons modernization,
    would view child care, family housing and family support as things that
    could, even should, be provided by the civilian sector. However, it has
    become obvious that an all volunteer force is a ``married with
    children'' force. The price of the readiness of that force includes the
    programs necessary to support its demographic structure. Servicemembers
    who are concerned about their families' well being cannot be totally
    focused on the mission at hand. Privatization and outsourcing
    initiatives have the potential to increase quality of life at reduced
    costs. Care must be taken that such initiatives reinforce the military
    community and do not, no matter how inadvertent, lead to the
    destruction of the community and its support infrastructure.
        Family life that is consistently compromised by separations due to
    deployments and training, and then further strained by long work days
    and work weeks, will eventually begin to fray. It is not unreasonable
    to speculate that this fraying will turn into negative retention
    decisions.

        Senator Stevens. Thank you. That was very interesting.
        We have looked at that and will continue to look at it, Ms.
    Hickey. It is a very difficult problem financially to take a
    system that is sort of wavering now and expand it that
    dramatically. However, we really are looking at it and we will
    be glad to follow up on your suggestion.
        Thank you very much.
        Ms. Hickey. Thank you, sir.
    STATEMENT OF JERRY M. WIENER, M.D., PAST PRESIDENT OF
                THE AMERICAN PSYCHIATRIC ASSOCIATION AND
                AMERICAN ACADEMY OF CHILD AND ADOLESCENT
                PSYCHIATRY AND CHAIRMAN OF THE DEPARTMENT
                OF PSYCHIATRY AND BEHAVIORAL SCIENCE AT
                GEORGE WASHINGTON UNIVERSITY
        Senator Stevens. Next is Jerry M. Wiener. Dr. Wiener is
    chairman of the Department of Psychiatry and Behavioral Science
    at George Washington University.
        Good morning.
        Dr. Wiener. Good morning, Senator Stevens, and thank you.
        I am here representing the American Psychiatric Association
    and the American Academy of Child and Adolescent Psychiatry.
        The American Psychiatric Association maintains its
    longstanding commitment to insuring that military personnel and
    their dependents will have unrestricted access to the best
    quality and most appropriate care for their mental health
    needs. I will address our support for the 1996 congressional
    decision to terminate the Department of Defense
    psychopharmacology demonstration project, known as the PDP, the
    coverage in delivery of mental health services in the military
    medical system, and the confidentiality of patient records.
        First, we urge that the Congress and this subcommittee
    respect the findings and recommendations of the GAO report and
    do the right thing by the taxpaying public and by the military
    personnel and their families: do not reinstate any aspect of
    this program. Do not alter your previous decision to terminate
    this unneeded, unrequested, wasteful, and expensive program.
        I offer you the following considerations. This program from
    its inception was created for the DOD by an unrequested
    appropriation bypassing the authorization process which would
    require hearings and public input.
        The GAO report documents that this program never had any
    basis in military need or readiness. Its only real purpose was
    to use the public funds to finance a professional guild agenda,
    an agenda to provide a basis for various initiatives for
    psychology prescribing privileges at the State level, none of
    which, so far, has been successful. No country in the world, no
    State in this country, allows psychologists to prescribe
    psychoactive medications for serious and severe mental illness.
    There is a good reason for that.
        Further, the GAO report itself was requested by organized
    psychology. But yet, beginning a month before its official
    release, an intensive campaign to discredit the GAO report was
    mounted. The campaign cites another study, the so-called Vector
    study, and a study of that study, which was prepared for the
    chief psychologist of the Air Force. Unfortunately, but not
    surprisingly, not only is the Vector report itself badly
    flawed, but it does not address the questions asked by the
    Congress: is the program needed, is it cost effective, should
    it be reinstated.
        The GAO's report answers no, no, and no, each ``no''
    accompanied by extensive documentation.
        In another assessment, this program was featured on the NBC
    ``Nightly News'' show as an example of the fleecing of America.
        On the issue of costs, even if start-up costs are removed
    from the GAO report, which was a criticism in the Vector
    report, it finds that the expense comes if not to $610,000 for
    each of the 10 graduates of this program, that it still would
    be and would have been far less expensive, far more cost
    effective, and far more quality conscious, either to increase
    the number of psychiatrists or, preferably, even make a
    relatively modest investment in upgrading the training of
    military primary care physicians. You already have the
    physicians trained to prescribe.
        If military needs and the best interests of active duty
    personnel and their dependents were the real concerns, this
    program would not have been conceived, much less been born and
    paid for.
        Finally, the GAO finds that, even if trained to prescribe
    drugs, psychologists cannot be substituted for psychiatrists in
    terms of military needs and military readiness.
        We urge you to stick by the decisions that have already
    been made to terminate this program.
        In the delivery and coverage of health service in the
    military medical system, we have concerns about the equity that
    the CHAMPUS program will provide for the treatment of mental
    illness.
        In trying to shorten this, let me say that CHAMPUS now has
    fully implemented what is called the TRICARE Program, which
    moves CHAMPUS into the managed care arena. For mental illness
    more than other areas of medical care, managed care systems
    pose a number of additional barriers for service personnel and
    their dependents who need clinical care for mental illness.
        While they generated savings, the managed care systems,
    they do so by limiting access to adequate care. We are
    concerned that TRICARE will follow this path.

                               prepared statement

        There is no scientific, clinical, or even economic
    rationale for these discriminatory levels of coverage and
    denial of access. The decisions about treatment should be made.
        [The statement follows:]
                     Prepared Statement of Jerry M. Wiener
        My name is Jerry M. Wiener, M.D., Past President of the American
    Psychiatric Association (APA) and the American Academy of Child and
    Adolescent Psychiatry (AACAP) and Chairman of the Department of
    Psychiatry and Behavioral Science at George Washington University. I am
    testifying today on behalf of the APA, a medical specialty society
    representing 42,000 psychiatric physicians nationwide. The APA
    maintains its longstanding commitment to ensuring that military
    personnel and their dependents have unrestricted access to the best
    quality and most appropriate mental health services. My testimony will
    address:
      --Our support for the 1996 congressional decision (Public Law 104-
            106) to terminate the unneeded and wasteful Department of
            Defense (DOD) psychopharmacology demonstration project (PDP)
            which proposed to train military clinical psychologists to
            prescribe psychoactive medications, and our support for the
            April 1997 GAO Report conclusion: ``Given DOD's readiness
            requirements, the PDP's substantial cost and questionable
            benefits, and the project's persistent implementation
            difficulties, we see no reason to reinstate this demonstration
            project;''
      --The coverage and delivery of mental health services in the military
            medical system, and;
      --Confidentiality of patient records.
    The GAO Report and the Psychopharmacology Demonstration Project (PDP)
        When Public Law 104-106 ordered termination of the PDP program no
    later than June 30, 1997, it also required the GAO to produce a report
    evaluating the cost-effectiveness of the program and recommending
    whether or not the program should be reinstated. This report, entitled,
    ``Defense Health Care: Need for More Prescribing Psychologists Is Not
    Adequately Justified,'' (GAO/HEHS-97-83). (A copy of the report can be
    found on GAO's World Wide Web Home Page at http://www.gao.gov.) It
    validates the decision made last year by the Congress and President
    Clinton to terminate the program.
        The report is a clear, thorough, and dispassionate examination and
    analysis of the PDP and documents that the program is exactly what the
    APA has been saying since the program's inception. It is a major
    boondoggle which was never needed and never requested--except by one
    powerful Senate aide who, not coincidentally, happens to be a
    psychologist--which has wasted millions of taxpayer dollars while
    exploiting the care of military personnel and their families to achieve
    a self-serving agenda. It was a lose-lose program from the beginning.
    The GAO found that ``training psychologists to prescribe medication is
    not adequately justified because the MHSS (Military Health Services
    System) has no demonstrated need for them, the cost is substantial, and
    the benefits uncertain.''
        In its blunt assessment of the PDP, the GAO found that there is no
    shortage of psychiatrists to justify training psychologists to
    prescribe drugs. ``The MHSS has more psychiatrists than it needs to
    meet its current and upcoming readiness requirements. * * * Therefore,
    the MHSS needs no prescribing psychologists or any other additional
    mental health providers authorized to prescribe psychotropic
    medication.''
        GAO did a thorough evaluation of the costs of the program--
    previously unavailable to Congress or the public--and found that $6.1
    million has been spent on a program that has produced only ten
    ``graduates'' who are ``prescribing psychologists'' and notes each one
    prescribes under a psychiatrist's supervision. That comes to about
    $610,000 per each ``prescription-writing'' psychologist and does not
    include, for those psychologists who have finished the program, the
    cost of the time by the psychiatrist physician to supervise (i.e.;
    support or disapprove) the psychologist's ``prescription-writing''
    decision. It would be far less expensive and far more cost-effective
    either to increase the number of psychiatrists or to make a relatively
    modest investment in upgrading the training of military primary care
    physicians.
        Among the GAO's other major findings are the following:
      --``None of the services needs additional mental health providers
            capable of prescribing medications to meet either current or
            upcoming medical readiness requirements. * * * Each service has
            more than enough psychiatrists, as well as clinical
            psychologists, to care for its anticipated wartime psychiatric
            caseload. Given this surplus, spending resources to provide
            psychologists with additional skills does not seem justified.''
      --``Because psychiatrists practice medicine, they can diagnose
            organic as well as mental conditions and treat each with
            medication. They consider a full range of possible organic
            causes for abnormal behavior * * * Therefore, they can
            distinguish between mental conditions with an organic cause * *
            * and organic conditions which have symptoms that mimic a
            mental disorder. Organic mental disorders are best treated
            through a combination of medication and psychotherapy * * *.''
      --In contrast, ``Because medical training is not required to practice
            clinical psychology, psychologists are not qualified to
            prescribe medication * * * Clinical psychologists practice
            psychology, not medicine.''
      --Psychologists cannot be substituted for psychiatrists * * * Even if
            trained to prescribe drugs, psychologists are not as equipped
            as psychiatrists to distinguish between actual combat stress
            and certain neurological disorders that appear to be combat
            stress. Psychiatrists are also better able to treat more severe
            or complicated combat stress cases.''
        The GAO concluded--as I noted in my opening--``Given DOD's
    readiness requirements, the PDP's substantial cost and questionable
    benefits, and the project's persistent implementation difficulties, we
    see no reason to reinstate this demonstration project.''
        Nearly a month prior to the GAO report's release, the Assistant
    Secretary for Defense Health Affairs, Stephen C. Joseph, M.D., M.P.H.,
    informed Senator Joseph I. Lieberman (D-CT) that ``the Department [of
    Defense] has no plans to extend the program after the termination date
    of June 30, 1997.'' However, as you each may be all too aware, a major
    lobbying and advertising campaign is being waged to have Congress
    reinstate this costly and needless program which, from its inception,
    was only a sad monument to a psychologist's wish to be a physician.
        Organized psychology itself requested the GAO report and, since
    GAO's conclusions are unfavorable from the psychologists' viewpoint,
    the psychologists have mounted a drumbeat of criticism of the GAO.
    Psychology is now relying heavily on the so-called Vector Study and its
    review by Coopers & Lybrand--a study commissioned by and for the Chief
    Psychologist in the Air Force--a study which makes selective
    assumptions leading to an outcome which, by highly selected excerpts
    and statements taken out of context, provides support for the
    psychologists' position.
        It is also most interesting to note that when NBC ``Nightly News''
    showcased the PDP, NBC concluded that ``psychologists are defensive,
    doing everything they can to keep their Pentagon program alive and
    continue what many critics call a prescription for the fleecing of
    America.''
        The reinstatement of the PDP in any form defies the GAO, the
    federal government's own independent watchdog group, and an independent
    news organization's conclusion that the PDP is unneeded and of
    questionable benefit. No funding should be provided to continue any
    program to train clinical psychologists to prescribe medications.
    Delivery and Coverage of Mental Health Services in the Military Medical
            System
        Reliable and accurate studies repeatedly document that diagnosable,
    serious, and treatable mental disorders are as prevalent and costly as
    heart disease, diabetes, and cancer, and that they may be even more so
    for mental illness in children and adolescents. However, mental illness
    insurance coverage is distinctly different than coverage typically
    offered for other illnesses.
        The Civilian Health and Medical Program of the Uniformed Services
    (CHAMPUS), like the private sector, covers mental health benefits
    differently than it does medical and surgical benefits. Furthermore,
    the delivery system for mental health benefits under the CHAMPUS
    program differs from that for other illnesses.
        These differences have contributed to the appearance that CHAMPUS
    has higher and faster-growing mental health costs than in the civilian
    sector. However, psychiatric services are generally provided off-base,
    therefore incurring an additional charge against the CHAMPUS program.
    Unlike psychiatric services, more than 75 percent of all other medical
    services provided to CHAMPUS beneficiaries are provided on a military
    base, but only 38 percent of inpatient psychiatric services for
    CHAMPUS-eligible beneficiaries are provided on-base. The other 62
    percent are provided off-base because the military either does not have
    the capability to provide them or has not structured the military
    medical care system to provide direct treatment. This, in part, is due
    to the military's mission on the one hand and concern for the sensitive
    confidentiality issues rooted in treatment of mental illness and
    substance abuse on the other.
        Moreover, in general, military life is more stressful than civilian
    life, especially for children and adolescents. There are long periods
    of separation from one's family, and very few types of employment
    require the employee to be prepared to give his or her life. In
    addition, frequent moves, especially overseas, add additional emotional
    strain on children. In fact, the DOD's own assessment of the various
    CHAMPUS demonstration projects points out that rising CHAMPUS mental
    health benefit costs are largely attributable to the service needs of
    child and adolescent CHAMPUS beneficiaries.
        As noted, CHAMPUS' mental health delivery system is different than
    that of the private sector. However, CHAMPUS now has fully implemented
    the TRICARE program which moves CHAMPUS into the managed care arena.
    For psychiatry, more than other areas of medicine, managed care systems
    pose a number of additional barriers for service personnel and their
    dependents who need clinical care for mental illness.
        While managed care systems require cost containment and generate
    savings on the part of the insurer, these benefits require limiting
    access to quality mental health care. We know that the financial
    incentives lead to denial and under-provision of services,
    deterioration of the quality of services, and subsequent adverse
    effects on patient management and health. We are concerned that TRICARE
    will follow this path.
        In the final rule implementing the TRICARE program, it is clear
    that mental health services are covered differently in comparison to
    other medical services. Across the board, whether TRICARE standard,
    TRICARE extra, or TRICARE prime, mental health services are assessed
    higher copayments and deductibles than other medical or surgical
    benefits. The same holds true for hospitalization for mental illness
    and substance abuse.
        Arbitrary limits on psychotherapy sessions are a problem under
    TRICARE. After eight sessions, permission to continue to have more
    psychotherapy sessions is usually required. This is a serious intrusion
    into the physician-patient relationship. The decisions about treatment
    should be made by the physician in consultation with the patient.
    Decisions should not be made by a remote and/or untrained third party.
    Patients should receive the medical care they require--no more and no
    less. Optimally, this should be the premise under which managed care
    programs operate, and it is APA's hope that TRICARE will strive to
    achieve this goal.
        APA supports inclusion of point-of-service alternatives in TRICARE.
    This provision allows the patient to seek services from non-network
    professionals and institutions while permitting the plan to establish
    reasonable higher copayments and an annual deductible for such
    services. Finally, we strongly support explicit regulations that assure
    patient access to the patient's choice of medical specialist.
    Confidentiality of Patient Records
        Confidentiality of patient records is a priority for the APA and
    nowhere even more so than when military dependent crime victims need
    treatment for the trauma they have experienced. The recent Elmendorf
    Air Force Base incident is an unfortunate example of the military's
    failure to respect the privacy of the physician-patient relationship
    and the confidentiality of patient records. At Elmendorf AFB, in
    Anchorage, Alaska, the 20-year-old daughter of a military counter-
    intelligence agent was allegedly raped by an airman. Later, she sought
    therapy at the base to help deal with the incident, and the records
    detailing her sessions with the Elmendorf Air Force psychiatrist
    treating her were requested by military lawyers to defend the airman
    charged with the rape because the records are considered government
    property.
        While we recognize that our Armed Forces must weigh conflicting
    priorities with regard to active-duty personnel and their dependents,
    the APA finds it appalling that both prosecution and defense attorneys
    are routinely permitted access to patient records not only to prepare
    for trial, but also for use at trial should the attorney believe it
    useful. This practice creates an untenable hazardous situation that
    must be remedied.
        More than eight months ago, the APA formally requested the DOD to
    implement policy changes that would strengthen the protection afforded
    to the medical records of military dependents who seek mental health
    treatment. This can be accomplished by amending the Military Rules of
    Evidence (MRE) to create a privilege that would be consistent with the
    June 1996 U.S. Supreme Court decision of Jaffee v. Redmond. While there
    was a sympathetic reception at DOD to our concerns, there has yet to be
    a remedial action.
        We would respectfully remind the Subcommittee that the Supreme
    Court majority in Jaffee v. Redmond stated this balance of interest as
    follows): ``Effective psychotherapy depends on an atmosphere of
    confidence and trust, and therefore the mere possibility of disclosure
    of confidential communications may impede development of the
    relationship necessary for successful treatment. The privilege also
    serves the public interest, since the mental health of the Nation's
    citizenry, no less than its physical health, is a public good of
    transcendent importance. In contrast, the likely evidentiary benefit
    that would result from the denial of the privilege is modest.''
        Moreover, the DOD Assistant Secretary for Health Affairs, Stephen
    Joseph, M.D., recommended on September 9, 1996 that ``non-active duty
    patient/DOD psychotherapist communication should be privileged, as it
    is in the civilian sector,'' and that the MRE should be amended to
    create this privilege. The Members of the 104th Congress who wrote to
    DOD Secretary William Perry last October requesting the implementation
    of Dr. Joseph's recommendation also have not received a reply.
        In the Armed Forces' vital role of protecting the nation's
    security, commanding officers need to be assured that their personnel
    are ready to carry out their mission and may, at times, need to weigh
    the physical and mental health of active-duty personnel and their
    dependents. However, protecting national security does not necessarily
    apply to military dependents who are not themselves on active duty. The
    knowledge that a dependent's mental health records are discoverable by
    military courts interferes with the ability of military dependents to
    obtain needed mental health treatment. Fear of exposure or humiliation
    will dissuade individuals from seeking such treatment. Those who of
    necessity do seek treatment are likely to withhold information that may
    be vital for accurate diagnosis and effective treatment.
        The morale of our active duty forces has an important impact on
    their mission readiness. Concerns about the mental well-being of
    dependents can have an adverse impact on active-duty military,
    particularly if these problems are not being addressed through proper
    health care. It is in the interest of the military to afford the family
    members of active-duty personnel the same right and access to effective
    health care that they would enjoy if they were not members of a
    military family. It is essential that military dependents who have a
    mental disorder, or need to deal with the stress of being a crime
    victim, have assurance of confidential mental health treatment if they
    are to have the same opportunities for recovery. We urge the
    Subcommittee to request the DOD to amend the Military Rules of Evidence
    to create this privilege.
    Conclusion
        Congress should continue to embrace the GAO's recommendation to
    continue the termination of the PDP; the TRICARE program should have
    mental health benefits (e.g. copayments and deductibles) that mirror
    those offered for other medical benefits and establish a point-of-
    service option to allow beneficiaries to access care outside the
    network; and the DOD should implement Dr. Joseph's recommendation that
    ``non-active duty patient/DOD psychotherapist communication should be
    privileged, as it is in the civilian sector,'' as upheld by the U.S.
    Supreme Court in Jaffee v Redmond.
        In closing, the APA wishes to thank the Subcommittee for the
    opportunity to testify.

        Senator Stevens. I am going to have to say thank you very
    much. We have looked at it. I have looked at your comment
    concerning the rules of evidence also. We are working on that
    with Senator Lieberman, as you know, and we will listen to your
    advice on that also.
        Dr. Wiener. Thank you very much, Senator.
        Senator Stevens. Senator, do you have any comments?
        Senator Inouye. No; thank you.
        Senator Stevens. Thank you very much. We appreciate it.
    STATEMENT OF MICHAEL D. MAVES, M.D., MBA, EXECUTIVE
                VICE PRESIDENT, AMERICAN ACADEMY OF
                OTOLARYNGOLOGY--HEAD AND NECK SURGERY
        Senator Stevens. Dr. Maves of the American Academy of
    Otolaryngology is our next witness. Would you say that for us,
    please.
        Dr. Maves. It is the American Academy of Otolaryngology--
    Head and Neck Surgery, sir. Thank you.
        Senator Stevens. Thank you very much.
        Dr. Maves. Mr. Chairman, I am Dr. Michael Maves, executive
    vice president of the American Academy of Otolaryngology--Head
    and Neck Surgery, the organization that represents the
    approximately 11,000 ear, nose, and throat physicians in this
    country. I want to thank you for the opportunity to return to
    this committee to give testimony today.
        I would like to deal with three issues, sir. The first of
    these is tobacco cessation in the military. The American
    Academy of Otolaryngology--Head and Neck Surgery has been
    opposed to the use of tobacco for many decades. We are the
    physicians that, for the most part, take care of patients who
    have cancers of the head and neck, which we find are directly
    related to the harmful use of tobacco among our patients every
    day.
        For this reason, we were pleased to see that several years
    ago the Department of Defense announced a policy banning
    smoking in all DOD work facilities worldwide. This far reaching
    initiative makes DOD workplaces free of harmful secondhand
    smoke and I believe will improve the health of all military
    personnel.
        We do know, however, that many military personnel have
    substituted the use of smokeless tobacco to avoid disciplinary
    actions when smoking tobacco cannot be used. We know full well
    again that smokeless tobacco has significant, harmful effects,
    and we are concerned about this change.
        We also are concerned that in a way tobacco use is still
    indirectly supported by the military through subsidized sales
    of tobacco products at military commissaries and PX's, where
    cigarettes and other tobacco products can be bought at a much
    lower price than would otherwise be charged.
        We have expressed our concern to the Department of Defense
    about this and would like to see the sale price of these
    products in the commissaries at least brought to parity with
    civilian prices.
        Finally, we also urge that the Department of Defense
    support tobacco cessation programs with military personnel and
    their families, but especially in relationship to mothers and
    children concerning the hazardous effects of secondhand smoke
    as well as tobacco.
        The second area I would like to speak about is UV
    irradiation and sun exposure. Last year, our academy indicated
    its strong support of the Environmental Protection Agency, the
    National Weather Service, and the Centers for Disease Control
    and Prevention in putting together a UV index to alert members
    of the public to the dangers of excessive radiation which can
    cause skin cancer. It is our understanding that one of your
    colleagues, Senator Connie Mack, of Florida, has begun an
    effort with the National Association of Physicians for the
    Environment to survey selected Federal agencies to determine
    the extent of educational programs regarding skin cancer.
        We would like to see this program supported and expanded. I
    think this would obviously be a very good program for the
    Department of Defense, particularly for our military personnel
    who are outdoors, by the nature of their profession, much of
    the time.
        We would urge this committee that, once the report is made
    by Senator Mack, it would contact us to determine how we could
    help participate with the Department of Defense in insuring
    that all military personnel and their dependents are educated
    regarding ultraviolet exposure.
        Last, let me deal with the issue of noise reduction.
        Our academy, from its beginning, by the very nature of our
    treatment of ear disease, has been concerned about the effects
    of excessive noise exposure on the structures of the ear,
    particularly when these noises are excessive. We know that
    noise is a natural part, a necessary part, of daily military
    life. But we would urge that continued educational programs be
    promoted by the Department of Defense for military personnel to
    use appropriate noise protection and hearing protection in
    their daily activities.

                               prepared statement

        Mr. Chairman, we have raised a number of issues with you.
    We would be happy to work with your staff on any additional
    followup. I appropriate the opportunity to participate in this
    discussion and I thank you once again.
        [The statement follows:]
                     Prepared Statement of Michael D. Maves
        Mr. Chairman, I am Michael D. Maves, MD, MBA, Executive Vice
    President of the American Academy of Otolaryngology--Head and Neck
    Surgery, Inc. (AAO-HNS). Thank you for the opportunity to present this
    testimony to you on behalf of our Academy. The AAO-HNS is the largest
    medical society of physicians, with over 10,000 members, dedicated to
    the care and treatment of patients with disorders of the ears, nose,
    throat and related structures of the head and neck. We are sometimes
    referred to as ENT physicians.
        If, after hearing our views, you would like your staff to discuss
    these issues with us, perhaps with the view to developing bill report
    language, we would be pleased to work with them.
        Mr. Chairman I will deal with several issues.
    Tobacco
        The first of these is tobacco use cessation in the military.
        The American Academy of Otolaryngology--Head and Neck Surgery, Inc.
    has been opposed to the use of tobacco for many decades. We are the
    physicians who care for most of the patients with cancer of the head
    and neck, and we see the harmful affects of tobacco use among our
    patients every day.
        Increasingly there are news reports of tobacco companies admitting
    to the adverse impacts of tobacco on users. We also know that there can
    be significant impacts on individuals, especially children, who happen
    to be in the vicinity of toxic smoke from tobacco products used by
    others.
        We were pleased to see that several years ago the Department of
    Defense announced a policy banning smoking in all DOD work facilities
    worldwide. This far-reaching initiative makes DOD workplaces free of
    harmful secondhand smoke as well and thus will improve the overall
    health of all military personnel.
        We do know, however, that many in the military have substituted
    tobacco smoking with smokeless tobacco to avoid disciplinary action
    where smoking itself is prohibited--smokeless tobacco also has very
    serious medical effects.
        Even with all of the scientific information we now have about the
    negative impacts of smoking and secondhand smoke on individuals, we
    find that tobacco use is still indirectly encouraged by the military
    through subsidized sale of tobacco products at military commissaries
    and PX's where cigarettes and other tobacco products can be bought at
    much lower prices than otherwise would be charged. The Academy has
    expressed its concern that the DOD would likely not ban sale of tobacco
    products in the commissary system. We strongly support the concept of
    bringing tobacco prices at least to a parity with civilian prices to
    help cut down on use.
        We especially urge that the Department of Defense promote tobacco
    cessation programs with personnel and their families, but especially in
    relation to mothers and children, about the hazardous affects of
    secondhand smoke as well as tobacco.
    Skin Cancer and UV Radiation
        Last year the Academy indicated its strong support of the
    Environmental Protection Agency (EPA) and the National Weather Service
    (NWS) and the Center for Disease Control and Prevention (CDC) in
    developing a nationwide UV Index to alert members of the public to the
    dangers of excessive radiation from the sun, potentially resulting in
    skin cancers (especially of the head and neck), eye damage and immune
    system damage.
        It is our understanding that one of your Senate colleagues, Senator
    Connie Mack of Florida, has begun an effort with the National
    Association of Physicians for the Environment (NAPE) to survey selected
    Federal agencies to determine the extent of educational programs
    regarding skin cancer as affected by excessive ultraviolet radiation
    from sunlight. Those Federal agencies would include those which have
    employees and clients (such as farmers served by the Department of
    Agriculture) routinely exposed to occupational and recreational
    sunlight far more than the general public.
        Of course, the major agency which has such personnel is the
    Department of Defense. Millions of our young men and women are
    routinely exposed to excessive sunlight for long periods of time in
    carrying out their duties. Senator Mack has requested from the DOD a
    report on its educational activities, and will follow up, we are sure,
    with recommendations for necessary actions to be taken.
        Our Academy members, of course, deal with many of the skin cancers
    of the head and neck, where many of the skin cancers occur. We urge
    that this committee consider, once the report is made available by
    Senator Mack, how it might participate with the Department of Defense
    in insuring that all personnel and their families are educated in this
    regard. One excellent instrument of education is the so-called UV
    Index, widely made available by the National Weather Service and by
    private weather reporting companies, which indicates, particularly in
    the summer, in a range of 1-10, the severity of UV radiation from the
    sun, at given localities throughout the United States. This excellent
    tool has been used by our Academy to inform members of the public about
    the extent of sunlight and have warned the public about the dangers of
    excessive sun exposure. Both the Centers for Disease Control and
    Prevention and the U.S. Environmental Protection Agency support the
    effort on skin cancer and use of the UV Index. Although these agencies
    are not funded by this committee's recommendations, nevertheless we
    note here their commendable activities in this regard.
        Along those lines we would be remiss if we did not report how
    pleased we are to see that a large number of military units have been
    receiving awards from the EPA Stratospheric Protection Division for
    their work in reducing the use of CFC's and other atmospheric ozone
    depletion chemicals in their activities, leading to stratospheric ozone
    layer protection.
        As you know, the stratospheric ozone layer protects us from
    excessive UV radiation harmful to the skin, and potentially causing
    skin cancer.
        In this activity and in so many others that the Department of
    Defense has become a leader in, we have seen the ``greening''
    (environmental improvement) of the Department facilities.
    Noise Reduction
        Finally, Mr. Chairman, let me deal with the issue of noise
    reduction.
        Our Academy, from its beginning, has been concerned about the
    affect of excessive noise on the structures of the ear, particularly
    those noises which are extremely excessive. We know that noise is a
    necessary part, frequently, of daily military life, and particularly so
    in wartime. Nevertheless, we believe that many of the noise affects on
    military personnel can be reduced by the appropriate use of noise-
    reducing and prevention activities.
    Summary
        Mr. Chairman, we have raised several issues with you involving the
    interface between the Academy's concerns and military activities.
        I would be happy to answer any questions you may have.

        Senator Stevens. Thank you very much.
        We will contact you after we get Senator Mack's report. I
    think it is a good suggestion and we would welcome your help.
        I think the two of us could hear you better if we had known
    about those things in World War II.
        Dr. Maves. I understand. Thank you much, sir.
        Senator Stevens. So we thank you very much.
    STATEMENT OF MARTIN B. FOIL, JR., CHAIRMAN OF THE
                BOARD, BRAIN INJURY ASSOCIATION, INC.
        Senator Stevens. Next is Martin Foil, of the Brain Injury
    Association.
        For those who have just come in, I announced at the
    beginning that we do have to have a limitation on the testimony
    today because of the Thurmond event that all of us will attend.
    We must leave here at 10:15. So we are limiting your statements
    to 3 minutes. But we will put your statements in the record and
    we have examined them in advance. Please believe me on that.
        Mr. Foil.
        Mr. Foil. Thank you.
        Good morning, Chairman Stevens and members of the
    committee. Thank you for allowing me to be here today. My name
    is Martin Foil and I come before you today as the father of
    Philip, a young man with severe brain injury.
        I serve as a volunteer chairman of the Brain Injury
    Association, but in my work life, I am the chairman and chief
    executive officer of a yarn manufacturing company in Mount
    Pleasant, NC. I receive no personal benefit or monetary gain
    from the program about which I am testifying.
        I am here because I really care about the 9 million
    Americans living with brain injury and their families. The
    Defense and Veterans Head Injury Program, DVHIP, and the
    violence and brain injury project under the DOD are critical to
    improving the lives of people with brain injury and to the
    prevention of brain injury. This is the only known cure--
    prevention.
        Our project not only serves all active duty military
    personnel who sustain a brain injury, over 12,000 a year and
    their families, but it also serves the civilian population as
    well. It is, indeed, an exemplary case of dual use funding.
        The DVHIP also serves veterans who have sustained a brain
    injury.
        I am proud to tell you today that these collaborative
    efforts between the Departments of Defense, Veterans Affairs,
    and the BIA continue to pay off.
        Programs have done the following: established a patient
    registry treatment and referral network, including 20 medical
    centers. It established toll free help lines for patients and
    caregivers, a multicenter patient evaluation program,
    prevention and educational programs for people with brain
    injuries, families, and caregivers, including our Head Smart
    Program and the multimedia interactive resource center now at
    place at more than 20 civilian and DVHIP centers.
        In addition, the programs have furthered an international
    traumatic brain injury research and education effort in
    collaboration with the World Health Organization.
        Brain injury is, indeed, a silent epidemic. It is the
    single largest killer and cause of disability among our young
    people. We need your support, Senators, for the $8.5 million so
    that the Brain Injury Association, the DVHIP, and the VBIP can
    carry on this unique partnership.
        This year, the Defense and Veterans Head Injury Program and
    the violence and brain injury project were included in the
    DOD's proposed funding for the uniformed services system.
    However, it is not at this time a separate line item.
        Last year and in years before, it was. It is important that
    the committee make clear that the funding for DVHIP and the
    violence project is used for its intended purpose. In addition,
    it should be made clear that the $8.5 million is needed to
    continue these programs. This is level funding. Any reduction
    in those fundings would undermine the effectiveness of these
    important programs.

                               prepared statement

        Thank you very much. If you have any questions, I will
    attempt to answer them.
        [The statement follows:]
                   Prepared Statement of Martin B. Foil, Jr.
        Mr. Chairman and Members of the Senate Appropriations Defense
    Subcommittee: Thank you for the opportunity to submit my testimony for
    the record, regarding two important programs under your jurisdiction.
    My name is Martin B. Foil, Jr., and I am the father of Philip Foil, a
    young man with a severe brain injury. I serve as volunteer Chairman of
    the Brain Injury Association, and in my work life as Chief Executive
    Officer and Chairman of Tuscarora Yarns in Mt. Pleasant, North
    Carolina.
        The Brain Injury Association is a national, non-profit advocacy
    organization dedicated to improving the quality of life of persons with
    brain injury, as well as promoting research, education and prevention
    of brain injuries. It is composed of individuals with traumatic brain
    injury, their families, and the professionals who serve them. What
    began as a small group in a mother's kitchen has blossomed into a
    national organization with 44 state association, over 400 local support
    groups and thousands of individual members.
        Both of the programs that I will discuss address the prevention and
    treatment of traumatic brain injury. The first program is the Defense
    and Veterans Head Injury Program (DVHIP), which is a successful
    collaborative effort between the Departments of Defense and Veterans
    Affairs and the Brain Injury Association. Anyone who has access to
    military health care as well as any eligible veteran who sustains a
    brain injury is being helped by this brain injury research, treatment
    and service program.
        The second program is the Violence and Brain Injury Project, which
    investigates the neurophysiological link between violence and brain
    injury and has established military/civilian community-based programs
    for the prevention of violence and brain injury.
                    defense and veterans head injury program
        I would like to first discuss the Defense and Veterans Head Injury
    Program (DVHIP). As this Committee is aware, whether in peacetime or
    during military action, brain injuries account for a significant
    proportion of all injuries to military personnel. Last year alone, over
    8,000 active duty military personnel were admitted to military and VA
    hospitals. In the past, these individuals had no access to the
    coordinated brain injury treatment, rehabilitation and follow-up they
    needed. They had no access because these services were generally not
    available.
        As a result of the DVHIP, this is no longer the case. I am happy to
    report that the collaborative effort between the Departments of Defense
    and Veterans Affairs and the Brain Injury Association continues to pay
    off. This program, Mr. Chairman, is one that contributes to our
    nation's preparedness by helping service members return to work, as
    well as providing the critical support necessary to keep families
    together during the difficult times after a brain injury. We are well
    underway in all three phases of the program, and I am excited about the
    results we are realizing.
        In phase one, the registry phase, over 4,800 active duty personnel,
    veterans and civilians have been entered into the DVHIP registry to
    date. Most of these individuals sustained brain injury resulting from
    motor vehicle crashes or falls, and about 25 percent have moderate to
    severe brain injuries. This is a patient tracking and cost-analysis
    program in addition to a brain injury incidence surveillance system. We
    are excited about this component because we are able to both follow
    along and document the course of treatment received by individuals with
    traumatic brain injury and use the data to better identify the need for
    services and gaps in service delivery. In conjunction with information
    gained through phases two and three, we will be able to clearly see
    which treatments are most effective. In this era of cost containment
    and managed care, with reduced inpatient hospitalizations and a over-
    reliance on outpatient and home care, this is vital information.
        We have developed a referral network of 25 military and VA
    hospitals, and provided special training about brain injury treatment
    and rehabilitation to personnel at these sites. In cooperation with the
    VR&C Service of the VA, we have trained vocational rehabilitation
    counselors for the Department of Veterans Affairs to assure that they
    have current information to assist the veterans they serve through
    Chapter 31 in identifying and succeeding in jobs. This year, we also
    trained Brain Injury Association Information and Resource Specialists
    from 40 states about the nature of military health care services and
    processes to foster improved linkages for individuals and their
    families between military and community services.
        In phase two, the evaluation program, I am pleased to tell you that
    over 1,700 standardized evaluations have been completed to date. This
    includes both initial and follow-up evaluations. Through this program,
    comprehensive standardized evaluations of the individual's status and
    progress in physical, cognitive and functional areas is assessed over
    time. Clinical management is provided for individuals undergoing
    evaluations as individual needs require.
        In phase three, the treatment phase, two models of rehabilitation
    treatment with and without adjuvant pharmacological intervention are
    being studied for efficacy. This is a randomized controlled multi-
    center study of a neuro-functional and a cognitive treatment model.
    Accessions began in August, 1996. Currently, there are 26 individuals
    participating in the protocol. Accession rates are accelerating. The
    results of this third phase will provide vital information about the
    relative efficacy and cost-effectiveness of these treatment models
    which will guide decisions about the type, nature, and duration of
    treatment needed by military personnel and veterans with brain injury.
        Other important aspects of the DVHIP are collateral studies
    including a Mild Traumatic Brain Injury study which is being conducted
    at San Diego Naval Medical Center. This study is researching factors
    affecting return to work among active duty military personnel after so-
    called ``mild'' brain injury. To date, many of these individuals are
    returning to their duty stations after acute treatment but experience
    difficulties resuming work at the level they had previously attained.
    The results of this study will help protect the expensive and extensive
    training investment made by the military by enabling the development of
    strategies which can assist active duty military personnel with mild
    brain injury to achieve their former level of success. Specific
    recommendations about command management of active duty personnel who
    sustain a mild traumatic brain injury to maximize successful return to
    work will be made.
        In a related effort, we have just convened a multidisciplinary core
    workgroup on mild traumatic brain injury to develop practice
    guidelines. Representatives of over 15 major physicians and allied
    health professional organizations are participating in this effort. An
    international working group will be convened to participate in the
    development to ensure worldwide acceptance of the practice guidelines.
    The guideline development process developed by the American Academy of
    Neurology and the American Association of Neurological Surgeons is
    being used.
        There are numerous other collateral studies underway, including a
    collaborative effort with the National Institute of Neurological
    Disorders and Stroke at the National Institutes of Health to conduct
    studies on specialized testing and therapeutic modalities in traumatic
    brain injury and frontal lobe injury patients, a rehabilitation study
    for individuals with moderate brain injury at Walter Reed Army Medical
    Center, and several clinically related laboratory research studies.
        Another important part of the DVHIP is the dissemination and
    updating of the Brain Injury Resource CenterTM, an
    interactive multimedia computer system which educates people about all
    aspects of brain injury. The Brain Injury Resource CenterTM
    has become a vital information source at DVHIP primary and network
    sites where it is being used by family members, patients and staff to
    gain better knowledge about what is happening and what they can expect.
    It is presently available at over 15 military and veterans hospitals,
    with a total of more than 40 civilian and military sites and will be
    available at over 60 by the end of 1997. We intend to update content
    and to translate the content into Spanish.
        While I have highlighted some of the important progress in the
    DVHIP to date, there is no substitute for the impacts the program has
    had on people's lives. I will share two short examples so you can have
    a sense of the real-life importance of the Defense and Veterans Head
    Injury Program.
        The mother of a 24 year old woman who sustained a severe brain
    injury in 1994 as a result of a motor vehicle crash while on duty
    contacted the Brain Injury Association for help. Her daughter had been
    medically discharged and following treatment, was discharged into a
    skilled nursing facility near her parents home in a rural state, funded
    by the Department of Veterans Affairs. The parents were concerned
    because they continually have been told there is no hope for their
    daughter although she last received a comprehensive evaluation over a
    year and a half ago. They believe there is potential to improve but
    because the nursing home is not providing any rehabilitation, that she
    will fail to attain her potential. They were asking for a comprehensive
    re-evaluation. We were able to arrange for the DVHIP evaluation team at
    the Minneapolis VAMC to conduct this evaluation. Results are pending.
        A 32 year old active duty Air Force E-4 who had sustained a
    moderate traumatic brain injury contacted the Brain Injury Association
    for assistance. After being treated at a civilian hospital, she was
    transferred to the Air Force Academy Hospital where she had a
    cranioplasty performed. She returned to active duty three months after
    her brain injury. She received no rehabilitation. At the time she
    called, she was at home awaiting admission for a second surgery and
    awaiting decision about a medical board. She was registered in the
    DVHIP, was referred to Wilford Hall for the necessary surgery which has
    since been done. Her medical board is expected this week and she will
    be relocating to the Tampa area, where the Tampa VA will evaluate her
    rehabilitation needs and provide such services as are necessary.
        These two examples demonstrate how the resources this Committee has
    supported to date have been put to good use. Individuals who had fallen
    through the cracks of the system now have a chance to receive the
    services needed to maximize their recovery. Others, like the young man
    in the first example, are receiving rehabilitation in a more cost-
    effective manner than would have been possible in the civilian sector.
    At the same time, the perception of the Department of Veterans Affairs
    Medical Centers is changing for the better.
        In order to continue this important work, I urge the Committee to
    appropriate the $7.25 million necessary to keep the program on track.
    This is level funding. I know you are well aware of the potential this
    program has of saving millions of dollars in productivity of
    individuals successfully rehabilitated and returned to work. This
    program helps to protect and preserve the investment made by the
    Department of Defense in training these young men and women, and
    contributes to ensuring the preparedness of our military forces.
                       violence and brain injury project
        I would next like to turn to the Violence and Brain Injury Project.
    The challenges we face in this country responding to the injuries
    related to violence is overwhelming in personal and economic cost. We
    always hear about the violent event, but as Paul Harvey would say; we
    don't sufficiently hear the ``rest of the story.'' The Violence and
    Brain Injury Project's mission is to focus on the ``rest of the
    story.'' The rest of the story is: brain injury is the number one
    killer and cause of disability among America's young people. Among
    children ages 1-4 years old, homicide is the fourth leading cause of
    death, and among children ages 5-14 years, homicide is the third
    leading cause of death. In 1990, the number of deaths from traumatic
    brain injury caused by firearms exceeded the number caused by motor
    vehicles. Approximately 70 percent of children less than one year of
    age who are abused sustain a traumatic brain injury. These facts are
    sad and frightening. Brain injury caused by violence is clearly a
    serious threat to our children's future and the well being of our
    military and civilian families and communities.
        The second part of the story of brain injury is a more insidious
    process. It is the attack on a child's normal brain development between
    1-12 years of age by: threatening home and community environments, lack
    of appropriate brain stimulation, witnessing violence in the home and
    in the media, and lack of proper nutrition. Central to the project's
    successful performance to reduce the number of brain injuries related
    to violence, is to increase military and civilian communities'
    awareness that brain injury is the most fatal and disabling injury
    sustained from violence. The only cure for brain injury is prevention.
        In collaboration with civilian and military injury prevention and
    public health programs, we have promoted brain building strategies as a
    first line of defense against violence and brain injury. Studies
    confirm the importance of early experiences on brain development. The
    brain is even more susceptible to environmental influences than was
    previously believed. The importance of a safe and stimulating
    environment is crucial for healthy brain development. Brain building
    increases a child's protective factors to combat the effects of
    violence which will reduce the risk of the individual becoming a victim
    or perpetrator of violence.
        The following objectives are being implemented to successfully meet
    the projects prevention mission:
      --Education of professionals, paraprofessionals, and community
            leaders about brain injury and violence prevention.
      --Increase awareness of the link between risk factors associated with
            brain injury and the increased probability of violence.
      --Build military and civilian coalitions to implement violence and
            brain injury prevention programs in collaboration with the
            Brain Injury State Associations.
      --Promote the public health approach by identifying and creating
            remedies for reducing risk factors associated with brain injury
            and violence.
      --Demonstrate the importance of including a brain building component
            as part of violence and brain injury prevention programs.
      --Train civilian and military health care providers in the
            identification and treatment of brain injuries sustained from
            intentional injuries.
      --Collaborate with the World Health Organization to replicate the
            Violence and Brain Injury prevention and advocacy program to
            support the World Health Organization's initiative on violence
            as a health issue.
      --Implement prevention programs for high risk populations to reduce
            risk factors that contribute to violence and brain injury.
        I would like to report on the progress of the prevention and
    advocacy programs developed and implemented by the Violence and Brain
    Injury Project:
    Be HeadSmart Community
        The Be HeadSmart Community Project builds a military and
    civilian partnership for the prevention of violence and brain injury.
    Currently there are four Be HeadSmart military/civilian
    community partnerships located at Ft. Campbell, Ft. Knox, West Point
    and Wright-Patterson Air Force Base. A fifth Be HeadSmart
    Community is planned for Ft. Carson. The collaborative relationships
    established between Brain Injury State Association's staff and the
    military communities have enhanced public awareness and education
    initiatives for the prevention of violence and brain injury. These
    community partnerships have enabled the participatory Brain Injury
    State Associations to collaborate with military elementary school
    personnel, community health nurses, family advocacy, family support
    personnel, and military police. The community partnerships have enabled
    the Brain Injury State Association to provide prevention resources and
    expertise to support installation special events, such as: bike rodeos,
    health fairs, school assemblies focusing on conflict resolution, family
    advocacy workshops, public service announcements, and shaken baby
    syndrome. The goal is to use these five Be HeadSmart Military
    Community Programs as models for replication at other military
    installations. The Be HeadSmart Community program is easily
    integrated with the military's family advocacy programs, child care,
    youth service, and safety programs, and exceptional family member
    programs. This integration makes support services more readily
    available to individuals who have sustained a brain injury and to their
    families.
    HeadSmart Schools
        The HeadSmart School Program provides elementary and preschool
    educators with the tools to teach children about the brain as well as
    prevention of violence and brain injury. HeadSmart Schools provides
    knowledge and awareness about brain injury prevention early in the
    child's educational process. HeadSmart has both immediate and long term
    potential in reducing the incidence of brain injury. This is true not
    only because elementary age children represent a high risk population
    for brain injury, but also because life-long behavior modification is
    more easily achieved at this age. HeadSmart lessons are designed to be
    integrated into the regular elementary school curriculum so that brain
    injury prevention is learned over time as a basic, rather than a
    ``special'' one time event. The HeadSmart Schools teaches messages
    about violence and brain injury prevention such as: the brain is vital
    and unique, the brain is vulnerable, and people are responsible for
    their behavior toward others. HeadSmart lessons and materials enable
    the teacher to accomplish two goals simultaneously: teach grade level
    skills and subject material, and promote the development of injury
    prevention values and healthy attitudes. HeadSmart messages can be
    repeated over and over to promote behavior change and responsible
    attitudes that will be shared with the child's family. HeadSmart
    Schools are established in 21 states including the District of
    Columbia. There are 108 HeadSmart Schools, 30 percent of these schools
    educate predominantly military elementary age children. Military
    HeadSmart School Regional Training programs have been conducted in
    Florida, Kentucky, New York, North Carolina, Texas and Tennessee.
    HeadSmart School Benefits
        Supports two of the eight National Educational Goals: Establishing
    a safe environment conducive to learning; and promoting partnerships
    that increase parental involvement.
        Supports the school's strategic plan for health and safety
    requirement (if one exists).
        Provides a flexible program where prevention lessons are easily
    integrated into existing curricula (HeadSmart Schools is not a set
    curriculum).
        Provides a flexible implementation approach (the program can be
    applied at selected grade levels or in selected subject areas such as
    physical education, language or the arts).
        Teachers receive teacher-developed lesson plans and materials, but
    more importantly, a day of intensive training on how to use them.
        The cost of the training, materials, and substitute fees are paid
    for by the Violence and Brain Injury Project.
        Training materials include guidelines for initiating a HeadSmart
    special event should the school choose to stage one.
        The one-day teacher training addresses intentional and
    unintentional causes of brain injury including automobile safety,
    pedestrian safety, bike safety helmet use, and playground safety.
        Training includes two very informative sessions on brain building
    and the development of learning, and violence prevention that are
    unique among prevention programs.
        Lesson plans are fun and interactive--not a lecture or a workbook.
        Is not a one-time special event, but is designed to be incorporated
    into the regular school curriculum throughout the year.
        Provides a school the opportunity to affiliate with a national
    agency, The Brain Injury Association, whose primary mission is brain
    injury prevention.
    Be HeadSmart Ambassador Thumbs--Up Program
        This program provides a powerful message about the importance of
    prevention of brain injury through the Ambassador's personal story of
    injury and recovery. The Brain Injury Association Ambassadors reach out
    to audiences dispelling misconceptions and presenting effective
    education and advocacy programs. Ambassadors promote prevention
    awareness and empowerment for people affected by brain injury.
    Materials for implementing Ambassador programs have been developed for
    the Brain Injury Association's Prevention Program Coordinators.
    Individuals who serve as Ambassadors are individuals who have sustained
    a brain injury or a family member. By sharing their experiences they
    underscore the importance of habits, attitudes, and values which serve
    to reduce one's risk of death or injury. The lessons they convey range
    from the simple to the complex; exhortations to ``Always buckle up''
    along with encouragement to cultivate a respectful and positive
    orientation to life, which rules out behaviors such as drug use and
    violence. Involvement in prevention efforts also provides an important
    outlet for individuals who, because of their impairments, have limited
    opportunities to satisfy the basic human need to be productive and
    helpful. All Ambassadors are provided with support materials to assist
    them in organizing their presentation. In April, one of our Ambassadors
    (a 1988 West Point graduate) will be speaking to the West Point Cadet
    Corps about the events leading to his brain injury and how this injury
    changed his life. Trained Ambassadors are providing valuable support to
    our Be HeadSmart Community and the HeadSmart Schools programs.
    World Health Organization International HeadSmart Program
        A model for the international development and implementation of the
    HeadSmart Schools program has been distributed to eight NATO countries
    who have indicated an interest in its implementation. The World Health
    Organization Violence Prevention Initiative has selected the HeadSmart
    School Program as its primary school based strategy to address the
    prevention of violence and brain injury in elementary and pre-schools
    around the world because of its comprehensive and flexible approach.
    Forensic Institutes Conference: Violence, the Epidemic of the 1990's
        The Violence and Brain Injury Project in collaboration with the
    University of Virginia's School of Nursing have organized a Forensic
    Institute Program that will focus on violence as a public health issue.
    Key presentations relative to violence and brain injury include: missed
    abusive head trauma, shaken baby syndrome, media violence, blunt and
    penetrating head trauma, brain building basics, and the role of the new
    parent support programs in the prevention of violence. Military
    personnel who work in the Family Advocacy Programs, New Parent Support
    Programs, medical personnel who treat injuries related to abuse,
    military investigations and teachers have been invited to participate
    in the Institute. The Violence and Brain Injury Project will continue
    to collaborate with the University of Virginia School of Nursing's
    Forensic Institute to develop multi-disciplinary training to address
    the health care issues related to violence.
    Brain Building Basics: A Parenting and Literacy Skills Program
        Child abuse and neglect has been regularly identified by
    professionals in many fields as a significant contributing factor in
    the development of subsequent violent behavior. There is also a clear
    link between ineffective parenting, child abuse, and criminal behavior.
    Child abuse is experienced on a continuum from neglect based from
    ignorance to willful physical and/or sexual abuse. The National Center
    on Child Abuse and Neglect estimate that around three times as many
    children suffer from neglect as deliberate physical abuse. Much
    physical abuse is also misunderstood by the perpetrator as
    ``discipline.'' Parenting through harsh discipline techniques has been
    associated with the greatest violence among both youthful and adult
    offenders. It is common for abusive parents to reveal histories of
    inadequate and abusive parenting themselves. Brain Building Basics has
    been developed for female and male offenders and pilot tested at the
    D.C. Department of Correction's Correctional Treatment Facility and at
    the Alexandria Detention Center in Virginia. These pilot programs will
    be competed in May of 1997. The Violence and Brain Injury Project will
    expand the Brain Building Basics to high risk populations in early
    childhood education programs and the military's exceptional family
    member program. It will also offer a ``Train the Trainer'' model to
    correctional facilities upon request to assist with implementation of
    Brain Building Basics at their facility.
    Changes, Choices and Challenges: Violence Prevention for the Young
            Adolescent
        Changes, Choices and Challenges is a violence prevention program
    that provides educators with integrated learning units which are
    designed to enhance the social, moral and intellectual development for
    young adolescents. In a position paper developed by the National Middle
    School Association (1995) the prerogatives for education for the middle
    years is set down as providing a curriculum that is challenging,
    integrative and exploratory, that provides opportunities for young
    adolescents to focus on issues of personal concern, and that provides
    opportunities to learn ``how to learn'' from a variety of techniques
    and individual learning styles. CCC can be integrated into the regular
    middle school curriculum as a self-contained, multi-faceted course; as
    a component of English, Science, or Social Studies; or it can be used
    as an after school mentoring program for at risk youth. CCC provides
    the learning experiences necessary for young adolescents to be
    successful in school in a variety of ways so that children at high risk
    can develop resilience to choosing a violent life-style. Changes,
    Choices and Challenges is currently being pilot tested in middle
    schools in New Jersey. Plans for 1997-98 include expansion for the
    pilot program to schools in Florida, Texas, Virginia, and other
    interested states.
        I am requesting the same level of funding as last year, $1.25
    million: this level of funding will enable the Violence and Brain
    Injury Project to support its current initiative and allow for
    expansion of Be HeadSmart military communities, HeadSmart Schools, and
    Brain Building Basics.
        I sincerely appreciate your support and commitment to these
    programs to reduce mortality and morbidity due to preventable brain
    injury. Without your support, the rest of the story would be difficult
    to tell. Adequate funding will enable us to maintain our essential role
    in demonstrating the essential link between brain injury and violence.
    Your involvement in these programs makes the reduction of the pain,
    misery, and economic burden caused by brain injury a reality.
        Thank you and God Bless you.

        Senator Stevens. We will line item it again for you and I
    congratulate you for the work you are doing. We follow a lot of
    the problems in terms of the ``Decade of the Brain'' and the
    research that is being done. I think you are on the right track
    and we are pleased to be of assistance.
        Mr. Foil. Thank you, Chairman Stevens.
        Senator Stevens. If there is more money available, we will
    provide more money. I am not sure there will be, but we will
    try.
        Mr. Foil. We appreciate it.
        Senator Stevens. Thank you very much.
        Now we have a representative of the American Indian Higher
    Education Consortium. Is that person here? We were not provided
    a name.
        [No response.]
    STATEMENT OF DENNIS M. DUGGAN, ASSISTANT DIRECTOR,
                NATIONAL SECURITY-FOREIGN RELATIONS
                DIVISION, THE AMERICAN LEGION
        Senator Stevens. If not, next will be Dennis Duggan,
    assistant director of the national security-foreign relations
    division of the American Legion.
        Good morning, sir.
        Mr. Duggan. Good morning, sir.
        Chairman Stevens and Senator Inouye, on behalf of its 3
    million members, the American Legion is extremely grateful for
    the opportunity again to appear before both of you as
    distinguished veterans. We, as well as members of the Armed
    Forces, owe you a debt of gratitude for your continuing efforts
    to maintain a strong national defense and to enhance quality of
    life features for men and women in uniform. We know that you
    and your subcommittee will do your very best.
        We had to prioritize, sir. The American Legion's greatest
    concerns at this point include military quality of life
    features, closely followed by readiness and then modernization.
        A marked decline in quality of life features for the active
    force and military retirees, coupled with heightened
    operational tempos, we believe can only adversely impact on
    both retention and recruiting.
        As Chairman Floyd Spence noticed in his review and report,
    ``Military Readiness 1997: Rhetoric and Reality,'' there is a
    widespread perception that not only is the military having to
    do more with less, they are also getting less. Good soldiers,
    sailors, marines, and airmen are questioning the desirability,
    we think, of a career in uniform, and our youth will question
    the sincerity of military services which provide diminishing
    health care, closing commissaries, paying less than inflation
    pay raises, living in substandard housing, and enduring
    frequent family separations.
        Most civilians we know would not endure a fraction of the
    sacrifices that our military and their families are currently
    undergoing. Again, this is a perception that we are led to
    believe.
        Many military retirees can no longer recommend a military
    career or perhaps even military service. They themselves are
    seeing the promise of lifetime military health care, for
    example, being broken. We support a broad array of options,
    particularly to help the Medicare eligible military
    beneficiaries to include, for example, Medicare subvention, the
    option of enrolling in the Federal employees health benefits
    plan regardless of age or health or status, and, of course, a
    GI bill of health.
        We also support correcting the long list of inequities
    imposed upon the military retiree, to include concurrent
    receipt, however limited, of both military retirement pay and
    veterans disability compensation, and, as always, attempting to
    remove the automatic age 62 Social Security offset of the
    survivors' benefit plan or SBP.
        Mr. Chairman, we think there is an obligation to do better.
    We have always believed that military service represents and
    still represents honorable and noble service to the Nation, as
    it not only fulfills American patriotic obligation but is a
    privilege and responsibility that has always embodied the
    highest form of service to the Nation.

                               prepared statement

        It is also the only form of service which may call upon our
    men and women to pay the ultimate price, if need be, for the
    common defense of the United States. We believe, therefore,
    that the U.S. Government--and I know you will--must continue to
    honor its obligations to all service members, to veterans, to
    military retirees and their dependents, or else we think we may
    stand to lose the finest military in the world.
        Thank you very much, sir. I am ready for your questions.
        [The statement follows:]
                     Prepared Statement of Dennis M. Duggan
        Mr. Chairman, The American Legion is pleased to appear before this
    Subcommittee to express its concerns over the fiscal year 1998 Defense
    Appropriations. The American Legion knows only too well what can happen
    when diplomacy and deterrence fail. As history has demonstrated, it is
    important for the President and Congress to continue to uphold their
    constitutional responsibilities to provide for the ``common defense''
    of the American people in a highly uncertain world.
        The world is still a dangerous place. There is unrest in the Middle
    East, in Bosnia and eastern Europe, and on the Korean peninsula. A
    revitalized Red China is exercising its military and maritime prowess
    by reaching into the Pacific and to our very shores and cities. Russia
    is still armed with at least 7,000 intercontinental missiles. The
    continuous proliferation of weapons of mass destruction along with the
    increase in ethnic and nationalistic wars brought about by the end of
    the cold war, and the shift from a bipolar to a multipolar world, are
    prompting more U.S. contingency operations which continue to demand
    attention. Additionally, the United States faces the challenges posed
    by international terrorism, fundamentalist religious movements and drug
    cartels, none of which operate within the basic rules of international
    law.
        The American Legion has always adhered to the principle that our
    nation's armed forces must be well-manned and equipped, not to pursue
    war, but to preserve and protect the hard-earned peace. The American
    Legion strongly believes the current military downsizing is based more
    on budget targets and budget deficit reduction than on current and
    foreseeable threats to the national security well-being of the American
    people and America's vital interests. Mr. Chairman, The American Legion
    is convinced that the United States is returning to the days of the
    ``hollow forces.'' Once Army divisions, Navy aircraft carrier battle
    groups, and Air Force fighter wings are cut from the force structure,
    they cannot be rapidly reconstituted without the costly expenditures of
    time, money, and human lives. History has demonstrated that it has been
    safer to err on the side of preserving robust forces to protect
    America's interests.
        This budget continues the shift of funding from defense to domestic
    social programs. The President's budget for fiscal year 1998 totals
    over $1.5 trillion and allocates 15 percent for defense and over 50
    percent for social programs and entitlement spending. The American
    Legion believes the Defense budget continues to bear the brunt of
    deficit reduction. The fiscal year 1998 Defense budget continues the
    steady reduction in defense spending and is 40 percent below the 1985
    Reagan budget which led to the end of the Cold War.
        The Administration's proposed fiscal year 1998 defense budget
    supports an Active Duty force of 1.431 million, down 21,000 from last
    year and a National Guard and Reserve force of 892,000, a reduction of
    10,000 from fiscal 1997. Additionally, the Quadrennial Defense Review
    would further reduce active endstrengths by 60,000 and those of the
    Reserve components by another 55,000. The currently authorized force
    structure for each service is well below the manpower level designed by
    former Chairman of the Joint Chiefs of Staff General Colin Powell
    during the Bush Administration. At the time, the manpower level of 1.65
    million was considered the lowest force level the Nation could maintain
    and still meet its global requirements. The rapid, deep reductions in
    defense spending are also making it increasingly difficult to keep the
    promises made to our current and former warriors and to insure that the
    United States maintains a first-class All Volunteer Force which is
    imperative for a strong national defense.
        The American Legion receives letters daily from veterans citing the
    string of broken promises, and the growing list of benefits under
    attack. Medicare-eligible military retirees and their dependents are
    prohibited from enrolling in the TRICARE program; military hospitals
    may charge dependents and retirees for outpatient treatment; some 58
    military medical facilities have closed down or are closing and another
    17 facilities are identified for closure, The Department of Defense is
    again proposing the closure of the cost-effective military medical
    school, the Uniformed Services University of Health Sciences; the
    Defense Commissary Agency may have to close 37 commissary stores and
    cut back on operating hours of other stores to makeup for budgetary
    shortfalls and there is the proposal of the Quadrennial Defense Review
    (QDR) that two more rounds of base closures will be conducted to pay
    for modernization of the Services.
        The American Legion's greatest concerns include quality of life
    issues such as the steady decline in funding and support for the
    military health care system and the fact that there is no comprehensive
    plan to provide care to all 8.3 million military beneficiaries. The
    marked decline in quality of life features for the Active force and
    military retirees, coupled with heightened operational tempos, will
    adversely impact on both recruiting and retention. If these benefits,
    like health care, commissaries, adequate pay and quarters all of which
    were taken for granted in the past, are funded at significantly reduced
    rates, or are privatized or eliminated completely, they will undermine
    the United States Government's effort to honor its obligations to its
    active and retired warriors.
                                   readiness
        The Administration asserts that the fiscal year 1998 defense budget
    protects readiness. The same claim was made regarding previous defense
    budgets as well. Over-optimistic assumptions about actual funding
    requirements coupled with multiple unbudgeted contingency operations
    have resulted in a series of unit readiness problems: training goals
    have not been met; and military readiness ratings have plunged due to
    reductions in operations; and maintenance accounts as a result of
    unprogrammed peacekeeping operations. If the 1997 Defense Supplemental
    Appropriations bill is not immediately passed, readiness may be reduced
    again. The Army, as an example, is having difficulty meeting its
    recruiting goals and the quality of recruits has been dropping.
    Personnel turbulence and the erosion of quality of life are weakening
    each of the military services. Personnel readiness problems place our
    ability to maintain high operational tempo at risk.
                           quadrennial defense review
        Since the collapse of the Soviet Union in 1991, the United States
    has conducted two substantial assessments of the strategy and force
    structures of the Armed Forces necessary to meet the national defense
    requirements of our Country. The assessment by the Bush Administration
    (``Base Force'' assessment) and the assessment by the Clinton
    Administration (``Bottom-Up Review'') were intended to reassess the
    force structure of the Armed Forces in light of the changing realities
    of the post-Cold War world. Both assessments focused attention on the
    need to reevaluate the military posture of the United States; but the
    pace of global change necessitates a new, comprehensive assessment of
    the current defense strategy for the twenty-first century.
        The American Legion supports the force structure proposed by the
    Base Force strategy. The United States must maintain 12 active Army
    combat divisions, 12 Navy aircraft carrier battle groups, 15 active Air
    Force fighter wings and three Marine Corps divisions.
        The American Legion believes the ``win-win'' two-war Bottom-Up
    Review strategy is delusional. The United States cut forces to the
    extent that we were incapable of waging and winning two wars on the
    order of the Persian Gulf and Korean Wars nearly simultaneously,
    especially with the diversion of division-size forces to Bosnia and
    Southwest Asia. With growing worldwide commitments, and with only 10
    Army combat divisions and three Marine divisions, the U.S. has a ``win-
    hold'' strategy at best.
        The Quadrennial Defense Review retains the two-war strategy but
    reduces the current force structure even further. The National Defense
    Panel noted that there is insufficient connectivity between strategy
    and force structures, operational concepts and procurement decisions.
    The United States faces an even greater array of challenges today, with
    even fewer resources than were available four years ago. Unfortunately,
    we are ``robbing Peter to pay Paul'' by further cutting manpower and
    bases to pay for modernization.
        The American Legion believes the U.S. can no longer afford to be
    the world peace enforcer by dispatching forces using unfunded mandates
    every time the United Nations passes a resolution to do so. The
    American Legion believes Congress, as the representatives of the
    American people, needs to become more involved in the decision-making
    process regarding the commitment of United States military forces. U.S.
    forces should be committed only when vital national interests of our
    country are at stake and only when such deployments are supported by
    the will of the American people.
        Our past and current National Military Strategies have not matched
    increased military missions, including military operations other than
    war, with the required resources. Like the Bottom-Up-Review, the QDR
    provides neither the forces, lift capabilities, nor budgets to fight
    two nearly simultaneous major theater conflicts and win. Peacekeeping
    operations do not train our combat forces for war.
                         active force personnel issues
        The American Legion is concerned that a number of influences, to
    include the military drawdown, pose significant--and often
    underestimated--retention and readiness risks for the remainder of the
    decade.
        Mr. Chairman, The American Legion and the Armed Forces owe you and
    your subcommittee a debt of gratitude for your strong support of
    military quality of life issues. Your assistance is needed now more
    than ever. Pro-active Congressional action is needed in this budget to
    overcome old and new threats to retaining the finest military in the
    world. Servicemembers and their families have endured physical and
    psychological risks to their well-being and livelihood. Many endure
    substandard living conditions, and forfeiture of personal freedoms that
    most American civilians would find unacceptable. Worldwide deployments
    have increased significantly, and a smaller force, Active Reserve and
    National Guard, has had to maintain high optempo with longer work
    hours, increased family separations and less tangible benefits.
        Throughout the drawdown years, military members have been called
    upon to set the example for the nation by accepting personal financial
    sacrifices. Their pay raises have been capped for years, and their
    health care system has been overhauled to cut costs, leaving military
    families with lessened access to proper health care. The American
    Legion congratulates Congress for the quality of life enhancements
    contained in the Fiscal Year 1997 National Defense Authorization Act.
    But more must be done now.
        Full Military Pay Raises.--Since 1982, military raises have lagged
    a cumulative 12.9 percent behind private sector wage growth. The Bureau
    of Labor Statistics measures private sector wage growth with a tool
    called the Employment Cost Index (ECI). Before 1994, federal civilian
    and military raises were supposed to match the ECI. But in 1994, new
    legislation took effect, capping federal civilian raises at one-half
    percentage point below the ECI. The difference was used to fund a ``new
    locality pay'' additive for federal civilians that varied by
    geographical location. When the pay raise standard for federal
    civilians changed to ``ECI minus one-half percent,'' service members
    got stuck with the half-point reduction in their pay raises, even
    though they are not eligible for the civilian locality pay.
        The only way to fix the problem is to change the pay raise process
    to link military basic pay raises to the ECI, the full ECI. The
    military drawdown is about over and the economy has improved. A smaller
    force with a high operations tempo will be extremely retention-
    sensitive. Service members have earned and deserve a raise at least
    equal to the average American's for every year not just during an
    election year. It is time to put that standard into law.
        The administration's budget describes the proposed fiscal year 1998
    2.8 percent raise, which is one-half percentage point smaller than the
    3.3 percent private sector wage growth, as ``the maximum raise allowed
    by law.'' Mr. Chairman, 11 pay caps in 15 years are already too many,
    and continuing this practice is a sure prescription for eventual
    retention disaster. Mr. Chairman, The American Legion also strongly
    believes this subcommittee should exert every effort to adequately
    compensate those hundreds of military families from having to rely on
    monthly food stamps and women's' and infants compensation (WIC).
        Housing Allowances.--Two years ago, Congress took on the challenge
    of restoring these allowances to be more consistent with their original
    intent of covering 65 percent of service members' median housing
    expenses, by grade and location. Thanks to this subcommittee, much
    progress has been made to ensure housing allowance stability for the
    duration of a servicemember's tenure at a duty location and to provide
    allowances at each location sufficient to obtain adequate quarters for
    junior personnel. But there is still some distance to go. The military
    is two years into what was intended as a five-year program to restore
    the Basic Allowance for Quarters (BAQ) to the standard originally set
    by Congress--an amount that would offset 65 percent of the national
    median housing cost for each grade.
        Now the Department of Defense has proposed ``cost-neutral''
    legislation to combine the BAQ and VHA into a single housing allowance
    that would vary by location within the United States. DOD also proposes
    linking annual adjustments of the new allowance to an independent
    measure of housing cost growth rather than to the ECI-based basic pay
    increase. The American Legion believes combining the allowances is a
    reasonable administrative technique, and that the proposed adjustment
    mechanism will better track future allowance increases to actual
    housing cost increases. Should the subcommittee elect to pursue this
    administrative change, it should do so in the context of restoring the
    combined allowances to the level originally intended by Congress.
        Subsistence Allowance Reform.--The Department of Defense is also
    proposing legislation that would establish the U.S. Department of
    Agriculture's (USDA) ``moderate food plan cost'' as the standard for
    the Basic Allowance for Subsistence (BAS), with future annual BAS
    increases linked to USDA food plan increases rather than basic pay
    raises. DOD proposes to transition to the new standard by capping both
    officer and enlisted BAS increases at 1 percent per year for five
    years. Depressing BAS growth in this way would allow the USDA standard
    to gradually ``catch up'' with the enlisted BAS rate. DOD envisions
    using the savings from the depressed BAS increases to pay a new
    ``partial BAS'' to single first-term members who do not receive BAS,
    but are required to use military dining facilities for their meals.
        Underlying DOD's proposal is an assumption that members currently
    receiving BAS do not need the full pay and allowances raises they would
    otherwise receive. DOD proposes to make all BAS recipients forfeit part
    of their annual pay raises over the next five years in order to ``plus
    up'' the next five annual pay raises for those members who are provided
    free meals in military dining facilities. In ``robbing Peter to pay
    Paul,'' the DOD plan would give junior enlisted personnel additional
    annual pay raises at the expense of the career force. The American
    Legion believes DOD implementation plan for this BAS reform would prove
    highly divisive and detrimental to morale. Any incremental increases
    should be additive to the normal across-the-board pay raise, and should
    not be extracted from the raises of their comrades in arms.
        The American Legion also urges this subcommittee to continue its
    strong support for needed improvements in military housing renovation
    and construction, child care facilities and religious support programs.
        Commissaries.--The Department of Defense is considering closing
    some 37 commissary stores worldwide and reducing operating hours in
    order to resolve a $48 million shortfall in the Defense Commissary
    Agency. Such an effort to reduce or dismantle the integrity of the
    military commissary system would be seen as a serious breach of faith
    with a benefit system that serves as a mainstay for the active and
    reserve components, military retirees, 100 percent service-connected
    disabled veterans, and others. The American Legion urges the Congress
    to preserve full federal funding of the military commissary system and
    to retain this vital non-pay compensation benefit which, we believe, is
    essential to the morale and readiness of the dedicated men and women
    who have served, and continue to serve, the national security interests
    of the United States. Furthermore, The American Legion fully supports
    the full-time usage of commissary stores by members of the reserve
    components.
        Surveys consistently indicate that the career incentive value of
    the commissary benefit is second only to military retirement and health
    care. The commissary benefit also provides significant additional
    ``psychological value'' that reinforces the sense of reciprocal
    commitment between the military institution and its members and plays a
    clear role in retention decisions.
                      dod healthcare for military retirees
        Today, there are approximately 8.5 million beneficiaries in the
    military health care program. Military retirees and their dependents
    make up nearly one-half of that number, and over 500,000 retirees have
    lost or will lose their access to military health care as a result of
    the closure of approximately 45 percent of military treatment
    facilities. Access to affordable health care, regardless of age or
    health care status, represents the number one concern among military
    retirees. The Sense of the Congress resolution in the Fiscal Year 1993
    National Defense Authorization Act reaffirms the basis of health care
    promised in law and tradition dating back more than 100 years. Until
    recently, military retirees were always led to believe that they were
    entitled to free lifetime health care as a major promise made in
    exchange for meager pay received and after having served 20 or more
    years in the most demanding and dangerous of professions.
        Military retirees are the only group of Federal ``employees'' who
    lose their health care benefits when they become 65 and are no longer
    eligible for CHAMPUS or TRICARE but become Medicare-eligible. Medicare
    covers much less than TRICARE, and must be supplemented by expensive
    health care supplement insurance which many military retirees cannot
    afford. There is the tendency to forget that the average military
    retiree is an E-6 Staff Sergeant or Petty Officer and not a Lieutenant
    Colonel. Despite its concerns, The American Legion supports full-
    funding of the TRICARE program, and it strongly believes that Medicare-
    eligible military retirees and their dependents should continue to have
    access to and treatment at military treatment facilities. Furthermore,
    all military retirees and their dependents should continue to receive
    free prescriptions from military medical centers.
        The American Legion has a number of concerns, however, with the DOD
    TRICARE Health Care System as it affects military retirees, namely,
    that military retirees and their dependents are required to pay annual
    ``registration fees'' and co-payments which are likely to increase over
    time. In addition, questions remain concerning out-of-pocket expenses
    and the viability of Medicare reimbursement for treatment in DOD
    facilities; and TRICARE Prime health care requires both portability and
    reciprocity. Many military retirees do not reside near TRICARE
    providers. The American Legion believes that, as a minimum, the
    following guidelines should be incorporated or retained as part of the
    TRICARE package or any reform of military health care for active duty
    families, military retirees and their dependents and military
    survivors:
      --Timely access to military medical treatment for a continuum of
            quality, comprehensive and equitable health care benefits
            covering the full array of services ranging from preventive
            health care and dental treatment plans to prescription services
            for all military retirees, their dependents, and military
            survivors regardless of age and health care status.
      --Preservation of the space-available system in military treatment
            facilities for CHAMPUS/TRICARE and Medicare eligible military
            retirees and their dependents.
      --TRICARE coverage should continue for the lifetime of military
            retirees and not end at age 65. Additionally, military retirees
            who become 100 percent disabled before 65 should continue with
            CHAMPUS/TRICARE coverage for their lifetimes with Medicare as
            second payer; as an absolute minimum, the requirement for 100
            percent disabled military retirees to pay Part B Medicare
            premiums should be discontinued.
      --DOD health care treatment facilities should be reimbursed by the
            Health Care Financing Administration for care provided to
            Medicare eligible military beneficiaries (Medicare subvention).
            Medicare subvention should be implemented nationwide on a fee-
            for-service basis, and Medicare eligible retirees should be
            allowed to participate in the TRICARE program.
      --No further military medical facilities should be closed or
            downsized, and adequate military medical personnel, to include
            graduates of the Uniformed Services University of Health
            Sciences, should be retained on active duty to provide health
            care for active duty personnel and their dependents, and
            retired military personnel and their dependents.
      --Authorize military retirees and their dependents the opportunity to
            voluntarily enroll in the Federal Employee Health Benefits
            Program, regardless of age or health care status. For this
            program to be cost effective for the government and military
            retirees, The American Legion believes it would have to be
            offered as an option to TRICARE for service members entering
            retirement.
      --Enrollment fees and cost-sharing in TRICARE plans should be
            reasonable and statutorily fixed by law.
      --Pharmacy networks and mail-order pharmacy programs should be
            extended beyond the 40-mile radius of closing military bases
            and they should operate on a flat-rate basis rather that one
            based on percentage of costs.
      --There should be no restrictions to preclude military retirees and
            their dependents from receiving treatment or prescriptions from
            TRICARE providers outside 40-mile catchment areas.
      --The imposition of penalty assessments should be waived for those
            military retirees who elected not to enroll in Part B of
            Medicare as they believed they would receive continuing
            military health care from DOD facilities which were
            subsequently identified for closure.
      --Implementation of the GI Bill of Health: The use of Department of
            Veterans Affairs medical centers by non-service-connected
            military retirees and their dependents who are CHAMPUS/TRICARE
            or Medicare eligible should be authorized. As TRICARE and
            Medicare providers, VA medical centers should be authorized to
            bill the Departments of Defense and Health and Human Services
            for medical care provided to these veterans. Unlike military
            treatment facilities there are VA medical care facilities in
            all the states to include Alaska and Hawaii.
      --Transferring TRICARE coverage for active duty families and families
            of military retirees should be facilitated when they transfer
            or move between TRICARE regions.
      --The American Legion opposes any further efforts to privatize
            medical care delivered in military treatment facilities.
        As indicated in these points, The American Legion is supportive of
    a broad array of options to provide medical care to military retirees
    and their dependents particularly those who are age 65 and older. As
    mentioned, these military beneficiaries should have access to military
    treatment facilities with the implementation of Medicare subvention.
    The major drawback to Medicare subvention, of course, will be access to
    military medical treatment facilities (MTF's). The drawdown of MTF's,
    and their usage by active duty personnel, their families, and TRICARE
    retirees and their dependents, will exacerbate the existent space
    problem that would be faced by dual eligible Medicare eligible military
    retirees and their dependents. These retirees and their dependents
    could, however, be treated by TRICARE civilian providers using TRICARE
    cost-shared rates.
        Mr. Chairman, the nation has an obligation to do better. The
    American Legion believes there is a moral obligation for the government
    to find a way to provide at least the same level of health coverage to
    military retirees that it already provides to every other federal
    retiree.
                         other military retiree issues
        The American Legion believes strongly that quality of life issues
    for retired military members and families also are important to
    sustaining military readiness over the long term. If the Government
    allows retired members' quality of life to erode over time, or if the
    retirement promises that induced them to serve arduous military careers
    are not kept, this will undoubtedly inhibit retention in the current
    active duty force.
        Accordingly, The American Legion believes Congress and the
    administration must place high priority on ensuring that these long-
    standing commitments are honored. They include maintaining regular
    military retiree pay COLA's and insuring that military retirement pay
    systems are not further diminished; deleting Social Security offsets to
    the Survivors' Benefits Plan; authorizing the concurrent receipt of
    both military retiree pay and VA disability compensation for the most
    severely disabled retirees; and conducting hearings on the Uniformed
    Services Former Spouses Protection Act.
        In conclusion, the true measure of whether a defense policy
    adequately protects our national security interests is not necessarily
    how much is spent on defense, but whether the armed forces will have
    the means to fight and win when conflict arises. America's national
    security well-being cannot be separated from the overall national well-
    being. The American people cannot view themselves from a position of
    relative weakness in the world. If the United States fails to lead, our
    own future will be shaped by others.
        Mr. Chairman, this concludes The American Legion statement.

        Senator Stevens. Thank you. We welcome you as the
    representative of the Legion and we do express our
    appreciation, that of the Congress, for the work you do.
        I would just make one statement. I have not talked to my
    colleague about this, but I would like to see the Legion do
    something about the excessive tempo of activity in deployments
    abroad. It seems to me that we have no real cost control over
    the activities of our people once they are deployed overseas.
    That is what is eating up the money we have provided for
    quality of life initiatives. We are facing that in the
    conference we will go to this afternoon.
        We are reprogramming a massive amount of money to pay for
    the deployments to Kuwait, Saudi Arabia, Hungary, Bosnia, and
    Italy. The question of the deployments is one thing. The rate
    of activity once the deployments are undertaken is excessive.
    It is like Haiti. We sent 40 percent of the military down there
    to quiet down one of the smallest nations in this Hemisphere.
    That is what is eating up the quality of life money in my
    judgment. We would urge you to help us find some way to put
    some constraints on that because that is where your quality of
    life is affected, with the excessive deployments of months away
    from home at a very high rate of activity. And they come back
    just for a few minutes before going off again.
        It is just too hard. The reenlistment rate is bound to go
    down if this keeps up. So we need your help on that.
        Mr. Duggan. Yes, sir; we will continue to work on that.
    Thank you for your time and your comment.
        Senator Stevens. Thank you very much.
        Next is Charles Calkins, national executive secretary of
    the Fleet Reserve Association.
    STATEMENT OF CHARLES L. CALKINS, NATIONAL EXECUTIVE
                SECRETARY, FLEET RESERVE ASSOCIATION
        Mr. Calkins. Mr. Chairman and distinguished members of your
    committee, thank you for the opportunity to present the Fleet
    Reserve Association's fiscal year 1998 priorities with regard
    to personnel issues.
        I am Charles Calkins, national executive secretary of the
    Fleet Reserve Association and am proud to represent over
    162,000 active duty, retired, and Reserve shipmates. I am
    joined today by my director of legislative services, Joe
    Barnes, and by our legislative counsel, Mac McKinney.
        I also wish to express appreciation to you and members of
    the subcommittee for your tremendous support of the men and
    women of our Nation's uniformed services. Thanks to your
    commitment and leadership, the quality of life of our military
    personnel and retirees has significantly improved in recent
    years.
        My statement has been submitted, Mr. Chairman, and I could
    spend probably 20 minutes on each of the issues in there. But I
    am just going to try to briefly touch on one of the priorities
    that affects all of us, and you practically covered that in
    your closing remarks with my predecessor.
        At the outset, the Fleet Reserve Association directs your
    attention to the impact of continual high operational tempo
    within the uniformed services. End strengths have been reduced
    by roughly 25 percent during the drawdown, yet deployments have
    increased significantly, resulting in considerable strain on
    personnel.
        Despite this, additional personnel cuts are under
    consideration to free up money for maintenance and procurement.
        The Fleet Reserve Association is concerned that this will
    result in greater demands on severely stressed personnel,
    negatively impact retention and readiness, and ultimately lead
    to return of the hollow forces.
        The FRA stands opposed to further personnel reductions.
        We especially want to thank you for your opening statement
    to protect the health care benefits for our active duty,
    retired members, and their families.

                               prepared statement

        Mr. Chairman, again in my closing I want to express the
    gratitude of the Fleet Reserve Association shipmates, who
    salute you and the other distinguished members of this
    subcommittee, for your outstanding support of active duty,
    Reserve, and retired men and women of our Nation's sea
    services.
        Thank you and I stand ready to answer any questions that
    you may have.
        [The statement follows:]
                    Prepared Statement of Charles L. Calkins
                                  introduction
        Mr. Chairman and distinguished members of the Subcommittee: Thank
    you for the opportunity to present the Fleet Reserve Association's
    (FRA's) priorities with regard to personnel issues for fiscal year
    1998. The FRA is the oldest and largest enlisted military association
    representing the men and women of the Navy, Marine Corps, and Coast
    Guard. Our membership of more than 162,000 Shipmates is comprised of
    active, reserve, and retired components of those services.
        At the outset, our members also wish to express sincere
    appreciation to you and members of the Subcommittee for your tremendous
    support of the men and women of our Nation's Uniformed Services. Thanks
    to your commitment and leadership, the quality of life for our military
    personnel has significantly improved in recent years.
                   increased optempo and personnel reductions
        Prior to addressing specific issues, FRA wishes to emphasize the
    impact of continued high operational tempo within the uniformed
    services. End strengths have been reduced by roughly 25 percent during
    the draw down, yet deployments have increased significantly resulting
    in considerable strain on service personnel. Long work weeks, back to
    back deployments, and deferred maintenance and/or training are common
    and exact a toll not only on military units but on individuals and
    their families.
        Despite this familiar scenario, the services are considering
    additional personnel reductions below established end strength floors
    in order to pay for maintenance and the procurement of hardware and
    high-tech equipment. Increased reductions may free up needed funds for
    these important functions, however, this move will add to the demands
    on severely stressed personnel and negatively impact on retention and
    subsequent overall readiness. Rumors about additional reductions,
    limited advancement opportunities and extended sea duty rotation
    requirements contribute to uneasiness in the ranks and frustration with
    the services.
        Accordingly, FRA stands opposed to further personnel reductions
    without corresponding reductions in operation tempos. (Since 1989
    manpower strengths have been reduced 28 percent while operation tempos
    increased 143 percent.) To support this recommendation, FRA again
    directs the Subcommittee's attention to the PersTempo Section of the
    October 1995 Report of the Defense Science Board Task Force on Quality
    of Life.
        FRA established the following issues as priorities to be funded
    during fiscal year 1998. Many issues parallel those adopted by The
    Military Coalition (TMC) and brief comments follow each of the
    recommended proposals.
                               pay and allowances
        Full Employment Cost Index (ECI) active duty/reserve pay
    increases.--Competitive pay is especially important to maintaining the
    all-volunteer military, yet pay adjustments have been capped below the
    Bureau of Labor Statistics' ECI for 11 of the last 15 years resulting a
    pay gap in excess of 12 percent when compared to private sector wage
    growth since 1982.
        The gap continues as long as recommended pay hikes are based on the
    current formula, ECI minus .5 percent, with implementation delayed for
    15 months. Addendum 1 provides additional information on pay
    comparability and includes Attachment A charting dramatic differences
    between military and civilian pay raises and the 15-month lag between
    survey data and the actual pay adjustments. Unless Congress provides
    higher increases to military pay than determined by the ECI or
    Administration, or amends the current formula, military pay will always
    lag behind comparability with the civilian sector.
        Sustain housing allowance reform.--The Subcommittee is to be
    commended for the significant progress that's been made on restoring
    housing allowances to the intended 85 percent of total costs during the
    past two years. In addition to the increased BAQ and the VHA floor, DOD
    is proposing combining BAQ and VHA into a single allowance that would
    vary by location within the United States. FRA supports this proposal
    since it will be linked to an independent measure of housing costs,
    rather than annual ECI-based pay adjustments, thus making it more
    reflective of actual housing costs. The new allowance must also be set
    at levels that offset the intended 85 percent of the civilian housing
    cost for each pay grade and duty location.
        Reform the Basic Allowance for Subsistence (BAS).--FRA supports
    adoption of the USDA's ``moderate food plan cost'' as the standard for
    calculating future BAS adjustments. This will disconnect BAS increases
    from annual ECI-based pay adjustments and more accurately reflect
    actual costs.
        However, FRA objects to DOD's plan to hold BAS increases to 1
    percent annually over the next several years until the allowance
    catches up with the USDA moderate food plan cost standard. The DOD plan
    results in decreased total compensation for the career force enlisted
    personnel while first-termers reap a net compensation increase despite
    generally having access to meals in military dining facilities.
    Although the DOD proposal is cost neutral, it results in career
    personnel forgoing a portion of their compensation package over six
    years despite a pay gap of nearly 13 percent.
        FRA supports the Seventh Quadrennial Review of Military
    Compensation (QRMC) plan for revamping BAS in a more equitable manner.
    That proposal establishes a single BAS rate for all personnel that is
    based on, and indexed to the USDA Moderate Food Plan with basic pay
    adjusted in all cases to preserve the present value of cash
    compensation.
        Adequately fund the Transition Assistance Program (TAP).--FRA
    continues to be concerned that Congress may terminate TAP before the
    completion of the current draw down. The program is valuable for
    uniformed members departing the military services as a result of
    ``downsizing.'' And as long as Congress continues to endorse DOD's
    requests to reduce military manpower strengths, the TAP is necessary to
    assist young men and women who volunteered to serve their country but
    find that their respective service no longer needs them. FRA believes
    that it is wrong to send them back to civilian life with little or no
    experience seeking employment or an understanding of the skills
    necessary to help them find employment. The program actually generates
    cost-savings in unemployment compensation because TAP provides job
    counseling and placement for most of those being discharged or released
    from active duty. FRA strongly urges Congress to keep this program
    intact until DOD has completed the ``downsizing'' of military manpower
    strengths.
        Fully fund the Relocation Assistance Program.--The Relocation
    Assistance Program should not be confused with the Transition
    Assistance Program (TAP). They are distinct programs with different
    objectives.
        The Relocation Assistance Program assists uniformed personnel when
    transferring from one military installation to another. Personnel
    assigned to a new duty installation know little about the who, what,
    where, why, or how of their new assignments. In addition, the Program
    is there to guide the member and his/her family throughout the transfer
    process. Members and spouses are advised of housing availability, where
    to go, and how to have utilities turned on or hooked up, child care,
    community and family services, the location of MWR facilities and other
    important programs. The Program helps ensure that each service ``takes
    care of its own.'' The program is a great retention tool, and the
    morale and readiness of the uniformed military family is enhanced since
    wherever they go they'll always be welcomed.
        Sea Pay or Partial BAQ for Junior Enlisted Military Personnel
    Assigned to Sea Duty.--(This item is not yet endorsed by The Military
    Coalition but is of paramount interest to FRA as an ombudsman for Sea
    Services personnel.) Under current law, sea pay is authorized for
    members in pay grade E-4 and above assigned to sea duty. Members in pay
    grades E-1 through E-3 are not so entitled and FRA believes this to be
    a Congressional oversight. These young men and women normally face more
    arduous duty and cramped quarters than those experienced by their
    shipmates in pay grade E-4. If they were incarcerated prisoners, the
    concern about such ``deplorable conditions'' would surely produce an
    almost immediate response. FRA urges Congress to review the current
    policy toward these young Sea Service members and adopt an amendment to
    Sea Pay allowances that includes E-1's through E-3's.
        Appropriate funds to provide uniformed service retirees a Cost-of-
    Living Adjustment (COLA).--FRA was one of the organizations to testify
    in the 1970's against favoring COLA's over the ``recomputation'' method
    (increasing military retired pay based on pay increases applied to
    active and reserve pay). Congress at that time believed the
    ``recomputation'' method would be more costly than using the COLA
    formula. Instead of reverting to ``recomputation'' when the impact of
    this decision became known, Congress began the almost annual process of
    reducing the amount of the adjustment resulting in smaller COLA's for
    the retired pay of Uniformed Service members than COLA's for Social
    Security and Veterans Pension and Compensation recipients. FRA strongly
    objects to the singling out of military retirees as ``budget busters.''
    The Association encourages this distinguished Subcommittee to
    appropriate funds for uniformed members' COLA's at the same level
    authorized for retired federal employees, Social Security recipients
    and veterans and survivors in receipt of pensions or compensation and
    at the same time as the latter group becomes eligible for their
    adjustments ( December 1 of each year).
        Protect the Commissary Benefit.--The commissary benefit is a major
    component of the military compensation package and is again under
    attack. Proposals to reduce federal support for the benefit include
    privatizing, closing commissaries, consolidation with exchanges and
    increasing prices.
        The only benefits ranked ahead of the commissary benefit as career
    and retention incentives are the military retirement plan and health
    care. Given the importance of the benefit, FRA supports initiatives to
    improve management of the Defense Commissary Agency (DeCA) that do not
    erode the value of the benefit, reduce services to patrons or increase
    commissaries' vulnerability to privatization or consolidation with
    exchanges. Accordingly, FRA opposes reductions in appropriated fund
    support for DeCA that reduce the value of the commissary benefit.
        Increase the number of days Reserve members may access
    commissaries.--FRA supports the expansion of commissary access to
    members of the Reserve preceded by a test of the concept at selected
    military installations. The test will ease concerns that the expansion
    would either increase government costs, or adversely affect the benefit
    for other beneficiaries. Unlimited commissary access would serve as a
    positive recruiting/retention tool, and recognize the increased
    contributions of Reservists to the defense of our nation. Lifting the
    restricted access will also eliminate $17 million expended annually to
    administer the current ration card system.
                              military health care
        Congress enacted the Civilian Health and Medical Program for the
    Uniformed Services (CHAMPUS) in 1966 in order to improve the delivery
    of health care to military beneficiaries. At the same time, it adopted
    language terminating the use of CHAMPUS for those beneficiaries 65
    years of age or older. The objective was to have this group utilize
    military treatment facilities (MTF's) or Medicare. Remembering the
    promises of ``free'' medical care for life made to them by military
    officials, most chose to retire near military installations where they
    and their eligible family members could use MTF's.
        Over the years, the reduced availability of care in MTF's for older
    beneficiaries forced many to seek health care services elsewhere.
    However, they still prefer to receive care at MTF's, and for those
    continuing to be seen in these facilities, most are contributing to
    Medicare and paying premiums for Medigap coverage yet MTF's are unable
    to recover any of the funds paid for either program.
        FRA and the other associations of The Military Coalition seek
    authorization for payments from the Health Care Financing
    Administration (HCFA) for care given to Medicare-eligible military
    beneficiaries in MTF's. FRA supports legislation authorizing a
    Medicare-subvention demonstration test and requests the Subcommittee's
    endorsement of same. Since DOD's care is less costly than private
    sector care, this will save Medicare money a ``win-win-win'' situation
    for Medicare, the taxpayers and Medicare-eligible beneficiaries.
        Hopefully, the progress made on this issue last year in the form of
    an agreement between DOD and HCFA can serve as the basis for test
    legislation this year.
        FEHBP-65.--Since Medicare subvention will only benefit about one-
    third to one-half of Medicare-eligible military retirees (those near
    military installations with MTF's), the need exists for another plan to
    benefit the remaining beneficiaries. Accordingly, FRA supports
    legislation authorizing Medicare-eligible military retirees the option
    of enrolling in the Federal Employees Health Benefits Program (FEHBP)
    the same program offered to every other Medicare-eligible federal
    retiree. The government subsidizes 72 percent of the premium expense
    with the member paying the remainder. Note that this recommendation is
    for any Medicare-eligible uniformed services beneficiary, regardless of
    age, in order to cover under-age-65 beneficiaries who are disabled.
        As with Medicare-subvention, a demonstration of FEHBP-65 will
    provide data on the number of beneficiaries who would take this
    optional coverage if offered. FRA understands the cost of implementing
    this program, but reminds the distinguished Subcommittee that the
    Federal government now spends $4 billion annually on FEHBP for federal
    civilian retirees. It is only fair for Medicare-eligible military
    retirees to receive the same level of health coverage as that provided
    to other federal retirees.
        Expand the mail-order pharmacy program.--Military retirees loose
    government-sponsored prescription drug coverage when they become
    eligible for Medicare. Many of these beneficiaries elected to live near
    military installations in order to be near MTF's and associated
    pharmacy services. However, four rounds of base closures and
    realignments coupled with budget cuts affecting the remaining
    formularies have left many with severely limited access to government-
    provided prescription drugs.
        While Congress has authorized a mail-order pharmacy program for
    base closure sites, eligibility is limited to members residing in
    designated closure areas, thus leaving hundreds of thousands of
    retirees with no prescription drug coverage. FRA urges the Subcommittee
    to expand eligibility for the DOD mail-order pharmacy program to
    include all uniformed services beneficiaries, regardless of age, status
    or location.
                         survivor benefit improvements
        The Survivor Benefit Plan (SBP) was enacted by Congress in 1972 and
    was intended to have a 40 percent government subsidy level which is
    comparable to that of federal employees' SBP. However the actuarial
    projections at that time have proven to be overly conservative and the
    Office of the DOD Actuary recently estimated that the current subsidy
    is only 26 percent for non-disabled retired members. This means that
    retirees participating in SBP are paying excessive premiums for their
    coverage. To correct this and add other improvements to SBP, FRA
    supports the following proposals.
        Allow Paid-Up Coverage.--Authorizing ``paid-up'' SBP coverage after
    a specific length of time (25 to 30 years) would make SBP more
    attractive to qualified participants. This would also be a means of
    recognizing the past ``overpayments'' discussed above.
        Minimum SBP Payment for ``Forgotten Widows''.--The 1972 SBP open
    enrollment period inadvertently created a category of ``forgotten
    widows'' widows of retirees who died before SBP was enacted, or during
    the open enrollment period before making a participation decision. The
    total number of these ``forgotten widows'' is estimated at between
    5,000 and 7,000.
        And in 1978, Reservists were allowed to participate in SBP after
    completing 20 years of qualifying service. However, the law did not
    provide coverage for widows of Reserve retirees who died prior to its
    enactment--thus creating a second category of ``forgotten widows.''
    There may be about 3,000 widows in this category.
        These ``forgotten widows'' deserve at least the minimum SBP annuity
    allowed under current law and FRA believes the minimum $165 a month
    annuity is essential to addressing this inequity. The Civil Service
    Survivor Benefit Plan resolved the problem of its ``forgotten'' widows
    nearly 39 years ago (June 25, 1958).
        Efforts by Sen. Strom Thurmond last year to address this problem
    were unsuccessful and the language was dropped from the 1997 Defense
    Authorization Act during conference deliberations. FRA strongly
    supports Sen. Thurmond's reintroduction of legislation this year to
    address this inequity.
        SBP Coverage for all Active Duty Deaths.--Current SBP regulations
    stipulate that only survivors of retired members or those of active
    duty members who have served over 20 years are eligible for SBP. This
    can create inequitable disparities in benefits for the survivors of two
    members of equal grade who die as the result of illnesses or injuries
    while on active duty. Note that personnel with less than 20 years
    service who die, only qualify for life insurance and certain veterans
    benefits.
        A casualty situation such as an airplane crash provides an example
    of this, and the difference hinges on whether the member survives for a
    time following the accident.
        Permanently disabled members are entitled to retirement with a 100
    percent disability rating which subsequently entitles them to retired
    pay (75 percent of base pay) and SBP eligibility, regardless of the
    years of service. By contrast, the survivors of those killed instantly
    with over 20 years service, are awarded SBP as if they had retired for
    longevity (2.5 percent basic pay times years of service) with no
    disability. Their benefits can be hundreds of dollars per month less
    than those who survive to be retired for disability.
        SBP Withdrawal Option.--Before retiring from active duty, uniformed
    service members must make an irrevocable decision regarding
    participating in SBP. The reluctance of many prospective military
    retirees to make this commitment could be reduced if they were
    permitted to reevaluate their estate plans after a reasonable period of
    transition into second careers. A limited exit option could therefore
    increase SBP participation, and FRA recommends approval of a one-year
    exit window option with no premium reimbursement between the second and
    third retirement anniversary.
        Survivor Enrollment in the Retiree Dental Program.--FRA salutes the
    Subcommittee for its support of the new retiree dental program included
    in the Fiscal Year 1997 Defense Authorization Act and we look forward
    to successful implementation of this program later this year. However,
    survivors of members who die on active duty are omitted from coverage.
    While these survivors retain their active duty dental plan coverage for
    up to one year, it also seems reasonable to allow them the option to
    enroll in the new retiree dental program following that transition
    period. Therefore, FRA recommends that survivors of members who die on
    active duty be extended eligibility to enroll in the DOD dental program
    for retired members and their survivors.
                               concurrent receipt
        A continuing concern of FRA members is the VA disability
    compensation offset to military retired pay. The rationales for these
    two types of pay are very different. Longevity retirement pay is a
    force management tool designed to attract high quality personnel to
    pursue military careers, and disability compensation is for injury or
    disease incurred in the line of duty. FRA understands that cost is a
    major obstacle in revamping the offset requirement, however this is an
    inordinate penalty to disabled retirees especially to those most
    severely disabled.
        FRA supports S. 657 sponsored by Sen. Tom Daschle, plus H.R. 303,
    H.R. 65 and H.R. 44, all sponsored by Rep. Michael Bilirakis. The
    latter (H.R. 44) would provide at least some relief to those rated 70
    percent or greater disabled. Although FRA remains committed to relief
    for all disabled military retirees, at a minimum, this legislation
    deserves the support of your distinguished Subcommittee.
                                   conclusion
        Mr. Chairman. This concludes FRA's funding priorities for fiscal
    year 1998. I close by again expressing the gratitude of FRA Shipmates
    who salute you and the other distinguished members of the Subcommittee
    for your outstanding support of active duty, reserve and retired men
    and women of our Nation's Uniformed Services. Thank you ever so much.
                                     ______

                                   Addendum 1
                               pay comparability
        The Department of Defense (DOD) defines one of the principles of
    military pay equity as follows: ``The basis for determining the
    approximate pay level for the service-specific aspects of compensation
    of the uniformed services shall be comparability with the American
    economy.'' However, since fiscal year 1982, the pay gap between Private
    Sector Pay (PSP) and Military Pay (MP) has widened in fiscal year 1997
    to an estimated 12.9 percent. For every $100 received in the pay check
    of the military service member, a civilian employee earns $112.90.
        For more than a decade and a half, the Administration's requests
    for military pay raises (MPR's) have fallen below ``projected'' private
    sector raises (PSR's) or Employment Cost Indexes (ECI's). This has not
    escaped the attention of Congress. In 1986, the Senate expressed
    concern for the pay lag. ``As measured by the Employment Cost Index of
    the Bureau of Labor Statistics (BLS),'' reads Senate Report No. 99-331,
    p. 225, ``military pay trails civilian wages by 8.3 percent.'' As the
    concern heightened, Congress for the first time since fiscal year 1982,
    authorized for fiscal year 1989 a greater MPR than the 3.5 percent
    recommended by the Administration. Again, last year, Congress increased
    the MPR above the Administration's ``projected'' request.
        The word ``projected,'' highlighted above, may require an
    explanation. Administrations, for years have used an estimate of the
    PSR/ECI for the same fiscal year that it recommends the MPR. This
    method hasn't, nor will it ever produce comparability. Only the
    employment of true PSR's/ECI's will cause MPR's to come nearer to the
    goal of achieving comparability but only if the MPR occurs the January
    of the following year the PSR/ECI is announced.
        Under the current method, even using true PSR's/ECI's to determine
    MPR's would cause a gap of 15 months. PSR's/ECI's are determined in
    October of any given year based on data compiled by BLS between October
    1 of the preceding year thru September of the following year. If the
    true PSR/ECI is used as a measure for requesting the next MPR, as noted
    in the above paragraph, the latter should occur the following January
    after the BLS data is released. Instead, the MPR occurs 15 months after
    the BLS publishes its latest ECI. Why? Because the Administration
    requests the MPR in January, which is approved by Congress sometime
    during the year it is requested, but not made effective until the
    following January.
        In the chart attached, prepared by FRA, comparisons of annual pay
    raises and indexes for fiscal years 1990-1997 are depicted. The
    diagonal lines indicate the delay described in the preceding paragraph.
    If true ECI's were used to determine MPR's, in lieu of ``projected'' or
    DOD's ``keeping military pay competitive with the private sector''
    requests, military pay would now be 4.3 percent better than it is
    currently as of January 1, 1997.
        Unfortunately, the only answer to comparability is for Congress to
    occasionally take the same action it did in fiscal year 1982 and boost
    military pay by double-digit increases.
                                  ratio of pay
        (Note: The Pay Grades used in the examples below were the highest
    grades existing prior to the inauguration of the new ``super-grades''
    in 1958).
        In a recent appearance before the House Appropriations National
    Security Subcommittee, the Sergeant Major of the Marine Corps called
    attention to the disparity of pay between his pay grade and that of a
    Marine private. He had good cause to do so. The ratio of pay of a
    senior Master Sergeant/Chief Petty Officer (now pay grade E-7) and a
    recruit private/seaman (now pay grade E-1) has gone from a pre-All
    Volunteer Force (AVF) high of 4.5:1 to today's current low of 2.6:1. It
    was even lower, 2.4:1, prior to the fiscal year 1982 MPR that provided
    larger increases in pay for career noncommissioned/petty officers than
    for other enlisted and officer grades.
        In the 1970's, the concern for recruiting the All Volunteer Force
    nudged Congress to increase the pay of junior personnel, officer and
    enlisted, including recruit seamen and newly commissioned officers.
    Although such increases were recommended by defense officials, FRA
    never subscribed to higher pay for new military accessions. The same
    defense officials also short-changed the pay increases for
    noncommissioned and petty officers.
        On the other side of the page, the ratios of pay between Admirals/
    Generals (now pay grade O-8) and newly-commissioned officers (now pay
    grade O-1) went from a high of 5:1 in the pre-AVF era to the current
    4.6:1 as of January 1, 1997. Whereas, the senior commissioned officers'
    pay in the AVF era suffered a small ratio loss of 0.4:1, senior
    enlisted members witnessed a deficit nearly 5 times greater, 1.9:1.
        For these ratios and others please review the chart below.

                                                     PAY RATIO CHART
                                               [To the nearest one-tenth]
    ----------------------------------------------------------------------------------------------------------------
                        Year                                    Time period                 E-7:E-1 \1\  O-8:O-1 \1\
    ----------------------------------------------------------------------------------------------------------------
    1971.......................................  Pre-AVF..................................       4.5:1        5.0:1
    1980.......................................  Pre-fiscal year 1982.....................       2.4:1        4.5:1
    1981.......................................  Fiscal year 1982.........................       2.6:1        4.5:1
    1997.......................................  Current..................................       2.6:1        4.6:1
    ----------------------------------------------------------------------------------------------------------------
    \1\ The Pay Grades of the E-7 and O-8 above are for 20 years service.

        FRA questions the rationale for (1) paying senior enlisted service
    members only at a ratio of 2.6:1 above the pay of a new recruit, and
    (2) paying senior enlisted personnel at a much lower ratio than what
    senior commissioned officers now earn when the former began the AVF-era
    at a ratio of pay just a bit less than that of the latter. Congress, in
    the near future, will need to address this problem as it did in fiscal
    year 1982, offering a greater MPR increase to senior petty officers/
    NCO's than to more junior enlisted personnel.

                                           ATTACHMENT A.--MILITARY PAY RAISES
                     [Compared to private sector raises, employment cost and consumer price indexes]
    ----------------------------------------------------------------------------------------------------------------
                                                       1990    1991    1992    1993    1994    1995    1996    1997
    ----------------------------------------------------------------------------------------------------------------
    Military pay raise..............................  ......     4.1     4.2     3.6     2.2     2.6     2.4       3
    Private sector raise............................  ......     4.4     4.2     3.7     2.7     3.1     2.9  ......
    Consumer price index............................     5.4     3.1     3.2     2.7     2.6     3.1     2.9  ......
    Employment cost index...........................     4.4     4.4     4.2     3.7     2.7     3.1     2.9  ......
    ----------------------------------------------------------------------------------------------------------------
    Source: Department of Labor, Defense Finance and Accounting Center.

        Senator Stevens. I have no questions. I thank you, though,
    for your comparisons of rates of pay. I think we are going to
    go into that, probably this year, and it has been very helpful.
        Mr. Calkins. We would be ready to help you with that.
        Senator Stevens. Thank you.
        We will now hear from Dr. David Johnson of the Federation
    of Behavioral, Psychological and Cognitive Sciences.
    STATEMENT OF DAVID JOHNSON, Ph.D., EXECUTIVE DIRECTOR,
                FEDERATION OF BEHAVIORAL, PSYCHOLOGICAL AND
                COGNITIVE SCIENCES
        Dr. Johnson. Mr. Chairman, Senator Inouye, I am testifying
    today primarily on the 6.1, or basic behavioral research
    budget, and particularly on support for that budget. I will
    speak mainly of proposed cuts at the Army Research Institute
    and rely on my written testimony to outline the substance of
    our views on the naval and Air Force behavioral research
    budgets.
        Senator Stevens. We are printing all of your statements in
    full in the record.
        Dr. Johnson. Thank you.
        We support the administration's request for a 7.8-percent
    increase for 6.1 research. The increase recovers some losses
    suffered in the last 2 years and provides an inflation area
    adjustment.
        While most of the research budget is consumed by hardware
    and electronics development, a small part of 6.1 funding, only
    about $30 million across all the service branches out of the
    $1.164 billion request for 6.1 research is devoted to research
    aimed at improving human performance. Much mission relevant
    research is supported by that meager allocation.
        The Army in particular is supporting research to understand
    the factors leading to sexual harassment in the military. We
    regret that the requests for the 6.1 behavioral research at the
    Navy and Air Force are zero percent and 3.5 percent
    respectively, far from the 7.8-percent increase sought for 6.1
    research overall.
        Nevertheless, we ask the subcommittee to support at least
    the funding levels requested for behavioral research at the
    Navy and Air Force. Those levels are $16 million for the Navy
    and $9.057 million for the Air Force. But we are most deeply
    troubled by the requested 25 percent cut in the overall
    research funding and a planned single year staff reduction of
    53 percent for the Army Research Institute.
        The concept known as reliance is important in the
    downsizing of military research. The approach designates a lead
    service as the provider to all the services of research in a
    given area. All research on social and organizational issues is
    assigned to the Army Research Institute. The Army is the only
    service doing research on leadership, on the integration of
    recruits from diverse backgrounds into well functioning teams,
    on sexual harassment, and on the training of troops for
    peacekeeping missions.
        The cuts proposed for 1998 will cripple ARI. We must plead
    with this subcommittee to give ARI the minimum tools to do its
    job. Without your intervention, fiscal year 1998 will see a
    precipitous and, we believe, ultimately fatal plunge for ARI.

                               prepared statement

        We urge the subcommittee to support a fiscal year 1998
    funding level of $21.4 million and a staffing level of 165
    full-time equivalent positions. Both represent painful, but
    survivable, cuts from their 1997 levels.
        I thank the subcommittee for allowing us to present our
    views.
        [The statement follows:]
                      Prepared Statement of David Johnson
        Mr. Chairman, members of the Subcommittee, my name is David
    Johnson. I am Executive Director of the Federation of Behavioral,
    Psychological and Cognitive Sciences, an organization of 16 scientific
    societies. The scientists of the Federation carry out behavioral
    research, including research of value to the Armed Services. I am
    testifying today on behalf of the 6.1 or basic research budget, and
    particularly on behalf of the basic behavioral research support
    contained in that budget. While my focus is on the 6.1 budget, I would
    note that basic research is the beginning of a process that culminates
    in application. Thus, the 6.2 and 6.3a budgets must be seen as going
    hand-in-hand with basic research. Strong support of the whole research
    pipeline--research, development, testing and evaluation--is necessary
    to assure that basic research achieves its ultimate purpose which is to
    assure our national defense.
    The 6.1 Basic Research Budget
        The Administration is seeking a 7.8 percent increase in the basic
    research budget for fiscal 1998, and we wish to lend our support to
    that request. Defense basic research has lost ground over the past two
    years. The requested increase is meant to recover some of those losses
    and to provide an increase for 1998 that allows the budget to stay even
    with inflation. It is legitimate to ask why the basic research budget
    should have an opportunity to recover steady-state funding when other
    areas of the defense budget see real cuts. There is just one reason to
    preserve basic research support: It enables future preparedness. The
    military systems in use today were enabled by basic research carried
    out decades ago. Two decades from now if U.S. forces are to have the
    superiority they have today, then the groundwork to maintain that
    superiority must be laid now with a strong program of basic research.
    If such research is not sustained, the knowledge necessary to improve
    technology, processes, and procedures will not be available. We
    appreciate that it is difficult politically to plan for the future in
    the face of many current needs, but responsible leadership demands
    decisions that will make it possible to defend the country well not
    just today, but over time.
    Basic Behavioral Research Within the 6.1 Budget
        There is a tendency when thinking about military research funding
    to think only of hardware and electronics development. And it is true
    that this work does consume a major portion of the research budget. But
    there is a small part of 6.1 funding--only about $30 million across all
    the service branches out of the $1.164 billion request for 6.1
    research--that is devoted to research aimed at improving human
    performance. It is a pittance, less than 3 percent of the basic
    research budget. Yet an astonishing array of highly mission-relevant
    research has been supported by that meager allocation to the human
    element in defense.
        At the Air Force, it supports research to understand how to keep
    pilots functioning in top form in the face of an onslaught of complex
    information that is difficult to interpret. Members may recall that
    during the Vietnam War, pilots often reported that they turned off or
    ignored many of the cockpit devices supplying them information. Why?
    There was simply too much information to process--so much information
    that paying attention led to a degradation of their performance. Air
    Force behavioral research is helping to determine how much and what
    kind of information is needed to assure top performance of pilots in
    life and death combat situations.
        At the Navy, behavioral research is helping perfect systems and
    techniques for embedded training that will reduce training costs while
    improving the quality of training, especially training for rare but
    highly exacting and critical tasks such as threat recognition and
    follow through. When embedded training is perfected, it will be
    possible to use the long hours spent uneventfully at sea to train crews
    for every type of combat situation under very realistic conditions on
    the equipment they would be using in actual confrontations. The Navy is
    also investing behavioral research dollars in advanced robotics so
    that, eventually, ships can be operated at full capability with crews
    that are a fraction of the size they are today.
        At the Army, behavioral research dollars support efforts to
    understand the factors leading to sexual harassment in the military.
    They go to improving the ability of recruits from different racial,
    ethnic and gender backgrounds to work together productively. And Army
    behavioral research dollars are spent to understand the nature and
    variation of leadership characteristics and to apply that knowledge to
    the selection, training and placement of leaders for optimum
    performance.
        Simply looking at this selection from the array of projects
    supported by 6.1 behavioral research dollars is enough to make it clear
    that the investment-to-payoff ratio for military behavioral research
    favors the payoff side overwhelmingly. It doesn't make good sense to
    neglect investments that pay back many times the initial investment.
    Recommended 6.1 Behavioral Research Funding Levels for the Navy and Air
            Force
        We regret that the requests for 6.1 behavioral research at the Navy
    and Air Force are 0 percent and 3.5 percent, respectively, a far cry
    from the 7.8 percent increase sought for 6.1 research overall. And we
    question the tendency of the Defense Department to budget much more
    generously for research leading to hardware development than for
    research to see that the humans operating the hardware are able to use
    it well. Nevertheless, we are relieved that these requests represent
    only an inflationary loss for the Navy and a steady-state budget for
    the Air Force rather than actual cuts. Thus, we ask that the
    Subcommittee support at least the funding level requested for
    behavioral research at the Office of Naval Research and the Air Force
    Office of Scientific Research. Those levels are $16 million for the
    Navy and $9.057 million for the Air Force.
    Recommended Research Funding and Staffing Levels for the Army Research
            Institute
        We are much more deeply troubled by the requested 25 percent cut in
    overall research funding, and a planned single year staff reduction of
    53 percent, for the Army Research Institute. Within that 25 percent
    cut, the reduction for 6.1 research would be 31 percent.
        As you know, one important element of downsizing with respect to
    military research has been implementation of the concept known as
    reliance. Under this program, many military research labs have been
    closed, and research that seemed duplicative across the services was
    assigned to a single service branch as the lead provider of research on
    that topic. It is expected that all the services will look to the
    leader for scientific knowledge in that service's assigned areas of
    research. Like the research offices of the Navy and Air Force, the Army
    Research Institute has defense-wide responsibilities under the reliance
    program. All research on social and organizational issues has been
    assigned to ARI. Thus, the Army is the only service carrying out
    research on leadership. It is the lead on research aimed at learning
    how to see that recruits from a diversity of backgrounds are integrated
    into teams that work efficiently and productively together. The latest
    scandals over treatment of women in the military are an example of one
    kind of problem ARI research is aimed at addressing. But the research
    extends to integrating recruits from diverse ethnic, racial, economic,
    social, and educational backgrounds as well. If units fail to function
    as teams, it won't matter how sophisticated their weaponry is.
        The Army is also the only service branch carrying out research on
    the training of peacekeepers. Since the end of the Cold War,
    peacekeeping has become a much more regular mission of U.S. forces.
    Little in our military history, however, has prepared us to keep peace
    well, especially in extremely volatile environments that could require
    an almost instant transformation of peacekeepers into combatants. We
    just don't know yet how best to train people for those complex roles.
    The Army is doing the research to provide the answers to all the
    service branches.
        The cuts that are contemplated for fiscal 1998 will cripple ARI.
    Both the contemplated staffing level and the requested funding level
    are well below what ARI would need to fulfill its responsibilities at
    an acceptable level of quality. We must plead with this Subcommittee to
    give ARI the minimum tools it must have to do its job. At the height of
    its funding, ARI received about $50 million for its 6.1 through 6.5
    research. That funding has been chipped away slowly year by year.
    Without your intervention, fiscal 1998 will see a precipitous and, we
    believe, ultimately fatal plunge for ARI. The request for 1998 is
    $17.75 million with 6.1 research comprising a mere $2 million of that
    total. By comparison, its current funding level is $23.7 million with
    6.1 research accounting for $2.9 million of the total. Its current
    authorized staffing level is 254 positions. The planned staffing level
    for 1998 is 119 positions.
        We understand that the Subcommittee is facing having to find ways
    to make up a several billion dollar shortfall in military funding. So
    we know that it is not realistic to ask even for an inflation-adjusted
    or steady-state budget. What we ask is that the Subcommittee support
    sufficient funding to enable ARI to continue to fulfill its mission. We
    urge the Subcommittee to support a fiscal 1998 funding level of $21.4
    million for ARI and a staffing level of 165 full-time-equivalent
    positions. Both represent painful but survivable cuts from their 1997
    levels.
        Much of the work ARI is doing is unique, and yet it addresses
    problems that several service branches have found particularly
    difficult to handle. If ARI goes, not just the Army, but the Navy, and
    the Air Force as well will have lost a critically important tool to
    address problems as current as tomorrow's headlines.
        I thank the Subcommittee for this opportunity to present our views,
    and I thank the Subcommittee for its continuing leadership in support
    of the nation's defense.

        Senator Stevens. Thank you for your time. We will do our
    best. That is a very difficult proposition in view of the
    reduced request that is in the budget. But we will take a good
    look at it.
        Thank you very much.
        Dr. Johnson. Thank you.
        Senator Stevens. Next is Frances Visco, president, National
    Breast Cancer Coalition.
    STATEMENT OF JANE REESE-COULBOURNE, EXECUTIVE VICE
                PRESIDENT, NATIONAL BREAST CANCER
                COALITION, FOR FRANCES M. VISCO, ESQ.,
                PRESIDENT
        Ms. Reese-Coulbourne. Thank you, Mr. Chairman and members
    of the Appropriations Subcommittee on Defense. I apologize that
    Frances Visco was unable to make it this morning. She had a
    family emergency.
        I am Jane Reese-Coulbourne, a 7-year late stage breast
    cancer survivor, a wife, a mother, an engineer, and executive
    vice president of the National Breast Cancer Coalition.
        On behalf of the National Breast Cancer Coalition and the
    2.6 million women who are currently living with breast cancer,
    I would like to thank you for your past support of the
    Department of Army Peer Reviewed Breast Cancer Research
    Program. We urge that you continue your support of this
    important program.
        The National Breast Cancer Coalition and the majority of
    your colleagues in the Senate believe that this program is
    vital to the eradication of breast cancer. Shortly you will
    receive a letter in support of this program from at least 52 of
    your colleagues in the Senate.
        The unparalleled efficiency and skill with which the Army
    has administered this groundbreaking research effort in the
    battle against the epidemic of breast cancer has been
    unprecedented. Your leadership in supporting this program is an
    example of the innovative approach that is needed to combat
    this disease. And, in fact, many countries, such as the United
    Kingdom and Canada are now using this program as a model for
    similar programs in their countries.
        The coalition and its membership are dedicated to working
    with you to insure the continuation of funding for this program
    at a level that allows this research to forge ahead.
        On May 6 of this year, we presented a petition to the
    congressional leaders with over 2.6 million signatures for $2.6
    billion in funding for breast cancer research by the year 2000.
    Women and their families across the country worked hard to gain
    those signatures.
        Funding for the Department of Army Peer Reviewed Breast
    Cancer Research Program is an essential component of reaching
    the $2.6 billion goal that so many women and families worked
    hard to gain. Despite our best efforts and your leadership,
    breast cancer is still the most common form of cancer in women.
    We still do not know the cause or have a cure for this dreaded
    disease.
        This, the peer reviewed research of the DOD program is
    essential and must continue. I appear before you today urging
    you to appropriate $175 million to the Department of Defense to
    continue its mission against breast cancer.
        Breast cancer policymakers and scientists agree that the
    DOD Peer Reviewed Breast Cancer Research Program is essential
    to the fight on breast cancer.
        One of every eight women is at risk of getting breast
    cancer. In addition to the fact that the DOD program provides
    desperately needed, excellent quality, peer reviewed breast
    cancer research, it also makes extremely efficient use of its
    resources. In fact, over 90 percent of the funds went directly
    to research grants.
        The Federal Government can truly be proud of its investment
    in Army breast cancer research. The overall structure of the
    system has streamlined the entire funding process while
    retaining traditional quality assurance mechanisms.
        We ask you, the Defense Appropriations Subcommittee, to
    recognize the importance of what you have initiated. What you
    have done is set in motion an innovative and highly efficient
    approach to fighting the breast cancer epidemic. What you must
    do now is continue to support this effort by funding research
    that will help us win this very real and devastating war
    against a cruel enemy.

                     prepared statement of frances m. visco

        Thank you again for inviting me to testify and giving hope
    to the 2.6 million women, such as myself, living with breast
    cancer.
        Thank you.
        [The statement follows:]
       Prepared Statement of Frances M. Visco, Esq., President, National
                            Breast Cancer Coalition
        Thank you, Mr. Chairman and members of the Appropriations
    Subcommittee on Defense. I am Fran Visco, a breast cancer survivor, a
    wife and mother, a lawyer and President of the National Breast Cancer
    Coalition.
        The National Breast Cancer Coalition is a grassroots advocacy
    organization dedicated to the eradication of the breast cancer
    epidemic. The Coalition is made up of 400 member organizations and more
    than 40,000 individual women, their families and friends. Our national
    network extends to every state where we have state coordinators who
    respond to our calls to action.
        On behalf of the National Breast Cancer Coalition and the 2.6
    million women who are now living with breast cancer, I thank you for
    your past support of the Department of the Army peer-reviewed breast
    cancer research program and I urge your continued support of this
    important program. The National Breast Cancer Coalition believes that
    this program is vital to the eradication of breast cancer. I am a
    member of the Integration Panel that implements this program, and I
    have witnessed the unparalleled efficiency and skill with which the
    Army has administered this groundbreaking research effort in the battle
    against the epidemic of breast cancer. Your leadership in supporting
    this program is an example of the innovative approach that is needed to
    combat this disease.
        The Coalition, and its members, are dedicated to working with you
    to ensure the continuation of funding for this program at a level that
    allows this ground breaking research to forge ahead. On May 6 of this
    year, we presented a petition to the Congressional leaders with over
    2.6 million signatures for $2.6 billion in funding for breast cancer
    research by the year 2000. Women and their families across the country
    worked hard to gain those signatures. Funding for the Department of the
    Army peer-reviewed breast cancer research program is an essential
    component of reaching the $2.6 billion goal that so many women and
    families worked to gain.
        Many of the women and family members who supported the campaign to
    gain the 2.6 million signatures came to our Annual Advocacy Training
    Conference in Washington, D.C. in early May. We were joined by over 600
    breast cancer activists from around the country to continue to mobilize
    behind the efforts to increase breast cancer research funding. The
    overwhelming interest and dedication to eradicate this disease
    continues to be evident as people are not only signing petitions, but
    are willing to come all the way to the Capitol to deliver their message
    about the importance of our commitment to peer-reviewed research. They
    recognize that the Department of the Army peer-reviewed breast cancer
    research program has forged a new path for breast cancer research,
    creating an innovative program that is efficient, flexible, and
    innovative.
        Despite our best efforts and your leadership, breast cancer is
    still the most common form of cancer in women. We still do not know the
    cause or have a cure for this dread disease. Thus, the peer-reviewed
    research of the DOD program is essential and must continue. I appear
    before you today urging you to appropriate $175 million to the
    Department of Defense to continue its mission against breast cancer.
        We are committed to the DOD program in every effort. NBCC has
    created a ten-point Breast Cancer Policy Platform. The second item on
    the platform is: The U.S. Congress and the President must continue
    support for the Department of Defense peer-reviewed breast cancer
    research program, under the strategies recommended by the Institute of
    Medicine.
        In addition, breast cancer policy makers and scientists agree that
    the DOD peer-reviewed breast cancer research program is essential in
    the fight against breast cancer. Over the past two years, there have
    been incredible discoveries at a very rapid rate that offer fascinating
    insights into the biology of breast cancer. Examples of these
    discoveries include the isolation of breast cancer susceptibility
    genes, and discoveries about the basic mechanisms of cancer cells.
    These discoveries have brought into sharp focus the areas of research
    that hold promise and will build on the knowledge and investment we
    have made.
        The Innovative Developmental and Exploratory Awards (IDEA) grants
    of the DOD program have been critical in the effort to respond to new
    discoveries and to encourage and support innovative, risk-taking
    research. The IDEA grants have been instrumental in the development of
    promising breast cancer research. These grants have allowed scientists
    to explore beyond the realm of traditional research and have unleashed
    credible new ideas and concepts. IDEA grants are uniquely designed to
    dramatically advance our knowledge in areas which offer the greatest
    potential.
        Therefore, we have devoted a majority of the DOD funds to these
    types of grants, yet there were many promising proposals that could not
    be supported because of a lack of funds. It is disheartening to think
    that lack of funding could be the only factor stalling scientific
    research that could save so many lives. IDEA grants are precisely the
    types of grants that cannot receive funding through more traditional
    programs such as the National Institutes of Health, and academic
    research programs. It is vital that these grants are able to continue
    to support the growing interest in breast cancer research--$175 million
    for peer-reviewed research will help sustain the IDEA grant momentum.
        The scientists who have seen, first hand, the benefits of the DOD
    breast cancer research program, have issued a strong statement, that in
    their scientific judgement the program should continue:

            * * * we urge that this program receive ongoing funding. This
            program has been broadly defined such that the research
            performed will be of benefit not just for breast cancer, but
            for all cancers and other diseases.

        The Army's program has not only increased current research, but has
    also inspired new efforts on the part of some of the nation's best and
    most experienced researchers who have never before been attracted to
    breast cancer research.
        Continuation of the Army's breast cancer research effort is
    important to all American women, but especially for the women who
    receive their health care from the military. One of every eight of
    these women is at risk of getting breast cancer.
        In addition to the fact that the DOD program provides desperately
    needed, excellent quality breast cancer research, it also makes
    extremely efficient use of its resources. In fact, over 90 percent of
    the funds went directly to research grants. The federal government can
    truly be proud of its investment in Army breast cancer research. The
    overall structure of the system has streamlined the entire funding
    process, while retaining traditional quality assurance mechanisms.
        Since the very beginning of this program, in 1993, Congress has
    stood in support of this important investment in the fight against
    breast cancer. The 1993 Defense Appropriations report language read:

              The Committee commends the Department of the Army for its
            fine management of the breast cancer research program * * * The
            Committee understands that the program has had a positive
            effect on recruiting new scientists into the field, developing
            needed infrastructure, and bringing innovative proposals to the
            fore, and that its continuation is necessary to build on these
            advancements.

        In the years since then, Mr. Chairman, you and this entire
    Committee have been leaders in the effort to continue this innovative
    investment in breast cancer research.
        We ask you, the Defense Appropriations Subcommittee, to recognize
    the importance of what you have initiated. What you have done is set in
    motion an innovative and highly efficient approach to fighting the
    breast cancer epidemic. What you must do now is continue to support
    this effort by funding research that will help us win this very real
    and devastating war against a cruel enemy.
        Thank you again for inviting me to testify and giving hope to the
    2.6 million women living with breast cancer.

        Senator Stevens. The news this morning says we will have a
    vaccine for breast cancer within 5 years.
        Ms. Reese-Coulbourne. I have not seen that news. I don't
    know about that. I would be surprised if that were true.
        Senator Stevens. It would be interesting news. In any case,
    we will do our best for you.
        Ms. Reese-Coulbourne. No one would like that more than
    myself.
        Senator Stevens. I started that research at $25 million. It
    is up to $125 million. And you want a $50 million increase this
    year?
        Ms. Reese-Coulbourne. Yes.
        Senator Stevens. That will be difficult with the cuts in
    the budget in our other areas. But we will do our best.
        Ms. Reese-Coulbourne. Thank you.
        Senator Stevens. Our next witness is John Guckenheimer,
    professor of mathematics at Cornell University
    STATEMENT OF JOHN GUCKENHEIMER, Ph.D., PROFESSOR OF
                MATHEMATICS AND MECHANICS AT CORNELL
                UNIVERSITY AND PRESIDENT OF THE SOCIETY FOR
                INDUSTRIAL AND APPLIED MATHEMATICS, JOINT
                POLICY BOARD FOR MATHEMATICS
        Dr. Guckenheimer. Good morning, Mr. Chairman and Senator
    Inouye. I am John Guckenheimer, professor at Cornell University
    and president of the Society for Industrial and Applied
    Mathematics. I appreciate this opportunity to comment on the
    fiscal year 1998 appropriations for the Department of Defense
    and will be speaking on behalf of the Joint Policy Board of
    Mathematics [JPBM], which represents three associations of
    mathematical scientists.
        Mr. Chairman, JPBM once again calls on Congress to provide
    full support for DOD's investment in basic research, especially
    research conducted at universities. The buying power of DOD's
    support for research is down over 30 percent compared to 30
    years ago, and nearly 10 percent since fiscal year 1994.
        We urge the subcommittee to stem the erosion in these
    critical investments and provide DOD's full fiscal year 1998
    funding request for basic research 6.1 activities.
        We ask this because basic research is essential to
    maintaining the technological superiority of our forces. The
    origins of many key defense technologies can be traced to DOD's
    support for basic research conducted at U.S. academic
    institutions.
        Rigorous decisionmaking processes within DOD guide these
    investments to insure both scientific excellence and
    consistency with DOD's strategic priorities. These thoughtfully
    planned investments need stable year to year funding.
        Let me describe my experience with DOD's investment in
    basic research. I conduct research in dynamical systems. My
    goal is to reveal universal patterns in dynamical processes on
    phenomena ranging from neural behavior to fluid flows.
        Today I shall describe research that is leading to new
    mathematical technologies for use in the design of jet engines.
        Designers attempt to optimize engine performance and fuel
    efficiency, thrust, emissions, and longevity. My research
    addresses limits on engine performance due to harmful
    mechanical oscillations or combustion instabilities.
        Computer models that incorporate many variables are used in
    engine design. My research produces tools that automate the
    analysis of these models. These reduce the need for time-
    consuming simulation and provide a framework for understanding
    engine instabilities.
        Fifteen years ago, the Air Force Office of Scientific
    Research helped stimulate my interest in computation. The
    research I described today began after a foresighted
    mathematical scientist at AFOSR introduced me to a group of
    United Technologies' Research Center. This project and others
    sponsored by AFOSR are outstanding examples of how the Federal
    Government, universities, and industry can work together on
    matters of importance to the national defense and economy.
        Basic research supported by DOD is making an impact within
    our defense industry.

                               prepared statement

        I would also like to emphasize the importance of Federal
    investment in basic research. I strongly urge you to continue
    your support of DOD's investment in basic research and for the
    contributions of the university-based researchers.
        Thank you for this opportunity to express our views for the
    record regarding fiscal year 1998 appropriations.
        Thank you.
        [The statement follows:]

                    Prepared Statement of John Guckenheimer

        Good afternoon, Mr. Chairman and Members of the
    Subcommittee. I am John Guckenheimer, Professor of Mathematics
    and Mechanics at Cornell University and President of the
    Society for Industrial and Applied Mathematics. I appreciate
    this opportunity to comment on fiscal year 1998 appropriations
    for the Department of Defense. I speak on behalf of the Joint
    Policy Board for Mathematics, which represents three
    associations of mathematical scientists whose concerns
    encompass fundamental and interdisciplinary research; the
    applications of the mathematical sciences in science,
    engineering, and industry; and mathematics education at all
    levels.
        Mr. Chairman, I am here today to speak in support of DOD's
    investment in basic research, in particular research conducted
    at universities, as JPBM strongly believes it is an integral
    and foundational part of DOD's overall R&D efforts undertaken
    to meet the Nation's defense needs. We urge the subcommittee to
    provide the full funding request for this investment,
    approximately $1.16 billion, including about $800 million for
    Defense Research Sciences, in fiscal year 1998.
        Mr. Chairman, the buying power of DOD's support for
    research is down by over 30 percent compared to 30 years ago.
    Since fiscal year 1994, DOD's investment in research has
    dropped nearly 10 percent in real terms. We urge the
    subcommittee to stem the erosion in these critical investments
    in our Nation's future. Recently the other two JPBM presidents
    and I joined a coalition of more than 40 presidents of
    scientific organizations who united to express their belief
    that the budgets of key federal research agencies--including
    DOD--need to increase by 7 percent in fiscal year 1998 so that
    science and technology can meet the challenges of the next
    century. JPBM concurs with this assessment and is especially
    committed to ending the decline in support for basic research
    conducted to advance the defense mission.
        The United States relies on superior military technologies
    to achieve its national security objectives. Basic research is
    essential to the development of new technologies, to improving
    existing ones, employing them as effectively as possible, and
    therefore maintaining technological superiority over the long
    term. By engaging the Nation's research universities in this
    process, DOD has access to first-rate researchers and the
    latest discoveries in pursuit of its R&D objectives. The
    origins of many key defense technologies can be traced to DOD
    support for basic research conducted at U.S. academic
    institutions.
        The defense agencies that sponsor basic research--the Army
    Research Office, the Office of Naval Research, the Air Force
    Office of Scientific Research, and the Defense Advanced
    Research Projects Agency--have an excellent track record for
    making decisions about which areas are vital to DOD's
    technology goals and which researchers are best able to mine
    the scientific opportunities for contributions to national
    security. Rigorous internal decision-making processes guide
    these investments to ensure both scientific excellence and
    consistency with DOD's strategic priorities. They take full
    advantage of the robust U.S. research system, supporting work
    at a mix of universities, governmental laboratories, and
    sometimes in cooperation with industry.
        These thoughtfully planned investments need stable year-to-
    year funding to avoid curtailing the scope of promising
    research that DOD has identified as relevant to its mission.
        Let me describe how DOD's investment in basic research
    contributes to the national defense with some examples from my
    own experience as a mathematical scientist. The area of
    research in which I work is called dynamical systems theory,
    sometimes called chaos theory. The goals of this research field
    have been to reveal underlying, universal patterns in the
    behavior of dynamical processes. The theories that have been
    developed are of astonishing generality and relevance to
    questions ranging from the stability of the solar system to the
    mixing of chemicals in industrial processes to the study of
    animal locomotion and its neural control. Today I shall
    describe research that is leading to new ``mathematical''
    technologies for use in the design of jet engines.
        There are several aspects of engine performance that
    designers attempt to optimize, such as fuel efficiency, thrust,
    emissions and longevity. The limits on engine performance also
    have different sources. My research addresses the control of
    harmful oscillations caused by mechanical or combustion
    instabilities. For example, oscillations of the air flow
    through an engine compressor result in phenomena termed stall,
    surge, and flutter and reduce engine efficiency dramatically.
    The resulting engine vibrations induce fatigue, leading
    eventually to catastrophic engine failure.
        Computer simulation and analysis is an important part of
    engine design. It can be a bottleneck for the entire design
    process. Computer models are constructed to enable simulation
    of an engine and its components with varying degrees of
    fidelity. The models incorporate many design parameters, and
    exploring the behavior of the models as these multiple design
    parameters vary is an enormous task. Therefore, the simplest
    possible models that embody design principles are desired.
    Comparison of the behavior of different models with each other
    and with test data is critically important. My research is
    directed at the development of computational tools that
    automate the analysis of models. In particular, we are looking
    for faster, more efficient ways to determine the parameter
    values that are most likely to lead to stable operation in the
    model engines; the tools created through this research will
    greatly reduce the need for time-consuming simulation.
    Dynamical systems theory provides a framework for the creation
    of procedures that accomplish this task as well as a sound
    guide to understanding the types of unsteady behavior that
    result from instability.
        There are several aspects of my research that bear upon DOD
    support for basic research. The Air Force Office of Scientific
    Research helped stimulate my interest in the early 1980's in
    the practical implementation of ideas originating in dynamical
    systems theory. The research I described today began after a
    foresighted mathematical scientist at the AFOSR took the
    initiative to introduce me to a group at United Technologies
    Research Center working on active control of engines. I think
    that this project and others sponsored by AFOSR are outstanding
    models of how the federal government, universities, and
    industry can work together to bring the results of basic
    mathematical sciences research to bear upon matters of
    importance to the national defense and economy. Basic research
    supported by DOD is making an impact within our defense
    industries.
        I would also like to emphasize the importance of
    maintaining a basic research portfolio in an era when
    government demands greater accountability and industry is
    focused on short term profits. University-based researchers
    have more flexibility in tackling fundamental scientific
    problems than most industrial research groups.
        In the computational science that I have been describing,
    mathematics is essential in the translation of physical
    problems into forms amenable to computational analysis, and it
    is essential to the development of computational methods that
    produce accurate solutions. Improvements in computer hardware
    are not enough to solve challenging problems. As the size and
    scope of problems we seek to solve by computers grow, old
    methods and software are unable to keep up. More effective
    algorithms and software are required. We are entering an age in
    which we have the ability to collect, store and transform data
    in quantities that were hardly imaginable even a decade ago.
    Mathematics can contribute enormously to the development of
    efficient, productive tools for enriching our lives and
    enhancing our national security.
        I strongly urge you to continue your support for DOD's
    investment in basic research and for the contributions of
    university-based researchers. Thank you for this opportunity to
    express our views for the record regarding fiscal year 1998
    appropriations. I would be pleased to answer any questions you
    might have.

        Senator Stevens. Thank you, Doctor. That is a very
    interesting project.
        Dr. Guckenheimer. Thank you. It is very exciting.
        Senator Stevens. We appreciate your coming to tell us about
    it and we will do our best to give you support.
        Thank you very much.
        Dr. Guckenheimer. Thank you.
    STATEMENT OF BOBBY HARNAGE, NATIONAL SECRETARY-
                TREASURER, AMERICAN FEDERATION OF
                GOVERNMENT EMPLOYEES, AFL-CIO
        Senator Stevens. Next is Bobby Harnage, the national
    secretary-treasurer of the American Federation of Government
    Employees [AFGE].
        Good morning.
        Mr. Harnage. Good morning, Mr. Chairman.
        I understand that the time has been moved up, so I will
    dispense with the introductions. I want to say that I
    appreciate the opportunity to testify this morning on the 1998
    appropriations bill and AFGE feels particularly indebted to
    you, Chairman Stevens, for all that you have done for Federal
    employees on the Appropriations Committee and the Governmental
    Affairs Committee.
        In the interest of time, I will limit my statement today to
    the three most important issues for AFGE. The 60/40, $3
    million, and core workload safeguards protect our depots by
    retaining a federally controlled core workload which is capable
    of meeting the maintenance needs of our Armed Forces in times
    of war and peace.
        These safeguards are critically important for the following
    reasons. Without these safeguards, misguided administrators in
    pursuit of short-term or even illusory savings would be tempted
    to disinvest the depot's infrastructure until these important
    installations became incapable of meeting the exacting
    requirements of our Armed Forces, particularly during
    emergencies.
        There is no viable alternative to the 60/40 safeguard,
    which has historically enjoyed bipartisan support because it
    has consistently proven to be the only fair way to provide for
    our national defense, insure depot readiness, and, at the same
    time, equitably allocate work between the private and public
    sectors.
        If the 60/40 safeguard is abolished, what will take its
    place? AFGE strongly recommends that the subcommittee continue
    in the absence of any viable alternative to strongly support
    the statutory safeguards which insure that our depots are ready
    when called upon to support our men and women in the Armed
    Forces.
        Like many of our lawmakers, even some who have no air
    logistics centers in their States and districts, AFGE believes
    that the workload at Kelly and McClellan should be relocated to
    the three surviving depots, as was recommended by the BRAC. GAO
    reported earlier this year that the Pentagon's scheme for
    Sacramento and Kelly will privatize, rather than eliminate,
    excess capacity and could be about $182 million per year more
    expensive than redistributing that workload to the other
    already underutilized Air Force units.
        AFGE urges the subcommittee to deny funding to the Pentagon
    for any privatization in place that is attempted contrary to
    BRAC. We realize that some contractors and Pentagon officials
    want to do away with A-76. They don't want the strong
    competition from the public sector that is necessary if DOD
    contracting expenses are to be prevented from skyrocketing out
    of control.
        It is imperative that lawmakers remember that the way to
    generate efficiencies in savings is not contracting out,
    outsourcing, or privatizing. Rather, what is key is insuring
    real and genuine competition between the public and private
    sectors.
        AFGE urges the subcommittee to resist any attempt to exempt
    DOD from the competitive requirements of A-76.
        AFGE urges the subcommittee to reaffirm its commitment to
    full and fair public/private competition and deny
    appropriations for conversion to contractor performance for all
    activities involving 10 or more employees until a commercial
    activity performance analysis has been completed in accordance
    with A-76.
        AFGE also urges the subcommittee to include language in
    this year's bill which will require DOD to conduct a
    postcontract award audit to insure that the Government is fully
    receiving the savings or efficiencies promised by the
    contractor in his bid. In the event promised savings or
    performance are not realized or in cases of contract
    nonperformance or default, DOD would be required to report what
    action, such as recompetition or conversion to in-house
    performance, it is taking to correct this situation.
        In the fiscal year 1996 Defense authorization bill, the
    Congress instructed DOD to stop managing by FTE ceilings.
    However, that mandate has been defied again and again.
    Personnel ceilings are forcing some military bases to lay off
    their civilian employees and then contract out their work at a
    higher cost. This problem is especially noticeable at service
    depots where Federal employees are getting reduction-in-force
    notices while planes, tanks, and ships await repairs.
        But don't take our word for it. A senior DOD official just
    wrote to AFGE's national president and admitted that he had
    discovered that some managers have been establishing FTE spaces
    on some depot maintenance activities. However, he insisted that
    he was taking corrective action.
        I would be happy to share this correspondence with you or
    your staff. I didn't include this letter in my testimony
    because a deviation from the Pentagon line that management by
    FTE's is never, ever practiced at DOD would surely invite
    retribution. And, since he is one Pentagon political appointee
    who is trying to be part of the solution, I would not want that
    to happen.
        Senator Stevens. I have to stop you because we have such
    limited time.
        Mr. Harnage. That concludes my testimony and I appreciate
    your time.
        Senator Stevens. We did read your testimony and I saw that
    comment about the correspondence. We can talk to you about that
    later.

                               prepared statement

        Mr. Harnage. I would appreciate the opportunity and would
    be glad to get with you at a later time. Thank you.
        Senator Stevens. Thank you, sir.
        [The statement follows:]
                      Prepared Statement of Bobby Harnage
                                  introduction
        Mr. Chairman and Subcommittee members, my name is Bobby Harnage. I
    am the National Secretary-Treasurer of the American Federation of
    Government Employees (AFGE), AFL-CIO, which represents over 700,000
    government employees working worldwide, including 300,000 employed by
    the Department of Defense (DOD). I am also the chair of AFGE's
    Privatization Committee, which has jurisdiction over many of the issues
    I will discuss today.
        I would like to begin my testimony by thanking the Subcommittee for
    this opportunity to testify on the fiscal year 1998 Appropriations Bill
    for DOD. I also welcome this opportunity to work with the Subcommittee
    in addressing the needs and concerns of our federal workforce. AFGE and
    its members are justifiably proud of our past service on behalf of
    America's defense. As both Americans and federal employees, we take
    seriously our role in keeping the nation's defense strong. While there
    are many important issues affecting our federal workforce which this
    Subcommittee will consider, I will limit my statement today to the
    issues which are the most important to the American men and women who
    do so much to ensure our nation's defense: safeguarding America's
    depots, upholding the competitive framework of OMB Circular A-76,
    ensuring a thorough Congressional review of DOD's wasteful policy of
    managing its civilian workforce by arbitrary FTE ceilings, and
    safeguarding the security of the nation's defense installations.
                        safeguarding the nation's depots
        10 U.S.C. Sec. 2466 (``60/40 safeguard''), Sec. 2469 (``$3 million
    competition safeguard''), and Sec. 2464 (``core workload safeguard'')
    protect our depots by retaining a federally-controlled, core workload
    which is capable of meeting the maintenance needs of our armed forces
    in times of war and peace. These safeguards are critically important
    for the following reasons:
      --They protect the national defense by ensuring that a core workload
            is performed by the depots. Without these safeguards, misguided
            administrators, in pursuit of short-term or even illusory
            savings, would be tempted to disinvest the depots'
            infrastructure until these important installations became
            incapable of meeting the exacting requirements of our armed
            forces, particularly during emergencies.
      --There is no viable alternative to the 60/40 safeguard, which has
            historically enjoyed bipartisan support because it has
            consistently proven to be the only fair way to provide for our
            nation's defense, ensure depot readiness, and, at the same
            time, equitably allocate work between the private and public
            sectors. If the 60/40 safeguard is abolished, what will take
            its place? Without a quantifiable, concrete alternative to the
            present definition of core, there will be continuous turmoil
            and debate regarding what is core and who should perform core
            work. Such a condition inevitably leads to disruption and
            inefficiency.
      --The government will not harvest savings by privatizing the core
            workload now protected by the safeguards. Despite years of
            debate and countless studies, no one has been able to prove
            privatization actually results in any savings. Far from it, in
            the absence of competition from the depots, the cost of meeting
            our defense maintenance requirements will skyrocket.
    AFGE's recommendations
        AFGE strongly recommends that the Subcommittee continue, in the
    absence of any viable alternative, to strongly support the statutory
    safeguards which ensure that our depots are ready when called upon to
    support our men and women in uniform.
        AFGE also asks this Subcommittee to work to ensure that the
    nation's depots are given maintenance assignments for new weapons
    systems. As Mr. Robert T. Mason, the Deputy Undersecretary of Defense
    for Maintenance, Policy, Programs and Resources, told a Congressional
    delegation in early 1996, ``If the depots don't get any new work from
    new weapons systems or from closing depots,'' a scenario that at least
    some senior officials in the Pentagon would actually like to bring
    about, ``they will all be closed in nine years.''
    Privatization-in-place of depots is wrong
        Like many other lawmakers, even some who have no Air Logistics
    Centers (ALC's) in their states and districts, AFGE believes that the
    workload at Kelly and McClellan should be relocated to the three
    surviving depots as was recommended by the Base Realignment and Closure
    Commission. The General Accounting Office (GAO) reported earlier this
    year that the Pentagon's scheme for Sacramento and Kelly will privatize
    rather than eliminate excess capacity and could be about $182 million
    per year more expensive than redistributing that workload to the other
    already underutilized Air Force depots. GAO estimates that annual
    savings from transferring the work to other depots rather than
    privatizing would offset the one-time transfer costs in about two
    years.
    AFGE'S recommendation
        AFGE urges the Subcommittee to deny funding to the Pentagon for any
    privatization-in-place that is either illegally implemented, as is the
    case at Newark Air Force Base, or attempted contrary to BRAC, as would
    be the case at Kelly and McClellan ALC's.
            upholding the competitive framework of omb circular a-76
        Mr. Chairman, we know that the options of contracting out,
    outsourcing, and privatization are generating more attention than ever.
    For AFGE and its members, the central issue which should drive the
    discussions surrounding this debate is readiness--how we can get the
    most effectiveness, efficiency, and reliability for the taxpayer
    dollars invested. It would be wrong to assume that AFGE's only interest
    in these discussions is to preserve federal jobs. AFGE has a long-
    standing policy to follow outsourced work into the private sector once
    a decision to contract out has been made. For example, earlier this
    year, we signed a contract with a private sector firm, Hughes Aircraft,
    which allows AFGE to continue its representation of the employees at
    the recently converted Naval Air Warfare Center, in Indianapolis, IN.
    So those defense contractors whose claims of savings are based not on
    innovation and ingenuity but instead on nothing more than paying their
    employees poorly and providing them with few if any benefits had better
    watch out. AFGE is not anti-privatization. We are, however,
    unreservedly and non-negotiably pro-competition. And we will not cave
    or compromise on this principle.
        AFGE was extensively involved in the 1995-1996 reform of OMB
    Circular A-76. This effort resulted in a revised Supplement that, while
    permitting more flexibility to contract out, also enables federal
    employees greater involvement in the competitive process, and makes
    contracting out a ``two-way-street'' by permitting work to return back
    in-house when it is more cost-effective to do so.
        We realize that some contractors and Pentagon officials want to do
    away with A-76. They don't want the strong competition from the public
    sector that is necessary if DOD's contracting expenses are to be
    prevented from skyrocketing out of control. The National Defense Panel
    has even demanded that the Congress do away with the safeguard against
    contracting out a function involving ten or more employees without
    first conducting an A-76 competition.
        It's imperative that lawmakers remember that the way to generate
    efficiencies and savings is not contracting out, outsourcing, or
    privatizing. Rather, what's key is ensuring real and genuine
    competition between the public and private sectors.
    AFGE'S recommendations
        AFGE urges the Subcommittee to resist any attempts to exempt the
    Department of Defense from the competitive requirements of the
    recently-reformed OMB Circular A-76 and its Supplement. So much work is
    already contracted out by DOD without any public-private competition.
    We must not exacerbate this situation by gutting A-76.
        AFGE urges the Subcommittee to reaffirm its commitment in Section
    8015 to full and fair public-private competition and deny
    appropriations for conversion to contractor performance for all
    activities involving 10 or more employees until a commercial activities
    performance analysis has been completed in accordance with OMB Circular
    A-76 and its Supplement.
        AFGE also urges the Subcommittee to include language in this year's
    bill which would require DOD to conduct a post-contract award audit to
    ensure the government is truly receiving the savings or efficiencies
    promised by the contractor in his bid. In the event promised savings or
    performance are not realized, or in cases of contract non-performance
    or default, DOD would be required to report what action--such as
    recompetition or conversion to in-house performance--it is taking to
    correct this situation. The information required by the audit is
    already included in A-76's new Supplement, so this report could be
    provided with a minimum of cost or administrative burden. However, we
    also need to compile this important information for all contracting out
    resulting from direct conversions and A-76 waivers and then allow DOD's
    contract administrators to bring this work back in-house in the event
    of poor performance and/or excessive costs. Mr. Chairman, we are eager
    to assist the Subcommittee in drafting the necessary language.
     ensuring a thorough congressional review of dod's wasteful policy of
                       managing by arbitrary fte ceilings
        AFGE members are extremely concerned about the effect of Full-Time
    Equivalent (FTE) personnel ceilings on our federal defense workforce's
    competitive capability and on our nation's readiness. Personnel
    ceilings are forcing some military bases to lay off their civilian
    employees and then to contract out their work at higher costs. This
    problem is especially noticeable at service depots where federal
    employees are getting reduction-in-force notices while planes, tanks,
    and ships await repairs.
        But don't take our word for it. The personnel directors of the four
    branches of the armed forces in their March 16, 1995, testimony before
    the Senate Armed Services Personnel Subcommittee bemoaned the fact that
    civilian ceilings--not workload, cost, or readiness concerns--are
    forcing them to send work to contractors that could have been performed
    more cheaply in-house. The representatives asserted that their
    services' depots must turn away valid, funded workload requirements
    because of the FTE ceilings, limiting the flexibility of our depots to
    adjust and to meet quickly the critical, unprogrammed, surge
    requirements of our operating forces.
        In the fiscal year 1996 Defense Authorization Bill, the Congress
    instructed DOD to stop managing by FTE ceilings. However, that mandate
    has been defied. Earlier this year, I was given a copy of the attached
    correspondence between General George Fisher, the Commander, Army
    Forces Command at Fort McPherson, GA, and the Commander, III Corps and
    Fort Hood, Killeen, TX. In his letter, General Fisher informs the
    Commander of Fort Hood that the installation's FTE installation quota
    has been increased from 645 to 767 spaces. To soften the blow a bit,
    General Fisher added a personalized note at the bottom of the
    correspondence: ``Tom, we're required to meet the Army's assigned
    requirement. For each function you select, a study leading to a
    contract-out decision. You're ahead of most everyone; just need a few
    more in 1998. George''
        Mr. Chairman, as a representative of federal employees, I am
    shocked and offended by valuable federal workers being treated
    impersonally as ``spaces'' in an anonymous quota system. As a taxpayer,
    I am offended to see the prostitution of the competitive system. The
    outcome of any competition at Fort Hood or elsewhere within Forces
    Command for that matter has already been decided in advance. The
    determinant criteria of the best provider will not be cost. It will not
    be efficiency, and it certainly will not be based on federal policy
    contained in A-76. As dictated by General Fisher, it's FTE's, not
    competition, that are key. Why go through the expense and the time
    involved in a Commercial Activities study if the outcome has already
    been preordained?
        I wish that I could say that this is an isolated case.
    Unfortunately, while it may be one of the more blatant cases, it is by
    no means unique. DOD's own IG reported two years ago that ``the goal of
    downsizing the Federal workforce is widely perceived as placing DOD in
    a position of having to contract for services regardless of what is
    more desirable and cost effective.''
    AFGE'S recommendations
        AFGE urges the Subcommittee to require DOD to manage by budgets,
    rather than FTE ceilings. AFGE also urges the Subcommittee to ask the
    GAO to determine whether the Pentagon has compiled with the
    Congressional prohibition against management by FTE ceilings.
        safeguarding the security of the nation's defense installations
        As we learned to our sorrow during the tragedy of Oklahoma City,
    disaster strikes without warning or without consideration for our
    capacity to respond. In prior years, AFGE has reported to this
    Subcommittee about DOD's alarming practice of understaffing its fire
    fighter units. Now, DOD has completed its own staffing survey and found
    that not a single installation world-wide is staffed according to law.
    What a risk this imposes on lives and property. Military base
    commanders often assign untrained and unqualified active duty personnel
    to fill civilian fire fighting positions which have been frozen or
    eliminated due to budget reductions. Unfortunately, this situation has
    not been changed for the better. In fact, in this time of dwindling
    defense budgets, the temptation to lift the prohibition against
    contracting out fire fighting and security guard functions is
    threatening to become worse.
        The functions of fire safety and fire suppression are not budgetary
    ``nice-to-haves'' or budgetary luxuries. In fact, we cannot afford to
    fail to fund the staffing levels of our federal fire fighters. Fire
    prevention and suppression are critical core defense functions. Lives
    are risked, readiness threatened, and public property endangered when
    such core functions are chronically understaffed. Our federal fire
    fighters possess the rescue, fire prevention, safety inspection,
    hazardous and explosive material training skills that are absolutely
    necessary to meet the unique requirements of the military environment.
    For reasons of safety and security, fire prevention and suppression
    services should not be contracted out. Experience has shown that
    contractor and off-base fire departments are not as responsive as the
    federal fire fighting teams and not trained to handle responses and
    incidents involving sophisticated defense armament.
    AFGE'S recommendations
        AFGE urges the Subcommittee to support funding of DOD fire fighter
    staffing levels at those required by law, regulations, and DOD's own
    directives. We also ask that the Subcommittee oppose any legislative
    initiatives which would eliminate the safeguard against contracting out
    federal fire fighting and security guard functions.
                                   conclusion

    Mr. Chairman, this concludes my testimony. I appreciate the opportunity
            to appear before the Subcommittee today. I would gladly answer
            any questions.
    STATEMENT OF JAMES E. LOKOVIC, CHIEF MASTER SERGEANT,
                USAF (RETIRED), AIR FORCE SERGEANTS
                ASSOCIATION
        Senator Stevens. Next is Chief Master Sergeant Lokovic of
    the Air Force Sergeants Association, please.
        Sergeant Lokovic. Good morning, Mr. Chairman, Senator
    Inouye. I left my written statement behind because we don't
    have much time. But I would like to point out four things to
    you that were listed in my written statement. They are
    particularly important to the enlisted men and women of all
    components of the U.S. Air Force.
        We visit bases quite frequently. At McGuire Air Force Base
    I recently had a chance to talk to the enlisted flight crews. I
    can tell you that for peacetime, it is rather amazing to us
    that we are working our people the way we are.
        It is most impressive. I spoke with one young man who, for
    the last 60 days, had 3 days during which he was not tasked
    military duty. The stress indicators that are being reported to
    us from senior enlisted advisors and first sergeants indicate
    increased instances of family abuse and other indicators are
    like that. Therefore, the point I am getting to is it is
    extremely important, as Ms. Hickey said earlier on, that we
    continue to appropriate dollars, whenever possible, to support
    family support centers, child development centers, and those
    kinds of things that help keep families healthy as our troops
    are deployed.
        Second, I think it is very great that this committee last
    year provided the support that it did for our troops. You took
    very good care of us in exceeding the ECI minus 0.5 percent pay
    raise mandated by Congress and increasing BAQ to further close
    the gap of the congressionally intended VHA and BAQ
    combination, accounting for 85 percent of costs of housing.
        We ask that you do that again this year.
        In the area of our Reserve forces there is an elimination
    of a program within the President's budget that we ask you to
    make sure we are able to counter, and that is the elimination
    of the 15 days paid leave for our military technician force.
    Currently, we have Federal employees that also make a choice to
    become members of our Reserve forces and when they do so, they
    are paid for their 15 days of duty--when they do that each
    year. The President's budget seeks to get rid of that.
        We think that is a very, very bad policy. It is going to
    eliminate the primary incentive that currently exists for
    former active duty people that then choose to become civil
    servants and then say well, let's use our military training--
    we're already trained--and let's go in and work for the
    Reserves or the Guard. What this possibly would do is eliminate
    that incentive.
        We think it is going to hurt recruiting and hurt retention.
        Finally, temporary living expenses for first-time PCS we
    have detailed in our statement and I ask that you consider
    funding that this year.
        Thank you very much, sir.

                               prepared statement

        Senator Stevens. Thank you very much. We appreciate your
    courtesy.
        [The statement follows:]
                     Prepared Statement of James E. Lokovic
        Mr. Chairman and distinguished committee members, on behalf of the
    155,000 members of the Air Force Sergeants Association and the active
    and retired enlisted members of all components of the United States Air
    Force, I commend this committee for the important quality-of-life gains
    made during the last session of Congress. These improvements were
    particularly important for our enlisted (noncommissioned) men and women
    whose pay and retirement are considerably less than their commissioned
    counterparts. The raise in military base pay above the legally mandated
    level was particularly beneficial. The Basic Allowance for Quarters
    (BAQ) increase that was higher than the raise in base pay helped bring
    the combined BAQ/Variable Housing Allowance (VHA) reimbursement rate a
    step closer to covering 85 percent of housing costs. The increase in
    the dislocation allowance from two months BAQ to two and one-half
    months BAQ that helped to reduce unreimbursed out-of-pocket expenses
    for those military members who are reassigned was particularly
    appreciated by enlisted members who are paid less, yet incur the same
    moving expenses as military members of all ranks. Enlisted military
    retirees appreciated the on-time, January 1997 cost-of-living
    adjustment. Members of the guard and reserve applaud the increase from
    60 to 75 of inactive duty training points creditable annually toward
    retirement and legislation to help protect them during drill weekends.
    Sir, again we thank you for those gains.
        Each of these wise efforts demonstrated an appreciation of those
    serving our nation. However, it is important to build upon these gains.
    At a time when the nature of military service is changing, when the
    operations tempo is extremely taxing on the quality of the lives of
    military members and their families, and when the administration
    forecasts further personnel cuts--while maintaining worldwide
    operations--we must make sure the needs of our current and past
    military members are met. Medicare subvention legislation should be
    passed now to honor the promises our government made to those who
    served during World War II and the Korean and Vietnam conflicts.
    Subvention, if implemented properly, would allow the Health Care
    Financing Administration (HCFA) to reimburse the Department of Defense
    for medical care provided to Medicare-eligible military retirees and
    save the American taxpayer money at the same time. Also, the current
    budget proposal has several areas that we are very concerned about:
    once again underfunding military health care; seeking to revise the
    Basic Allowance for Subsistence (BAS) in a way that is detrimental for
    our enlisted members; and the ill-thought-out effort to delete the 15
    days paid leave for our reservists/guardsmen who are also civil
    servants. Mr. Chairman, we understand that budgetary considerations
    drive many decisions, but we ask that you protect, and where possible
    expand, quality-of-life benefits so important to our enlisted members.
                                  health care
        There is no non-pay, quality-of-life program more important to
    military members, families and retirees than health care. Until
    recently, it has been a major career incentive for those serving to
    endure a long career until retirement. Yet, the administration's annual
    budget submissions consistently underfund military health care. This
    year's request underfunds health care by between $350 and $600 million,
    depending on various estimates. AFSA is grateful for the diligence
    shown in the past by Congress to restore these funds, and respectfully
    asks that this Congress do the same. However, such consistent,
    intentional underfunding serves to make many active and retired
    military members skeptical about any promises made to them at all, and
    about health care promises in particular. Certainly, these cuts, if not
    countered, would most affect military retirees who will find less and
    less care available to them.
        The situation for those over 65 is most troubling. This group which
    most needs the care is today largely excluded from the military health
    services system. To them, the promise of free lifetime health care for
    them and their spouse is a bitter memory. Few facilities now will treat
    the Medicare-eligible population because of cost. The solution to this
    problem is Medicare subvention which would bring these retirees back
    into the military health services system. Subvention has been proposed
    in the past but has never been implemented due to cost fears and the
    potential effect it would have on the Medicare Trust Fund. AFSA has
    long contended that providing these patriots medical care in the
    military system will cost the taxpayers less than through the Medicare
    system. In that sense, subvention would take less money out of the
    trust fund. In fact, in a recent change from previous cost figures
    provided on Medicare subvention, a General Accounting Office (GAO)
    briefer testified before the House National Security Committee,
    Military Personnel Subcommittee, that the GAO believes that Medicare
    subvention could be accomplished with no additional cost to the
    taxpayer, and would probably be cost beneficial. DOD and HCFA now both
    believe that DOD can provide the care, saving taxpayers eight cents on
    the dollar. Mr. Chairman, AFSA asks that you support this cost-savings
    initiative and, at the same time, do what is right for our most
    vulnerable retirees--pass Medicare subvention legislation now.
        However, subvention will not care for all Medicare-eligible
    retirees, only those living within TRICARE catchment areas would
    benefit. To care for the rest, we need to give them the option to
    enroll in the Federal Employees Health Benefits Program (FEHBP). After
    all, each of them were government employees for many years. Why should
    those who served at mortal risk not have as comprehensive a program as
    federal employees who faced no such risk. As we pointed out earlier,
    many of these retirees served our great nation in World War II, Korea
    and Vietnam. Denying them military health care now is unjust and
    shameful.
        Many military retirees living near a military treatment facility
    turned down Medicare Part B when they became eligible because free care
    was available to them on a nearby base. As more facilities close, and
    as the military transitions to TRICARE Prime, access to military
    treatment facilities has become and will increasingly become less
    available. AFSA asks that you support legislation to waive the late
    enrollment penalty for these Medicare-eligible military beneficiaries
    who now must buy into Medicare Part B to protect themselves.
        AFSA has generally supported DOD's TRICARE initiative, periodically
    making suggestions and working to protect enlisted interests. However,
    active duty family members' and retirees' support is beginning to wane,
    especially for those dependent on TRICARE Standard (the old CHAMPUS).
    AFSA believes that as a minimum, TRICARE Prime and TRICARE Standard
    should be improved to match the level of care, efficiency and
    comprehensiveness provided by the Federal Employees Health Benefit
    Program (FEHBP). The military beneficiary's plan should also include,
    as a minimum, preventative care, dental care, and a universal
    (including mail-order) prescription drug service.
                                  compensation
        The fiscal year 1998 DOD budget proposes to link Basic Allowance
    for Subsistence (BAS) reimbursement rates to the United States
    Department of Agriculture Moderate Food Plan Cost. This change would be
    instituted over several years by limiting the growth in BAS to one
    percent per year until BAS and the USDA Food Plan Cost equalize. The
    plan also would provide a ``partial'' BAS to those not currently
    entitled to BAS. In effect, the plan would significantly reduce BAS for
    many to provide a minimal BAS to those in the dormitories who would
    still be required to pay for their meals even if not eaten in the
    dining facility. Why take more money out of the pockets of enlisted
    people who are already receiving pay at the lowest levels? While we
    applaud the initiative to expand BAS to all members, we do not believe
    that those currently receiving BAS should be forced to pay for this
    initiative. And if there is a sincere desire to provide BAS to those in
    the dormitories, give them a full allowance and let them decide where
    to eat. It is very likely that most would choose the dining facilities
    as their place of choice due to reduced cost meals. For enlisted
    members, BAS is a part of the total compensation package; any decrease
    in BAS should be offset by a corresponding increase in military pay. To
    do less would financially harm enlisted personnel.
        The fiscal year 1998 DOD budget proposal also includes a request
    for a 2.8 percent pay raise for active duty and air reserve component
    military members. This raise is in keeping with current law that limits
    pay raises to the Employment Cost Index (ECI) minus one-half of one
    percent, a law that will always ensure that military pay falls further
    behind inflation. This law should be changed to allow, at least, full
    inflation-protected annual raises. Until the law is changed, AFSA asks
    that you provide a pay raise, at least for enlisted military members,
    that keeps pace with or exceeds the ECI. Military pay is already 13
    percent below private sector pay and, if the trend continues, will fall
    even further behind. Full ECI raises are needed to fairly compensate
    our military members, especially enlisted members, if we are to
    continue to attract and retain the top quality military personnel
    needed for the twenty-first century.
        Mr. Chairman, DOD and service leaders will tell you that the
    enlisted corps today is increasingly intelligent, skilled and key to
    the success of our military. While the ratio of enlisted pay to
    commissioned pay (two different pay charts, one significantly higher
    than the other) has remained steady for many years, the relationship of
    the responsibility held by enlisted (non-commissioned) members and
    officers has not. The Air Force, in particular, has converted many jobs
    from commissioned to enlisted, greatly raising the level of
    responsibility of enlisted members without a commensurate raise in pay.
    Given the increased levels of responsibility, AFSA believes it is now
    time to provide several years of disproportionately higher pay raises
    for enlisted members to bring the enlisted/commissioned pay charts back
    into line with the changing levels of responsibility held by these
    groups.
        For enlisted military members, permanent change of station moves
    cause significant financial damage. It must be remembered that these
    are, in most cases, government-directed moves. Clearly, reimbursement
    for members being reassigned needs to be increased. Actions last year
    to increase the dislocation allowance help, but they do not go far
    enough. Military members absorb approximately $1 for every $3 spent on
    a permanent change of station (PCS) move. The situation for most junior
    enlisted members is even more severe. A young airman moving from
    technical training to a first permanent duty station may experience
    temporary living expenses of $75 to $100 per day for which there is
    currently no provision for reimbursement. Extending the authority to
    pay a temporary lodging expense (TLE) for first permanent duty station
    moves will provide reimbursement for these expenses.
        With bases closing, dental care now nonexistent for military
    retirees, and health care opportunities declining, many benefits that
    were expected as part of military retirement are increasingly at risk.
    It is, therefore, even more important to protect the heart of the
    military retirement system; retired members should be provided with
    timely, full Consumer Price Index (CPI) cost-of-living allowance (COLA)
    adjustments. Retired pay is deferred compensation that recognizes the
    sacrifices made and the low pay received during one's military career.
    The 1980's reforms of the Military Retirement System have diminished
    the lifetime value of military retired pay by 25 percent. As the
    ``battle'' over whether, and by how much, the CPI overstates true
    inflation heats up, we ask you to protect this vital military benefit.
    Anything less would break faith with those who faithfully served our
    nation. Further, it sends one more signal to those currently serving
    that military retirement benefits cannot be depended upon.
                                 reserve/guard
        Mr. Chairman, as you know, our reserve component is increasingly
    important in the everyday business of carrying out military missions at
    home and abroad. We believe there will never again be any significant
    military undertaking without our reservists being key players. It is
    therefore important that we fairly recognize the work that these
    citizen soldiers do by increasing their benefits whenever possible. We
    should support programs that provide full benefits for these men and
    women from the first day of duty. Current law limits benefits for those
    serving less than 31 days. This can and has resulted in considerable
    expense and hardship.
        Additionally, many federal civilian employees also honor this
    nation with their service as members of the Air National Guard or the
    Air Force Reserve Command. The administration's proposed budget
    includes an ill-conceived provision that would eliminate the 15 days of
    fully paid ``military leave'' to federal civil servants who are also in
    the guard or reserve. This pay is well worth the investment and is a
    major incentive for federal civilian employees to also serve as
    reservists. AFSA asks you to support preserving this reserve component
    benefit that has paid good dividends. The proposed change would, in
    effect, cost most members their military pay by limiting the total
    compensation to the higher of civilian pay or military pay, versus the
    current practice of paying both. We believe that any such limitation
    will significantly harm reserve component recruiting and retention of
    former, already-trained, military members who separate and become civil
    servants. Recruiting of non-prior-service civil servants into our
    reserves would also suffer. Undoubtedly, the technician force that is
    so very important to the guard and reserve would cost considerably more
    to train and maintain. Perhaps equally as important is the unknown
    effect this change would have to the extremely vital ``civilian
    employer'' support provided to guard and reserve personnel. Eliminating
    this 15-day military leave program would clearly send the wrong
    message. We urge that funding be found to continue this program.
        The Reserve Mobilization Income Insurance Program was a commendable
    effort to protect the income of those members called to active duty.
    However, from the beginning enrollment has been very, very low. Because
    of the current Bosnian deployment, may reservists have been called to
    duty. Accordingly, the government owes those enrolled in the income
    insurance program the protection they bought. However, as of now, the
    program can pay only four cents on the dollar. This needs to be
    corrected with appropriated monies. Is it the fault of reserve/guard
    members who bought this insurance that the program was ill designed? In
    the longer term, a comprehensive review should be ordered to look at
    methods to fix the monetary problems, create a fair mechanism that
    would allow reservists to periodically change their level of
    protection, and to expand the program to cover members voluntarily
    deployed.
                               concurrent receipt
        Mr. Chairman, veterans receiving VA disability pay who served in
    the military for a relatively short period of time rightfully draw full
    disability pay. After all, their service resulted in damage to the
    human body--and the resultant effect on future lifestyle, life span,
    and earning ability. They should rightfully be so compensated. However,
    those who are able to serve until they earn a military retirement
    (earned strictly for honorable service longevity) who are also
    evaluated with a level of disability don't get paid full retirement
    along with their disability compensation. In fact, they experience a
    dollar-for-dollar offset of military retired pay when receiving VA
    disability pay. This is illogical and certainly unfair; these benefits
    were ``earned'' separately and exist for completely different reasons.
    While DOD no doubt views the current system as a money saver, it is
    grossly unfair that military retirees have to pay their own disability
    compensation. We urge your support in allowing the concurrent payment
    of VA disability compensation and full military retired pay.
                                   commissary
        The commissary is consistently cited by enlisted people as one of
    their best non-pay benefits. Maintenance of this important benefit is
    well worth our nation's investment as part of the military lifestyle;
    it is one of the costs of military compensation. For the lower-paid
    enlisted members, the commissary is a place where they can stretch
    their hard-earned dollars. AFSA applauds the initiatives to improve the
    management of the commissary system; however, experimentation in such
    efforts as privatizing or evaluation as a performance based
    organization should do nothing to undermine the value of the commissary
    benefit. Full appropriated funding is required to protect this benefit
    that is so important to the enlisted members of the Armed Forces.
                             family support centers
        AFSA asks your continued support for Family Support programs for
    active and reserve component members. As the nation's military
    transitions from a forward-based force to a contingency force that
    deploys from bases in the United States, support programs to help
    military members and their families become increasingly important.
    These centers coordinate the efforts of in-house and base-level
    services in Family Readiness Programs. These programs provide
    deployment preparation for the entire family, family support during
    separations, and expert guidance when the deployed member reunites with
    the family. With the high number of deployments, these services have
    become essential at many bases. Enlisted first sergeants and senior
    enlisted advisors tell us repeatedly that the increased operational
    tempo has placed significant pressures on the well-being of military
    family members and marriages. These ``must fund'' programs are critical
    components of maintaining readiness and managing the stresses of
    extraordinarily high military activity for active and Reserve members
    and their families. The importance of Family Support Centers cannot be
    overstated and they deserve continued funding.
                                   conclusion
        Mr. Chairman, AFSA appreciates the difficult decisions that this
    committee has to make, and we thank you for this opportunity to share
    our thoughts on these important issues. We ask you to keep in mind the
    promises, both oral and written, that were made to those who serve and
    have served our great country. In this 50th year of the Air Force as an
    independent service, we ask you to keep in mind active duty, reserve
    and retired enlisted airmen of all components.
        We are very concerned that the services have faced difficulty in
    making recruiting goals this past year. The Air Force, with the highest
    retention rates of any service, is starting to see signs that retention
    among those most experienced (over ten years of service) is beginning
    to decline. We as a nation cannot afford to return to the hollow force
    that occurred in the late 1970's. The continued strength of the Air
    Force, and all services, will depend on the ability to recruit, train,
    and retain quality people. We can achieve these goals by providing a
    reasonable quality-of-life for our members and their families as they
    serve our nation. We believe that the decision to leave is based in
    large part on an unreasonable operations tempo and the perceived
    decline in benefits. Providing a reasonable quality of life is becoming
    increasingly difficult in these fiscally austere times, yet to keep a
    fit fighting force for the twenty-first century, we as a nation must be
    willing to pay for it.
        Again, thank you for this opportunity to express AFSA's concerns.
    As you face the tough issues ahead, we trust that you will do what is
    right for active, reserve component, and retired military members and
    their families. They deserve no less. As always, AFSA is ready to
    assist you on matters of mutual concern.
    STATEMENT OF MAJ. GEN. ROGER W. SANDLER, AUS (RETIRED),
                RESERVE OFFICERS ASSOCIATION OF THE UNITED
                STATES
        Senator Stevens. Maj. Gen. Roger W. Sandler of the Reserve
    Officers Association is next.
        General Sandler. Mr. Chairman, thank you very much for
    allowing the Reserve Officers Association to testify before
    your committee.
        Senator Inouye, it is good to see you again.
        Senator Inouye. Thank you.
        General Sandler. The ``Quadrennial Defense Review'' has
    been recently released to the Congress and it stresses that the
    review is strategy driven and that the end-strength of the
    services will be reduced in order to free up money for
    modernization.
        We all agree that we have been living on borrowed time
    regarding modernization and that we are falling behind by up to
    $20 billion a year in recapitalizing our inventories in
    modernizing the force.
        We believe that if the Active Forces are reduced to provide
    modernization dollars, we must either stabilize or increase the
    Reserve components to leverage what we will lose from the
    active components.
        Today, your Army Reserve components are operating under the
    1993 offsite agreement of 575,000 Guard and Reserve personnel.
    This stability has proven invaluable in turning the attention
    to the very important tasks of unit readiness.
        Over 11,000 Army reservists have been deployed to Haiti and
    Bosnia during the last 2 years. Yet, with a significant
    contribution to the Army's mission, they and the Guard are
    being asked to reduce 45,000 soldiers below the 1993 offsite
    agreement.
        Army deployments, including the Reserve components, are up
    over 300 percent since Operation Desert Storm. There is clearly
    a need for the Army to leverage the strength of its Reserve
    forces. The Navy and the Marine Corps are also eyeing their
    Reserve forces for cuts, which will make their total forces
    less capable than they are today. Four thousand one hundred
    Navy Reserve and four thousand two hundred Marine Corps spaces
    are being targeted for elimination.
        The Navy is removing critical Reserve missions and
    equipment and at the same time eliminating 18,000 of their
    active duty forces. Even more questionable is the programmed
    Reserve personnel cut in the Marine Corps. The corps is
    reducing its active force by only 1,800 spaces, slightly more
    than 1 percent, and yet they have decided that a 10-percent
    reduction in the Reserve force is necessary.
        It should be noted here that the Marine Corps Reserve has
    had a steady state end-strength of 42,000 for at least 4 years.
    There is nothing presented in the QDR that would justify taking
    a 10-percent reduction in the Marine Corps Reserve end-
    strength.
        The Air Force Reserve is the only service in which there
    has been a conscientious effort to balance requirements with
    assets. While the Air Force leadership clearly were mindful of
    the budgetary restrictions, their QDR decisions were based on
    the plan to modernize their force and purchase a fleet of F-22
    aircraft. To accomplish this objective, the Air Force has opted
    to remove 26,900 of their own active duty personnel but only
    700 Reserve component personnel, and transfer a fighter wing to
    the Reserve component.
        In the case of the Coast Guard, most of this is not your
    responsibility. But I would just urge this committee to fund
    $15 million to support the port security equipping requirements
    which have been requested by the CINC's around the world.
        ROA urges this committee to fund the Reserve component end
    strength at current or higher levels.
        Mr. Chairman, the DOD has determined that they must procure
    at a rate of $60 billion a year in order to modernize the force
    into the next century. It has been recognized for at least 3
    years that the budget request has been submitted for $40
    billion. We are concerned that almost $1 billion has been
    eliminated from the Reserve portion of that $60 billion
    submission in the QDR.
        Finally, Mr. Chairman, we understand that you and three of
    your Senate colleagues have introduced legislation that is
    calling for the Chief of the National Guard Bureau to be
    promoted to four star general and become a member of the Joint
    Chiefs of Staff. We would ask that you expand your legislation
    to include all of the citizen reservists of the Ready Reserve
    component.
        As of September 30, 1996, there were 1,536,641 Ready
    Reserve component personnel, of which approximately 485,707
    were in the Army and Air National Guard.

                               prepared statement

        ROA would be happy to work with your staff to craft
    language to expand your legislative proposal.
        Mr. Chairman, thank you very much for your time.
        [The statement follows:]
                Prepared Statement of Maj. Gen. Roger W. Sandler
        Mr. Chairman and Members of the Committee: On behalf of the many
    members of the Reserve Officers Association from each of the uniformed
    services, I thank you for the opportunity to present the association's
    views and concerns relating to the Reserve components and the Defense
    Appropriations Bill for fiscal year 1998.
        Today, our nation is charting a new course for its defense. The
    threats to national security have been altered by the demise of the
    Soviet Union and the end of the Cold War. The danger of an East-West
    confrontation has essentially disappeared, but the world has at the
    same time become more volatile with the rise of ethnic and religious
    hostilities, regional instabilities, nuclear proliferation, and
    terrorism. All of these external developments take place against a
    domestic backdrop of constant economic and political pressures to
    reduce defense spending as a means of shrinking the deficit. As East-
    West tensions have decreased, Defense expenditures have come to be
    viewed ever more frequently through the glass of economic
    affordability.
                                  qdr and ndp
        While the results of the Quadrennial Defense Review have only just
    become available, the NDP's Alternative Force Structure Assessment will
    not be available until the fiscal year 1999 budget cycle, it is
    reasonable to assume that significant changes to the national defense
    strategy will be forthcoming as a result of the studies' conclusions.
    Evolutionary or revolutionary, these changes will largely hinge on
    affordability and the prudent acceptance of risk. Absent a fundamental
    shift in national priorities, increases in the defense share of the
    annual budget will be marginal at best.
        Although these reviews are intended to be threat-based rather than
    budget-driven, common sense and experience says that both of these
    factors will play a large part in developing the ``final product'' in
    both cases. Ultimately the recommended solution will bear evidence of
    pressure from both ends of the equation. To achieve balance in the face
    of unyielding economic constraint, force structure will be modified and
    so, too, will the definition of the perceived threat.
        Clearly, this is not the way to develop a national defense strategy
    for the next century; nevertheless, the actual product is more likely
    to resemble this model than not. What may be salutary in this process
    will be the necessity of modifying significantly the structure of the
    Total Force to integrate components and to eliminate as much as
    possible the current unnecessary redundancies that exist, both inter-
    and intra-service and component. However the structure is finally
    crystallized, one thing is virtually certain: our Reserve forces will
    play an increasingly significant role in it and its employment.
                      reserve component cost-effectiveness
        ROA maintains that a proper mix of Active and Reserve forces can
    provide the nation with the most cost-effective defense for a given
    expenditure of federal funds. Reservists provide 35 percent of the
    Total Force, but cost only 8 percent of the DOD budget. They require
    only 23 percent of active-duty personnel costs, even when factoring in
    the cost of needed full-time support personnel. Over a 4-year period,
    100,000 Reservists cost $3 billion less than 100,000 Active duty
    personnel. If the significant savings in Reserve unit operations and
    maintenance costs are included, billions more can be saved in the same
    period. ROA is not suggesting that DOD should transfer all missions to
    the Reserve, but the savings Reservists can provide must be considered
    in force-mix decisions. It is incumbent upon DOD to ensure that each
    service recognizes these savings by seriously investigating every
    mission area and transferring as much structure as possible to the
    Reserve components.
                                  army reserve
        The Army and its Reserve components continue to be the world's
    premier land combat force, serving the nation every day at home and
    around the world. Since the end of the Gulf War in 1991 the Army has
    transformed itself from a forward deployed, primarily European based
    force to a Conus-based, power projection Army capable of projecting
    power worldwide to protect U.S. interests.
        Today's Army is smaller now than at any time since before WWII and
    yet its pace of operations continues to increase. Since 1990 the Army
    has conducted operations in such places as Kuwait, Saudi Arabia, Iraq,
    Haiti, Bosnia, Rwanda, and Somalia, and conducts these and like
    missions at a level 16 times that of the much larger Army in place
    prior to 1990. In 1996, on any given day, more than 35,000 soldiers,
    from all Army components, were deployed from their home stations
    participating in exercises and conducting operations in more than 70
    countries.
        As missions continue to increase, available budget resources,
    ironically, continue to decrease. For fiscal year 1998 the Army's total
    obligation authority (TOA) for its Active, Guard and Reserve components
    is $60.4 billion. The Army estimates that after normalization for
    supplements, transfers, and inflation, its TOA for fiscal year 1998 is
    $59.7 billion in fiscal year 1998 constant dollars, representing a loss
    in buying power of $3.8 billion from fiscal year 1997 and of $5.9
    billion from fiscal year 1996 actuals costs.
        In the administration's effort to reduce the budget, today's
    readiness and OPTEMPO requirements are being funded at the expense of
    procurement, upkeep of existing facilities, and future force
    modernization. The administration's decisions to use defense as a
    billpayer and the desire to convert defense spending to the long-sought
    peace dividend continue to put Total Army readiness, modernization, and
    the defense of our nation at too great a risk. The Armed Services,
    today, are so dependent on their Reserve forces that they can no longer
    conduct their expanding missions or go to war without them. By the end
    of fiscal year 1998 the on-going post-Cold War downsizing will reduce
    the Total Army by nearly 500,000 personnel--approximately 285,000 from
    the Active, 90,000 from the Guard, and 111,000 from the Reserve
    components. The QDR recommends still further reductions, including an
    additional 45,000 from the Army's Reserve components.
        These reductions and the Army's decision to transfer much of its
    combat service (CS) and combat service support (CSS) into the Reserve
    have placed much greater reliance on its Army Reserve. Today's Army
    Reserve is a full partner in every Army operation. The Army Reserve is
    20 percent of the Total Army and is structured and missioned to perform
    46 percent of the Army's combat service support and 32 percent of the
    Army's combat support missions. Approximately 350 Army Reserve units
    are part of the Force Support Package (FSP)--Active, Guard, and Reserve
    units that support America's Army Crisis Response Force and Early
    Reinforcing Force. Unlike many Army Reserve units of just a few years
    ago, these units are required at the start of any contingency
    operation.
        During the 1980's the Army and the Army Reserve enjoyed dramatic
    increases in readiness. During the 1990's the Army Reserve, like the
    Active Army, is experiencing severe underfunding for many of its
    required programs, negatively affecting current and future readiness.
        The Army Reserve's share of the Army budget request in the fiscal
    year 1998 DOD budget request is $3.2 billion or 5.3 percent of the
    entire $60.1 billion request. Separated into the Reserve Personnel,
    Army (RPA) and the Operation and Maintenance, Army Reserve (OMAR)
    accounts, the request is for $2 billion RPA and $1.2 billion OMAR. Both
    accounts could use considerable plus-up to fully fund known
    requirements. Critical funding shortfalls in these two areas alone
    exceed $400 million.
        Included in this $400 million shortfall are necessary training
    funds to support training for troop program unit personnel. We believe
    that the special training account for TPU personnel is critically
    underfunded by at least $100 million. Additional funding will allow the
    Army Reserve to better train its personnel by supporting Army Reserve
    related projects that maintain and improve individual mobilization
    skill proficiency and unit readiness. Soldiers require additional
    training days to retain critical individual competencies so that their
    time during annual training can be utilized for collective training
    essential to unit cohesion and readiness. Soldiers, currently forced by
    these RPA shortages to attend schooling in lieu of collective training
    with their units during AT, would be given the opportunity to train and
    become educationally and professionally qualified, enhancing unit
    readiness.
    Reserve personnel, Army
        Fiscal year 1998 continues to be a restructuring year for the Army
    Reserve as it downsizes from 215,000 Selected Reserve (SELRES)
    personnel in fiscal year 1997 to a programmed fiscal year 1998 end
    strength of 208,000. Even with the downsizing, we believe the
    President's RPA budget request for $2 billion is insufficient to
    provide adequate funds to train, educate, man, and support Army Reserve
    personnel and units. We believe the Army Reserve budget request for
    training understates the actual requirement by at least $160 million.
    Training/professional development education
        We estimate that the fiscal year 1998 training budget for the Army
    Reserve is underfunded by at least $120 million. This critical RPA
    shortfall forces the Army Reserve to limit, or not offer, professional
    development education (PDE), required for promotion to some unit, and
    many IMA and IRR personnel; limits training time available to teach
    critical individual skills; and dramatically reduces IRR mobilization
    training. We urge Congress to increase the Army Reserve RPA training
    budget by an additional $120 million.
    Full-time support
        The lack of adequate RPA funds once again keeps the Army Reserve
    full-time support (FTS) level below 9 percent, the lowest level of FTS
    manning within the Reserve components. This full-time force of
    MILTECH's, AGR, DA civilians and Active component soldiers who
    administer, manage, plan, recruit, and maintain equipment for Army
    Reserve units allowing the drilling Reservist to take full advantage of
    limited training time and is the key to factor to Army Reserve unit
    readiness. This FTS force offers the most flexibility in improving and
    maintaining unit readiness.
        The Army Reserve is being forced to manage its force with minimum
    essential full-time support requirements negatively affecting readiness
    and training. We urge Congress to stop any further reductions to Army
    Reserve FTS. An addition of $16 million will maintain the fiscal year
    1997 AGR level.
        We urge the Congress once again to increase the number of Army
    Reserve AGR personnel and to increase the fiscal year 1998
    authorization and appropriation bills by 304 AGR positions and $16
    million. This wedge will help to reverse this adverse trend to Army
    Reserve FTS and readiness. AGR soldiers are crucial to unit success and
    are the key to ready units required for the warfight.
    Office of Management and Budget withhold
        A Reserve personnel account shortfall of $20.4 million could soon
    exist because of an Office of Management and Budget initiative. This
    amount has been withdrawn from the Reserve personnel account and placed
    in a contingency fund, pending passage of the fiscal year 1998
    President's budget. Should the ill-advised legislation to limit
    military pay of federal civilians performing annual training not pass,
    and we strongly support its defeat, the $20.4 million must be returned
    to avoid this additional RPA shortfall. This funding should come from
    non-Reserve accounts.
    Operation and maintenance, Army Reserve
        The fiscal year 1998 DOD budget request for the Army Reserve
    operations and maintenance (OMAR) account is $1.2 billion. We believe
    there is at least a $300 million OMAR shortfall in the fiscal year 1998
    budget request that will force the Army Reserve to compensate by
    further reducing equipment and facility maintenance, OPTEMPO, and
    supply purchases. Backlogs for maintenance and repair continue to grow
    at the alarming rate of 20 percent, and necessary support to essential
    training continues to deteriorate, decreasing readiness. We urge the
    Congress to add $300 million to fund these neglected and critically
    underfunded Army Reserve OMAR programs.
    Army Reserve equipment, National Guard and Reserve equipment request
        The Office of the Secretary of Defense in its February 1997
    National Guard and Reserve Equipment Report for fiscal year 1998 states
    that the Army Reserve has approximately 78 percent of its required
    equipment-on-hand (EOH). This represents an equipment shortfall that
    exceeds $1 billion. Realistically, the EOH includes substituted
    equipment--some that is not compatible with newer equipment in the
    Active Army inventory.
        The greatest source of relief to Army Reserve equipment shortages
    is the National Guard and Reserve Equipment Appropriation. Since 1981
    the Army Reserve has received, through the oversight of Congress,
    nearly $1.4 billion in equipment through the NG&REA. Without the
    appropriation the Army Reserve would still be struggling to reach 50
    percent equipment on hand (EOH). The NG&REA works and works well.
    Unfortunately, so far this year in fiscal year 1997, DOD is holding the
    NG&RE funds hostage to offer as a recision package. We urge the
    Congress to direct DOD to immediately release these funds so that
    needed equipment can be purchased.
        Due to the interest of Congress and the success this appropriation
    has made in increasing the level of EOH in the Army Reserve, the
    readiness of the Army Reserve has increased significantly over the past
    decade. We urge the Congress to continue the NG&REA and to fund the
    following high priority equipment requirement.

                                        U.S. ARMY RESERVE FISCAL YEAR 1998 NGREA
    ----------------------------------------------------------------------------------------------------------------
                                                                        1998 NGREA
                                  Item                                    request        Item cost      Item total
    ----------------------------------------------------------------------------------------------------------------
    HEMTT wrecker...................................................              44        $277,000     $12,188,000
    HEMTT bridge trans kits.........................................              53         105,000       5,565,000
    M-915A2 tractor, line HL........................................              50         112,000       5,600,000
    HEMTT, fuel tanker kits.........................................              23          70,000       1,610,000
    M-915 glider kits...............................................              61          45,000       2,745,000
    5 ton ESP.......................................................             250          60,000      15,000,000
    3KW generator kits..............................................             625           2,000       1,250,000
    5 TN cargo/drop side kit........................................             100           5,000         500,000
    M-101A2 and M-101A3 kits........................................             825           4,300       3,547,500
    ROWPU 3K GPH....................................................              24         285,000       6,840,000
    HMMWV contact mnt trk...........................................             120          57,000       6,840,000
    Foodlight set trl mnt...........................................             300           4,500       1,350,000
    Trailer hmt.....................................................             300           7,500       2,250,000
    Generator 5KW tqg...............................................             300          10,500       3,150,000
    Tractor, yard...................................................              30          67,000       2,010,000
    M-871 semi trlr, FB, 22.5 t.....................................              75          17,100       1,282,500
    All-terrain forklift 10.........................................              45         100,000       4,500,000
    Hydraulic excavator.............................................              20         260,000       5,200,000
    All-terrain crane 20 tn.........................................              25         250,000       6,250,000
    Roller vibratory type I.........................................               6         130,000         780,000
    Roller vibratory type II........................................              20         130,000       2,600,000
    FMTV/FLTV.......................................................             120         138,000      16,560,000
    MG grenade M40, MK 19...........................................             200          16,000       3,200,000
    PLS trailer.....................................................             100          41,400       4,140,000
    Small arms simulators...........................................               5         200,000       1,000,000
    Medical equip, misc.............................................             100          10,000       1,000,000
    Steam cleaner...................................................              55          20,000       1,100,000
    Fuel system supply PNT..........................................              50          32,000       1,600,000
    Night vision PVS-7..............................................             600           2,000       1,200,000
    IFTE............................................................               5       1,000,000       5,000,000
    Push boat.......................................................               1       2,500,000       2,500,000
    Base shop test facility.........................................               2       2,000,000       4,000,000
    Barge derrick, 115 ton..........................................               1      16,000,000      16,000,000
    CH-47, cargo, helicopter........................................               2      18,000,000      36,000,000
                                                                     -----------------------------------------------
          Total.....................................................  ..............  ..............     184,358,000
    ----------------------------------------------------------------------------------------------------------------

                               air force reserve
        Without doubt, the single most important piece of the Fiscal Year
    1997 National Defense Authorization Act for the Air Force Reserve is
    legislation found in Title XII raising this former field operating
    agency to the status of a major command, or MAJCOM, of the Air Force.
    ROA is grateful to the Congress, because, as this legislation
    formalizes a successful working relationship of many years' duration,
    it also protects this most valuable national resource from possible
    future adverse actions of individuals or institutions not in agreement
    with the reality of the citizen-soldier policy.
        ROA also notes with appreciation and relief that AFRC end strength
    numbers appear to have bottomed out in fiscal year 1997 and are on the
    upswing with the President's Budget estimating 73,431 participants in
    fiscal year 1998. If the AFRC drawdown is, indeed, nearly finished, the
    command will be able to enjoy a period of relative stability, even if
    its OPTEMPO remains high. While some in the Pentagon believe the
    concept of compensating leverage has not yet been stretched as far as
    possible and that there is more the Reserve can do to relieve the
    fearsome OPTEMPO of the Active component, many of our members in the
    flying units tell us it is no longer a concept, but a policy and that
    they are coming close to maximum output.
        If properly resourced, however, the Reserve component can
    participate in any Air Force mission at the current OPTEMPO. Proper
    resourcing includes sufficient authorizations in end strength, RPA,
    O&M, equipment, and MILCON. The fiscal year 1998 budget gives AFRC
    $2,453.8 million, or 3.3 percent of the total Air Force TOA of
    $73,893.5 million to support missions performed by 73,431 personnel.
    Six percent, or $4,371.1 million is devoted to the Air National Guard
    and its force of 107,000. Ninety-one percent of the TOA goes to support
    the Active component--that is, $67.1 million.
        What does the Total Air Force get for 3.3 percent of its budget? It
    gets aircrews who put in from 95 days per year in the C-9 medical
    evacuation mission to 140 days per year in C-17, B-52, MC-130, and HH-
    60 missions. It gets 100 percent of DOD's weather reconnaissance,
    aerial spray, and helicopter space shuttle support. It gets 67 percent
    of Air Force's total medical crews; 62 percent of its special
    operations ``Talon 1'' capability; and 50 percent of the KC-10 tanker
    aircrews and maintenance through its associate program, where the
    aircraft are owned by the Active component and the tasks of flying and
    maintaining them are shared evenly with AFRC. And it gets 45 percent of
    the strategic airlift C-141, C-5, and C-17 aircrews and maintenance,
    also through the associate program. AFRC itself owns 25 percent of the
    C-5 and C-141 assets of the Total Air Force. It owns 25 percent of
    DOD's aerial fire fighting capability, 23 percent of the tactical
    airlift C-130 force, 15 percent of the B-52 bomber force, and 13
    percent of the KC-135 tanker force as well. Additionally, it owns 5
    percent of the fighter force, 4 percent of the AWACS mission, 3 percent
    of the associate KC-135 tanker force, and it is developing its
    instructor force for the T-38 specialized undergraduate pilot training
    mission.
        With contributions of the magnitude of those above, it is not
    difficult to view AFRC as a leveraging resource--almost bottomless. Up
    to a point, it is very effective leverage at a very reasonable cost.
    But it is not bottomless. Further increases in operations tempo will
    likely reach the limits of what a volunteer force can do, while still
    fulfilling obligations to civilian employers and families, if it does
    not grow. With growth comes the ability to decrease personnel tempo at
    a cost much lower than that of increasing the size of the Active
    component. In short, the aircraft will be able to fly at the same high
    rate, but with more crews and maintainers to accomplish the mission.
    Unfunded O&M requirements
        As may be expected with such a budget proposal, there are
    shortfalls. Among them is depot-level maintenance of AFRC's 400-plus
    aircraft. Based on Air Logistics Command pricing adjustments and
    increases in engine repair requirements, AFRC will be short $22 million
    in depot maintenance funding. The majority of the command's aircraft
    are early models requiring more maintenance. Satisfaction of the $22
    million shortfall will support 90 percent of the executable maintenance
    requirement.
    Unfunded requirements
        A Reserve personnel account shortfall of $8.2 million could soon
    exist because of an Office of Management and Budget initiative. This
    amount has been withdrawn from the Reserve personnel account and placed
    in a contingency fund, pending passage of the fiscal year 1998 PB. If
    legislation limiting the military base pay of federal civilian
    employees, who are also drilling Reservists, while they are on military
    leave from their civil service jobs, should not pass, the $8.2 million
    must be returned to avoid the shortfall. This funding should come from
    non-Reserve accounts.
    Unfunded equipment requirements
        The following equipment listing represents ROA's estimate of those
    hardware items necessary to maintain readiness and ensure compatibility
    with the Active component in fiscal year 1998.

                                                                 In millions

    WC-130J  (4).........................................   $194.5
    WC-13J conversion, spares and support equipment  (2).     22.3
    C-20G  (1)...........................................     30.0
    KC-135R re-engining kits  (2)........................     60.0
    C-5 simulator.................................................     27.0
    F-16 Situational Awareness Data Link (SADL)...................      3.45
    F-16 Laser Designator/Targeting Pods..........................     12.0
    A-10 Situational Awareness Data Link (SADL)...................      4.8
    Laser Guided Bomb Support Equipment...........................       .71
    A-10 Electronic Warfare Management System.....................      3.0
    F-16 Upgraded Data Transfer Unit (UDTU).......................      1.65
    HH-60 Self Protection System..................................      3.19
    F-16 Electronic Warfare Management System.....................      3.68
    Night vision devices..........................................      1.93
    ALQ-131 mux bus interface.....................................       .63
    C-130 night vision cockpits...................................      3.0
    C-130 integrated electronic warfare...........................      1.50
    Enhanced flightline security systems..........................      3.71
    A-10 unit training device.....................................      3.0
    Combat arms training equipment................................       .24
    MC-130 UARRSI refueling mod...................................      7.0
    Motor vehicles for medical UTC's..............................       .85
    Trunked Land Mobile Radio (LMR) systems.......................      3.27
    Modular Airborne Firefighting Systems (MAFFS).................      2.4
    Aircraft paint spray booth....................................       .6
    C-130 unit training devices...................................     13.5
    C-130 towed decoy.............................................      8.0
                        --------------------------------------------------------------
                        ____________________________________________________

          Total...................................................    415.91
                                 naval reserve
        The funding issues facing the Naval Reserve are similar to those
    facing the Navy's active duty force and the entire Department of
    Defense. The Department of Defense's budget remains in decline when
    adjusted for inflation. Decisions regarding the Department's budget
    continue to be driven by arithmetic rather than being based upon force
    structure requirements and the number of people required to do the job.
        Recognizing the foregoing, the Department of the Navy is to be
    commended for its recognition of the vital importance of today's Naval
    Reserve force as a true force multiplier in the Total Force policy. In
    this respect, the fiscal year 1998 budget request, although omitting
    any funding for equipment modernization, does not make any drastic cuts
    in Reserve personnel strength. Nevertheless, the Naval Reserve budget
    should not be driven solely by the requirement to reduce the Navy
    budget and the perceived requirement to ``share the pain'' with the
    Active component.
        The fiscal year 1998 budget request projects a decline in the
    personnel strength of the Naval Reserve, to 94,294 in fiscal year 1998
    and 93,500 in fiscal year 1999. This reduction is a marked improvement
    over the sharp cuts that were typical of the requests of the early
    1990's when the Naval Reserve force experienced a draw down
    disproportionate to that of the Active force. Notwithstanding, the
    decline in the Naval Reserve force continues despite the significant
    and well-recognized compensating leverage offered by today's Naval
    Reserve. In this regard, the Naval Reserve represents 20 percent of the
    Navy, yet encompasses only 3 percent of the Navy's budget.
    Operations and maintenance funding
        The budget also proposes a decline in operations and maintenance
    funding for the Naval Reserve from $885.3 million to $834.7 million in
    fiscal year 1998. It does not appear that this entire decrease in
    funding is supported by the proposed decrease in end-strength.
    Furthermore, the Naval Reserve provides continual OPTEMPO/PERSTRMPO
    relief for the Active force beyond that which occurs during annual
    training periods. There is, however, no reimbursement from the Active
    component for this additional support. Given the increasing reliance on
    the Naval Reserve as a cost-effective force multiplier, previously
    discussed, it is urged that any decrease in operations and maintenance
    funding be strictly correlated to any reduction in end-strength.
    Funding shortfalls
        In addition to the previously addressed shortfalls, there is a
    particular need for additional funding for real property maintenance.
    At least $35 million of additional funding is needed to keep the
    critical backlog of real property maintenance from increasing above the
    current level. This appropriation also needs approximately $35 million
    in additional funding for aircraft depot maintenance, base operating
    support, and recruiting.
        The Naval Reserve could also effectively use $15 million more in
    the RPN appropriation to fully fund Special Duty Assignment Pay for
    recruiters, to support additional periods of contributory support to
    the Navy, and to offset the estimated $8.5 million cost of proposed
    legislation to limit military pay of federal civilians performing
    annual training. These latter funds should come from non-Reserve
    accounts.
    Equipment modernization
        ROA continues to advocate assignment of modern fleet-compatible
    equipment to the Naval Reserve. Of particular concern, the fiscal year
    1998 budget does not include any funding for equipment in the Naval
    Reserve. As a result, when it comes to equipment modernization, it does
    not appear that the Department of the Navy has recognized the Total
    Force Policy.
        ROA has identified unfunded Naval Reserve equipment requirements
    for consideration by Congress for addition to the administration's
    request for fiscal year 1998 in either the National Guard and Reserve
    Equipment appropriation or as earmarked additions to the Navy's
    traditional procurement appropriations.
        Among the top priorities are C-9 replacement, the F-18C upgrade,
    the H-60B helicopter transition to level III and the continuation of
    the P-3 upgrade.
        Naval coastal warfare capabilities are entirely resident within the
    Naval and Coast Guard Reserve. This includes surveillance, harbor
    clearance, port and coastal patrol, mine clearance, and command and
    control. Funds are needed to fill the existing shortfalls and for
    replacement equipment.
        Civil engineering support equipment in trucks and other rolling
    stock will provide for the acquisition and replacement of aged
    equipment that is becoming increasingly difficult and costly to repair
    and maintain.
        The addition of the precision strike upgrade to Reserve F-14's
    provides the same long range surface target acquisition, precision
    strike, laser guided and conventional ordinance delivery capability as
    the fleet.
        No ALQ-126B equipment exists in the Naval Reserve. This vital
    equipment increases aircraft survivability against radar controlled
    weapons systems. The provision of such equipment will enhance
    survivability under wartime conditions.
    ROA recommendations for fiscal year 1998 NG&RE

    Naval Reserve

                                                                 In millions

    C-9 Replacement Aircraft (3 aircraft @ $50 million)...............  $150
    SH-60B Aircraft (5 aircraft @ $28 million)........................   140
    E-2C (Plus) (4 Aircraft @ $75 million)............................   300
    Naval Coast Warfare (11-MIUW Van upgrade, 9-MAST, SHF SATCOM, Dive
        Unit).........................................................    91
    F/A-18 Upgrade Program (Precision Strike).........................    92
    CESA TOA..........................................................    25
    F-14A Upgrade (Precision Strike)..................................    34
    P-3 Modifications.................................................   116
    ALQ-126B.......................................................... 25.00
                              marine corps reserve
        The Administration's budget proposes an end strength of 42,000
    Selected Marine Corps Reserve (SMCR) personnel for fiscal year 1998.
    This request is consistent with the views of Congress to maintain a
    Marine Total Force of 174,000 Active force and 42,000 Reserve
    personnel.
        This year, the administration's request is to maintain the Marine
    Corps Reserve at 42,000 personnel, including 2,559 Active Reserve
    personnel for fiscal year 1998. In light of the fact that facility
    closures, consolidations, and associated unit relocations have made it
    very difficult for the Marine Corps Reserve to achieve its authorized
    personnel strengths, ROA supports the administration's request as a
    reasonable method of ensuring needed growth of quality personnel in
    both the Selected Reserve and Active Reserve portions of the force. ROA
    recommends that the Marine Corps Reserve be authorized and funded for
    an end strength of 42,000 Selected Reservists, including 2,559 FTS
    personnel for fiscal year 1998.
    Funding shortfalls
        The request to support the Marine Corps Reserve appears to be
    underfunded by approximately $40 million in the Operation and
    Maintenance, Marine Corps Reserve (O&M,MCR) and Reserve Personnel,
    Marine Corps Reserve (RP,MCR) appropriations.
        Modern equipment is critical to the readiness and capability of the
    Marine Corps Reserve. Although the Marine Corps attempts to implement
    fully the single acquisition objective philosophy throughout the Marine
    Corps Total Force (Active and Reserve), there are significant unfilled
    Reserve equipment requirements that have not been met because of
    funding shortfalls.
        In keeping with the goal of fielding new equipment to both Active
    and Reserve Marines to enhance Total Force integration, Marine Forces
    Reserve has begun an orderly transition from the older RH-53D to the
    newer, frontline, CH-53E. In support of that effort, Congress has added
    CH-53E's to the Marine Corps budget in each of the past two years. This
    ongoing transition remains a top aviation equipment priority. The
    requirement is to reequip two Marine Forces Reserve squadrons with the
    CH-53E. Not only will CH-53E provide better reliability, but it will
    also give the Marine Reserve for the first time the capability to lift
    heavy engineering equipment and organic M-198 howitzers of Marine air/
    ground task forces. Finally, the Marine Corps Reserve is in need of one
    T-39 replacement aircraft, similar to that provided to the Naval
    Reserve.
    ROA recommendations for fiscal year 1998 NG&RE

    Marine Corps Reserve

                                                                 In millions

    CH-53E (2 aircraft)............................................... $63.0
    T-39 Replacement..................................................   4.5
    F/A-18D (4 aircraft).............................................. 164.0
    Miscellaneous Equipment...........................................  60.0
                            -----------------------------------------------------------------
                            ________________________________________________
          Total Marine Corps Reserve equipment for consideration in
          fiscal year ................................................
            1998 NG&RE................................................ 291.5
                              coast guard reserve
    Selected Reserve strength
        We strongly support the fiscal year 1998 authorization request to
    maintain the Coast Guard Selected Reserve end-strength at the 8,000
    level. While recognizing that the Coast Guard Reserve's end-strength is
    below currently 7,600, we have serious concerns regarding the
    administration's proposal for an appropriated end-strength of only
    7,600.
        The plans of just a few years ago to reduce the personnel strength
    of this key part of the Coast Guard's Total Force below the post-World
    War II low of 8,000 Selected Reservists now authorized was a source of
    major concern for this association. Since that time the Congress, the
    administration, and Coast Guard leadership have ever increasingly
    recognized the unique capabilities of the Coast Guard Reserve. It is
    now well-recognized that the Coast Guard Reserve has clearly become a
    value-added resource for peacetime day-to-day operations, as well as a
    highly cost-effective source of needed trained personnel to meet
    military contingency and other surge requirements.
        In view of the foregoing, we are particularly concerned that the
    administration and the Coast Guard allowed the Coast Guard Reserve's
    end-strength to fall below the authorized and appropriated level for
    fiscal year 1997. We attribute the end-strength shortfall to a failure
    to devote the requisite assets to recruiting Coast Guard Reservists.
    Port security unit requirements
        As part of the continuing review of mission requirements, the Coast
    Guard must establish three additional port security units (PSU's) to
    meet validated war-fighting CINC requirements. This action has been
    coordinated with the Chairman of the Joint Chiefs of Staff and the
    Chief of Naval Operations and stems from war-gaming at Total Force 1993
    and 1994 as well as development in several CINC deliberate planning
    processes.
        PSU's are manned by 115 selected reservists and 2 active duty
    personnel. Each unit has six transportable boats, of Boston Whaler type
    design, with twin outboard engines, a .50 caliber machine gun forward
    and two M60 7.62 mm machine guns aft. These units are air deployable
    worldwide within 4 days' notice. The units provide waterside security
    of ports and high value assets and fill the security perimeter gap
    between the land side security force and coastal assets.
        The three existing units performed critical mission-essential
    functions during Operation Desert Storm and during Operations Support
    and Uphold Democracy in Haiti. The major lessons learned from these
    operations are: The port security unit mission is logical for the Coast
    Guard Reserve; three additional PSU's are needed to meet CINC
    requirements; and equipment is needed to replace what has been consumed
    by the high tempo of operations by the three existing units and to
    outfit the three additional PSU's.
    ROA recommendations for fiscal year 1998 NG&RE

    Coast Guard Reserve

                                                                 In millions

    Refurbishing existing PSU's.......................................  $4.6
    Equipping three additional PSU's..................................   9.9
                            -----------------------------------------------------------------
                            ________________________________________________
          Total Coast Guard Reserve equipment for consideration in
          fiscal year ................................................
            1998 NG&RE................................................  14.5

        Unfunded equipment needs include transportable PSU boats, secure
    communications equipment, organizational outfitting and facility
    equipment, personal equipment and replacement parts.
        We recommend that the fiscal year 1998 National Guard and Reserve
    Equipment (NG&RE) appropriation include funds for port security unit
    equipment for the Coast Guard Reserve.
    Fiscal year 1998 proposal
        ROA is fully aware that this committee is not directly responsible
    for funding the Coast Guard Reserve. Full funding of this Reserve
    Component is, however, necessary to ensure that the Coast Guard Reserve
    is capable of providing needed personnel and capabilities to DOD for
    contingency operations.
        The administration has requested $65 million for the Reserve
    Training (RT) appropriation for fiscal year 1997. ROA supports this
    request as the minimum needed to fund a full training program for 7,600
    personnel.
        Additional funding required to support the full 8,000 level
    authorized is only $2 million. This additional funding would allow
    sufficient resources, with additional efforts in recruiting, to attain
    the 8,000 level. Such additional funding would also have a positive
    morale-building effect on Reservists by avoiding the negative signal
    that Reserve strength is again in jeopardy.
        This committee's support of the Coast Guard has been critical to
    maintaining its military capability. Your continued support is vital.
                            general personnel issues
        The Reserve Officers Association greatly appreciates the many
    things the Congress has done for military personnel, both Active and
    Reserve and their dependents, and we would like now to call your
    attention to some specific areas that we believe still need to be
    addressed.
                               gulf war illnesses
        Since the Persian Gulf War in 1991, there has been clear and
    mounting evidence of numerous apparently disparate medical problems
    among those who served in the Persian Gulf area of operations during
    that time. Medical experts, both within and outside government have
    been unable to identify any single cause for the numerous clinical
    symptoms that Gulf War veterans and some members of their families have
    presented. Moreover, many Gulf War veterans, especially members of the
    Reserve components, have been unable to obtain military medical
    treatment pending thorough scientific investigations.
        While, as a result of DOD's earlier handling of this issue, there
    has grown up a significant degree of skepticism, the department's
    recent initiatives, particularly the establishment and the activities
    of the Office of the Special Assistant on Gulf War Illnesses, have been
    both welcome and encouraging. We recognize this renewed commitment to
    assisting our veterans who served with such distinction in the Persian
    Gulf, and we encourage DOD to continue its vigorous support of this
    effort. ROA urges the Congress to ensure that appropriate health care
    and support are provided to veterans and their families with Gulf War
    illnesses without charge, pending medical determination of the causes
    of those illnesses. ROA also urges the Congress to provide supplemental
    appropriations to pay for such health care and support.
              ready reserve mobilization income insurance program
        The Ready Reserve Mobilization Income Insurance Program, authorized
    by the Fiscal Year 1996 Defense Authorization Act, and first
    implemented by DOD in the fall of 1996, is underenrolled and
    undercapitalized. As a result, those Ready Reserve members who have
    enrolled in the program will be paid only four percent of the benefit
    they contracted for until sufficient funds are available in the program
    to pay out the full, contracted amount. DOD has requested additional
    funds from the Congress to cover the liability, and has identified
    various Reserve accounts, especially the National Guard and Reserve
    Equipment Appropriation, as bill payers. Decrementing these accounts,
    which are already severely constrained, would be as harmful to Reserve
    component readiness as not paying the contracted insurance benefits in
    full in a timely manner. The Administration's supplemental budget for
    the Bosnia operation is the appropriate source for these funds. ROA
    urges the Congress to provide quickly the funds necessary to restore
    mobilization income insurance fund's solvency without recourse to
    existing DOD accounts.
                    military leave for government employees
        The Administration has proposed a major change in the long-standing
    policy of providing paid military leave in addition to full military
    pay to federal government (civilian) employees who are members of the
    Reserve components and are ordered to serve tours of active duty. Under
    the Administration's proposal, Reservists who are also federal
    employees, would receive only civilian pay for their annual 2-week tour
    of active duty. Their military pay would be withheld unless their
    civilian pay was less than their military pay, in which case they would
    receive only enough additional military pay to make up the difference.
    ROA recommends that the Congress once again reaffirm its support for
    federally employed Reservists (as it did in the Fiscal Year 1997
    Defense authorization Act) and disapprove the DOD proposal. We also
    recommend that the Congress direct DOD to reallocate from nonreserve
    accounts the funds required to support the traditional federal military
    leave policy for Reservists on active duty.
                                   conclusion
        Thank you for the opportunity to represent the Reserve Officers
    Association's views on these important subjects. Your support for the
    men and women in uniform, both Active and Reserve, is sincerely
    appreciated. I'll be happy to answer any questions that you might have.

        Senator Stevens. You just killed my legislation. Thank you
    very much.
        Our next witness is Russ Molloy of the University of
    Medicine and Dentistry of New Jersey.
        I might say that we are going to have to schedule another
    session today. We have to leave here at 10:15 a.m. If there are
    any of you that can come back at a later date or a later time
    today, please let our assistant know now. We will schedule it
    for later and will listen to you a little bit longer this
    afternoon.
        But we do have to get out of here, both Senator Inouye and
    I, at 10:15 a.m. So those of you on the list, and there are 10
    more on the list, if we can get at least one-half of you to
    come in later, we probably could make our time limits.
        Please go ahead, sir.
    STATEMENTS OF:
            RUSS MOLLOY, ESQ., DIRECTOR OF GOVERNMENT RELATIONS, UNIVERSITY
                OF MEDICINE AND DENTISTRY OF NEW JERSEY
            DR. WILLIAM HAIT, DIRECTOR OF CANCER INSTITUTE OF NEW JERSEY,
                UNIVERSITY OF MEDICINE AND DENTISTRY OF NEW JERSEY
        Dr. Hait. Mr. Chairman, Senator Inouye, my name is Dr.
    William Hait and I am the director of the Cancer Institute of
    New Jersey.
        I respectfully present testimony in behalf of the
    University of Medicine and Dentistry of New Jersey, the largest
    health sciences university in the Nation.
        I appreciate the opportunity to bring to your attention two
    of the university's priority projects. The first is the New
    Jersey Women's Environmental Health Act or breast cancer
    initiative, which focuses on New Jersey's breast cancer crisis.
        New Jersey has the fourth highest incidence, 110 per
    100,000, and highest mortality rate, 31 per 100,000, from
    breast cancer in the Nation. The American Cancer Society
    estimates that there will be 6,400 new patients diagnosed in
    New Jersey in 1997 and that 1,800 patients will die from breast
    cancer this year.
        From 1989 to 1993, 8,378 New Jersey women died of breast
    cancer.
        New Jersey is also one of the most polluted States in the
    Nation, having 107 Superfund cleanup sites and over 3,000 other
    contaminated sites listed in the State's department of
    environmental protection.
        New Jersey is the most densely populated State in the
    Nation with almost 8 million people living in less than 7,500
    square miles. New Jersey has no large cities and, therefore,
    represents a large suburban sprawl that is the likely
    predecessor to population centers developing throughout the
    country.
        As a result, millions of people live on top of or next to
    highly contaminated areas known to contain carcinogens and
    mutagens with a high probability of escaping into the air or
    contaminating the water, leading other States to ask, ``Is
    there a New Jersey in our future?''
        Therefore, it is a reasonable and testable hypothesis that
    the high breast cancer rate in New Jersey is due to the
    exposure of its population to environmental hazards. In this
    regard, Senator Frank Lautenberg has been highly effective in
    focusing the Nation's attention on the linkage between the
    environment and disease.

                               prepared statement

        The University of Medicine and Dentistry of New Jersey is
    ideally suited to conduct critically needed research in this
    area. The university is only one of seven in the United States
    that houses both an NCI designated cancer center, the Cancer
    Institute of New Jersey, and an NIEHS designated environmental
    research center, the Environmental and Occupational Health
    Sciences Institute.
        [The statement follows:]
                    Prepared Statement of Russ Molloy, Esq.
        The University of Medicine and Dentistry of New Jersey (UMDNJ) is
    the largest public health sciences university in the nation. The UMDNJ
    system consists of seven schools on five academic campuses throughout
    the state and includes 3 medical schools, and schools of nursing,
    dentistry, health related professions and biomedical sciences. It is a
    system that involves over 100 affiliations with other hospitals,
    community centers and clinics, and education and research entities
    throughout the entire state.
        UMDNJ respectfully requests support for two initiatives of national
    importance and significance which are consistent with the mission of
    the Department of Defense and its biomedical research agenda: the
    International Center for Public Health through the collaboration of the
    renowned Public Health Research Initiative (PHRI) and the model
    University Heights Science Park project, and the New Jersey Breast
    Cancer Epidemiology, Surveillance and Prevention Initiative.
     university heights science park and the creation of the international
                            center for public health
        Infectious diseases now pose a profound threat to national and
    international security. Changing international conditions, post-Cold
    War deployment of U.S. troops to new geographic areas, and an
    increasingly global economy have contributed to a resurgence of
    infectious microbes. The rapid and repeated exposure to diseases
    arising in any part of the world is now a reality for military men and
    women as well as our citizens at home. In 1980, there were 280 million
    international travelers, including military personnel. By the year 2000
    this number will double. In response, many federal agencies are
    developing infectious disease initiatives to address the emergence of
    new infectious agents as well as the re-emergence of known infectious
    agents in drug resistant form. The creation of the International Center
    for Public Health is a direct response to this emerging public health
    crisis.
        The International Center for Public Health is a strategic
    initiative that will create a world class, infectious disease research
    and treatment complex at University Heights Science Park, Newark, New
    Jersey. Science Park is located in a Federal Enterprise Community
    neighborhood. The Center will have substantial local, regional,
    national and international impact as it addresses many critical social,
    economic, political and health-related issues. The International Center
    is a $70 million anchor project that launches the second phase of the
    fifty acre, $300 million mixed-use urban redevelopment initiative,
    University Heights Science Park. The facility will total 144,000 square
    feet and house two tenants: the Public Health Research Institute (PHRI)
    and the University's National TB Center, one of three Federally funded
    TB centers. The International Center for Public Health is a priority
    project for UMDNJ, Rutgers University, New Jersey Institute of
    Technology, Essex County College and the City of Newark.
        PHRI, the core tenant for the International Center, is a nationally
    prestigious, 55 year old biomedical research institute that employs 110
    scientists and staff in the research of infectious diseases and their
    underlying molecular processes. This facility will permit them to
    double their size to 220. Presently they conduct research programs in
    tuberculosis, AIDS, drug discovery, diagnostic development, and the
    molecular pathogenicity of a broad range of infectious diseases. A
    major focus of PHRI research is the study of antibiotic resistance of
    life-threatening bacterial organisms, and the development of the next
    generation of antibiotics.
        Joining PHRI to form the International Center will be UMDNJ's
    National Tuberculosis Center. The TB Center is one of three Model
    Tuberculosis Prevention and Control Centers in the country funded by
    the CDC. It will add an important clinical component to the
    International Center for Public Health, since many TB patients also
    manifest other infectious diseases. The TB Center was founded in 1993
    in response to a national resurgence of antibiotic resistant
    tuberculosis strains. At that time, Newark had the nation's second
    highest rate of TB cases for a major city. Together, PHRI and the
    National TB Center will create a world class research and treatment
    complex.
        Other collaborators in the development of the International Center
    include the New Jersey Department of Health & Senior Services (NJDHSS)
    and the state's pharmaceutical industry. Responsible for overseeing all
    statewide public health initiatives, NJDHSS will contract with the
    International Center to have cutting edge molecular epidemiology
    services provided to the State of New Jersey. Expanding the strategic
    use of molecular epidemiology to direct public health activities will
    facilitate prompt identification and containment of emerging and re-
    emerging pathogens. New Jersey's major biomedical companies will also
    participate in the International Center. An infectious disease
    consortium will be developed to serve as a forum for disseminating
    fundamental research on the underlying molecular processes of
    infectious disease organisms. This research will contribute to
    pharmaceutical industry development of new drug therapies for
    antibiotic resistant microorganisms. Private industry R&D facilities
    contiguous to the International Center are also being explored.
        The International Center for Public Health will be located in
    University Heights Science Park (UHSP). UHSP is a collaborative venture
    of Newark's four higher education institutions, the City and Community
    of Newark, and private industry designed to harness university science
    and technology research as a force for urban and regional economic and
    community development. The university sponsors, New Jersey Institute of
    Technology (NJIT), The University of Medicine & Dentistry of New Jersey
    (UMDNJ) and Rutgers University at Newark, annually conduct nearly $100
    million of research in Newark, much of it federally funded. Essex
    County College trains technicians in eleven science and technology
    fields and prepares Newark residents for employment with Science Park
    technology companies. Four Newark-based companies also sponsor the
    Park: Public Service Electric & Gas, The Prudential Insurance Company,
    First Union National Bank and Bell Atlantic of New Jersey.
        Located in a Federal Enterprise Community neighborhood, UHSP is
    designed as a 50-acre, mixed-use, science and technology park in
    Newark's Central Ward, adjacent to its four higher education sponsors.
    At buildout UHSP will include one million square feet of technology
    commercial space, 75,000 square feet of technology incubator space, up
    to 20,000 square feet of retail business opportunities, an 800-student
    technology high school, two blocks of new and rehabilitated housing,
    and a community day care center. The $10 million first phase of Science
    Park has been completed, and includes the NJIT Enterprise Development
    Center 2 (a technology business incubator), a 100-child day care center
    and the CHEN Building (housing the industrial laboratories for the
    Center for Biomaterial and Medical Devices). CHEN is the acronym for
    the Council for Higher Education in Newark, the coalition of the four
    universities that founded Science Park. For almost two decades CHEN has
    jointly sponsored educational, housing, and retail/commercial projects
    in Newark's public schools and the neighborhoods of University Heights.
    The NJIT technology incubator was completed in Fall 1996, and is now 80
    percent leased. More than half of the incubator companies are minority
    and/or women owned technology business enterprises. In addition, over
    half of the children in the Science Park day care center are from the
    surrounding community, and the majority of day care center staff are
    from Newark.
        The construction of the International Center will anchor the second
    phase of Science Park, and serve as a magnet to attract pharmaceutical,
    diagnostic and other biomedical companies to Science Park. The Center
    will have the same impact on the Park as an anchor store does in a
    retail shopping mall.
        The DOD is vitally concerned with the impact of infectious diseases
    on combat readiness and the subsequent health of armed services
    personnel. Troops deployed in new geographic areas always encounter new
    infectious disease threats. For example, two-thirds of all hospital
    admissions in Vietnam were due to infectious disease. Medical counter-
    measures in a combat zone require rapid microbial diagnostics and the
    development of vaccines and therapies for a wide range of infectious
    diseases likely to be developed in global deployment. Of particular
    concern are new and re-emerging diseases, food-borne diseases, and
    drug-resistant organisms. The International Center will contribute to
    the achievement of these objectives in the following ways:
      --Through a grant from the U.S. Army, PHRI is presently conducting
            AIDS vaccine research. The vaccine is now moving from rat to
            monkey trials and looks very promising.
      --PHRI is presently in discussions with the U.S. Army to collect and
            fingerprint TB samples from military bases and laboratories
            around the world.
      --PHRI has the capacity to develop nucleic acid probes to match DOD
            inventories of infectious agents. These diagnostic probes and
            techniques permit rapid-in-the-field detection of microbial
            pathogens. Currently, PHRI is pursuing discussions for the
            potential use of these probes by DOD personnel in combat
            locations.
      --PHRI has initiated discussions with the Armed Forces Institute of
            Pathology regarding research collaborations in the area of
            infectious diseases.
        Although not directly related to DOD activities, national security
    concerns are also addressed by the U.S. Agency for International
    Development (USAID). USAID recognizes that disease and endemic ailments
    often overwhelm and disrupt developing countries, posing a strategic
    challenge to the United States. The spread of HIV/AIDS, drug-resistant
    tuberculosis, and other infectious diseases consume resources needed
    for long-term investments. Without long-term investments, long-term
    stability cannot be achieved. USAID is actively seeking to implement
    health-related programs it considers vital through partnerships with
    non-governmental and private organizations. The International Center
    will contribute to the achievement of these objectives in the following
    ways:
      --The Center will develop cooperative programs with foreign
            governments to implement molecular epidemiology techniques as a
            means of focusing public health priorities and programs in
            those countries. PHRI is presently engaged in a 13 nation
            European Economic Community DNA TB fingerprinting project, and
            is in discussions with Egypt, Indonesia, and Russia to provide
            similar and expanded infectious disease services. UMDNJ's
            National Tuberculosis Center is currently consulting with the
            Singapore government to develop a TB Elimination Plan, with the
            Center's Executive Director chairing an international advisory
            panel. Staff training will also be provided during the
            implementation phase of the Elimination Plan. The National
            Tuberculosis Center currently provides international
            fellowships to physicians from China, India, the Netherlands
            and Singapore.
      --The International Center will help establish molecular epidemiology
            laboratories in foreign countries.
      --The National TB Center currently collaborates with the
            International Union Against Tuberculosis and Lung Disease
            (IUATLD, an NGO) and WHO, providing them with ongoing
            consultations and TB staff training.
      --The International Center will raise private funding to supplement
            governmental funding for these programs.
        The University Heights Science Park is requesting $9 million from
    the Senate Defense Appropriations Subcommittee for fiscal year 1998 to
    support the Phase II development of Science Park: the construction of
    the International Center for Public Health. Such support will leverage
    Phase II development that totals $130 million, and creates nearly 3,000
    direct and indirect construction and permanent technology jobs. These
    funds will be used specifically for construction related project costs.
    This project is a top priority for UMDNJ, Rutgers University, New
    Jersey Institute of Technology, Essex County College and the City of
    Newark.
      new jersey breast cancer epidemiology, surveillance and prevention
                                   initiative
        Breast cancer is the most prevalent cancer in women in the United
    States. Approximately one in eight women will be diagnosed with breast
    cancer in their lifetime; 46,000 die each year. New Jersey has the
    fourth highest incidence of breast cancer in the country and ranks
    second in mortality from this dreaded disease. The American Cancer
    Society estimates that there will be almost 6,500 new breast cancer
    patients identified in New Jersey during the coming year, and that
    nearly 1,800 women will die of this disease. The ultimate causation of
    breast cancer is unknown but several factors have been identified that
    are clearly associated with onset and prognosis of this disease. Some
    of these factors include the early onset of puberty, late onset of
    menopause, specific gene mutations, lifestyle factors, and possibly
    exposure to known and unknown environmental agents. The cancer
    statistics of New Jersey are of great concern because the incidence
    surpasses the national and regional incidence. This finding begs the
    questions of differences in New Jersey. Is the population that much
    different from New York or Pennsylvania? Are the poverty levels
    considerably different from surrounding states? Are occupational and
    environmental exposures potential causes of these cancers?
        New Jersey is a paradox. It is one of the most affluent states in
    the nation, but it is also a state that is widely contaminated by
    municipal and industrial wastes--much of which is from past disposal
    policies and practices. New Jersey has 107 Superfund Sites, the
    greatest concentration in the nation, scattered throughout the State,
    and over 3,000 other contaminated sites that are listed by the State's
    Department of Environmental Protection. Many of the chemicals in these
    sites have not been characterized as to the toxicity, carcinogenicity
    or teratogenicity. It is known that most of these sites contain one or
    more carcinogens, and that these chemicals pose a threat to the
    citizens through potential water and air pollution.
        The New Jersey Tumor Registry has recently been updated to gather
    and tabulate the most current cancer incidence data from physicians in
    the State. The Registry does not have the capability to gather complete
    occupational, lifestyle, and environmental histories on the patients,
    and the gathering of genetic information (which is highly sensitive),
    as it applies to breast cancer, is just in its infancy.
        What is needed to attack the high incidence of breast cancer in New
    Jersey is a multifaceted approach that includes better and more rapid
    detection, diagnoses, and treatment. More importantly, to prevent new
    cases in future generations there needs to be a program to elucidate
    the causative factors, be they inborn or environmental or both, to
    establish biomarkers of susceptibility and biomarkers of exposure to
    carcinogenic agents, and to establish a broad outreach program to
    educate women of the State and their pre-teen and teenage daughters as
    to measures that can be taken to prevent breast cancer.
        New Jersey is the site of the nation's newest National Cancer
    Institute's Clinical Cancer Centers. The Cancer Institute of New Jersey
    (CINJ), based at the UMDNJ-Robert Wood Johnson Medical School in New
    Brunswick, received the designation as an NCI Center after completing a
    four year period as an NCI Planning Site, during which time it
    established outstanding clinical oncology specialties and expanded an
    already outstanding basic cancer research effort. CINJ is the only NCI
    designated Center in the State and as such is the only site able to
    generate and carry out investigator initiated protocols for treatment
    of breast cancer patients. The physicians and scientists at CINJ have
    established a major program for the study of breast cancer. This
    program brings together medical oncologist, radiation oncologists,
    surgical oncologists. social workers, specialty nurses, basic
    scientists, geneticists, nutritionists and toxicologists to address the
    encompassing issues of breast cancer in New Jersey. CINJ serves as the
    focal point for patients, their families and the support groups. The
    basic research of the breast cancer program is multifaceted. The issues
    of causation and prevention are major emphases.
        New Jersey is also the site of one of 18 National Institute of
    Environmental Health Sciences Centers of Excellence. The NIEHS Center
    is based at the Environmental and Occupational Health Sciences
    Institute (EOHSI), a joint venture of the UMDNJ-Robert Wood Johnson
    Medical School and Rutgers, the State University. The NIEHS Center is
    the home of the researchers dealing directly with the role of the
    environment and human diseases. The researchers in this Center are
    closely affiliated with CINJ, in fact the Director of the NIEHS Center
    is the Scientific Director of CINJ. This unique arrangement gives the
    clinicians at CINJ direct access to the scientists who are engrossed in
    the study of environmental causes of cancer. The NIEHS Center and EOHSI
    support the largest academically-based exposure assessment research
    team in the country. This group of dedicated scientists and physicians
    are studying the types of pollutants being emitted from the many toxic
    waste sites in New Jersey and they are developing molecular markers of
    exposure and risk. The toxicologists and experimental oncologists at
    the NIEHS Center are focusing on mechanisms of carcinogenicity and the
    potential for anticarcinogenicicity of some dietary components.
        The combination of the CINJ and the NIEHS Center at EOHSI presents
    a unique opportunity to address breast cancer at many levels, from
    molecular markers of environmental exposures to clinical evaluation and
    treatment. This combination offers the citizens of New Jersey new hope
    to combat this dreaded disease.
        The interaction between the environment and the human genome is one
    of the most promising new approaches to elucidating the true causes of
    human malignancies. In the past, epidemiologists were hindered by the
    lack of sensitive markers of cancer susceptibility and were tied to
    descriptive parameters of research. Today, the field of molecular
    epidemiology provides more powerful tools to define causation and will
    be applied to the breast cancer problem in New Jersey through the
    collaborative efforts of the EOHSI and the CINJ. In this way, we plan
    to investigate the link between specific environmental exposures and
    specific genetic mutations that predispose individuals to the
    development of cancer.
        The needs of the research and clinical programs are urgent. To
    accomplish the goal of markedly diminishing breast cancer in New
    Jersey, the Centers (CINJ and EOHSI) need to expand the efforts in
    Epidemiology, Surveillance and Prevention. UMDNJ and Rutgers do not
    have the resources to develop a major program in cancer epidemiology.
    The plan(s) of the Centers Directors has been to work with the
    Universities' administrations, the State Health Department, as well as
    other interested parties in the State such as the NJ Commission on
    Cancer Research and the American Cancer Society to markedly enhance
    cancer epidemiology in the State. To do this, we must attract several
    key research teams to the Centers. The three foci of research are: (1)
    Molecular Epidemiology, (2) Population-based Epidemiology, and (3) High
    Resolution Molecular Analyses.
        We have developed a five-year budget plan for the three core
    components of this New Jersey Breast Cancer Epidemiology, Surveillance
    and Prevention Initiative and the New Jersey Cancer Registry of $10.5
    million. This initiative will be well-grounded through the work of two
    federally designated centers of excellence, where we have already
    secured an extensive range of state, public, private sector and
    foundation support. We see the federal participation in this initiative
    as a true partnership. In the first year we would focus on the
    recruitment and support of a five-member team to work with us to
    implement these three core initiatives, and for the most critical
    instrumentation essential to this unique epidemiological challenge,
    including the High Resolution Mass Spectrometer technology and High
    Resolution DNA Display Instrumentation. We see this initiative as a
    unique opportunity to serve as a national, model demonstration project
    in the application and utilization of these cutting-edge technologies
    in the breast cancer race. Our fiscal year 1998 request for these
    components of this initiative would be $3.6 million.
        On behalf of UMDNJ, I would like to thank the Members of the
    Subcommittee for their long-term leadership in supporting nationally
    and internationally critically needed research and development
    initiatives. This Subcommittee is to be commended for its staunch
    support of the universities and research institutions of this country.
    Your particular role in the support of many biomedical research
    initiatives must be especially recognized.

        Senator Stevens. I am going to have to interrupt you.
        We have money in the bill, as you know, that is going to
    NIH for that. We are not going to carry specific appropriations
    in the Department of Defense bill for any particular State. We
    would soon have 50 of them if we did.
        So I am sorry to tell you we cannot do that. As you point
    out, none of this is DOD related. We have appropriated money
    for general research in breast cancer because of the fact that
    a substantial portion of the military population are women now.
    But we are not going to get into putting this bill into a
    direct State-by-State or university-by-university
    appropriation. I am sorry. I will fight that. We just cannot do
    what you ask.
        You should go to NIH and present your case.
        Thank you very much.
        Dr. Hait. You're welcome.
        Senator Stevens. Dr. Mundy is our next witness.
        Is Dr. Mundy here?
        [No response.]
        Senator Stevens. Then we will hear from Commander Lord,
    please.
        If some of our witnesses have made agreements with staff to
    present later, I wish you would let me know.
        Commander Lord.
    STATEMENT OF COMDR. MIKE LORD, USN (RETIRED),
                COMMISSIONED OFFICERS ASSOCIATION OF THE
                U.S. PUBLIC HEALTH SERVICE, INC., CO-CHAIR,
                HEALTH CARE COMMITTEE, THE MILITARY
                COALITION
    ACCOMPANIED BY COMDR. VIRGINIA TORSCH, MSC, USNR, THE RETIRED OFFICERS
                ASSOCIATION, CO-CHAIR, HEALTH CARE COMMITTEE, THE MILITARY
                COALITION

        Commander Lord. Good morning, Mr. Chairman and Senator
    Inouye.
        As the executive director of the Commissioned Officers
    Association of the U.S. Public Health Service, I am pleased to
    represent the views of The Military Coalition.
        Our written statement provides the details of our health
    care concerns and I will just highlight a couple of our key
    initiatives for you.
        First is Medicare subvention, which would authorize
    Medicare to reimburse DOD for care provided to Medicare
    eligibles in DOD medical facilities. A demonstration program
    was nearly passed by Congress last year following an agreement
    which was signed by DOD and HCFA on September 4. Unfortunately,
    it did not pass. But we are encouraged by the appointment of a
    joint task force by congressional leaders this past March to
    develop a consensus subvention proposal.
        Our one concern in this regard is that a proposal which
    some are calling affinity subvention, is being seriously
    considered by the task force. This concept, which is not the
    Medicare subvention which the coalition has been pursuing and
    which this Congress nearly passed last year, would allow
    Medicare HMO's to form affinity relationships with MTS, thereby
    including them within their network of service providers.
        While we have many concerns about the concept, chief among
    them is that it requires the collocation of a military
    treatment facility and a Medicare HMO, thereby leaving out
    many, many locations without Medicare HMO's, among them the
    States of Mississippi and Alaska.
        One final point. I would urge this subcommittee to support
    and fund a limited demonstration program to test the concept of
    FEHBP 65, which would authorize Medicare eligible uniformed
    service beneficiaries to enroll in the Federal employee health
    benefit plan, the program available to all Federal employees
    and annuitants and Members of Congress.
        We feel strongly that a limited test would alleviate many
    of the cost concerns that have been raised about the program.

                               prepared statement

        In conclusion, Mr. Chairman, I want to express my sincere
    thanks to both you and Senator Inouye and to the rest of the
    committee for the support you have shown all of the uniformed
    services in the past and for the future support we anticipate.
        Thank you.
        Senator Stevens. Thank you very much. We will talk to the
    DOD about the release of that money that you mentioned. But
    we'll have to wait for that.
        Commander Lord. Thank you, sir.
        [The statement follows:]
                     Prepared Statement of Comdr. Mike Lord
        Mister Chairman and distinguished members of the committee: On
    behalf of The Military Coalition, we would like to express appreciation
    to the Chairman and distinguished members of the Senate Appropriations
    Committee's Subcommittee on Defense for holding these important
    hearings. This testimony provides the collective views of the following
    military and veterans organizations which represent approximately 5
    million members of the seven uniformed services, officer and enlisted,
    active, reserve, veterans and retired plus their families and
    survivors.
        Air Force Association
        Army Aviation Association of America
        Association of the United States Army
        Chief Warrant Officer and Warrant Officer Association, United
    States Coast Guard
        Commissioned Officers Association of the United States Public
    Health Service, Inc.
        Enlisted Association of the National Guard of the United States
        Fleet Reserve Association
        Jewish War Veterans of the United States of America
        Marine Corps League
        Marine Corps Reserve Officers Association
        National Guard Association of the U.S.
        National Military Family Association
        National Order of Battlefield Commissions
        Naval Enlisted Reserve Association
        Navy League of the United States
        Reserve Officers Association
        The Military Chaplains Association of the United States of America
        The Retired Enlisted Association
        The Retired Officers Association
        United Armed Forces Association
        United States Army Warrant Officers Association
        United States Coast Guard Chief Petty Officers Association
        Veterans of Foreign Wars
        The Military Coalition does not receive any federal grants or
    contracts from the federal government.
              despite lifetime commitment--care is second to most
        Mr. Chairman, we would like to underscore why quick and judicious
    intervention by Congress to strengthen the Military Health Services
    System (MHSS) with new initiatives is so important to our members.
    Fundamentally, uniformed services beneficiaries have always been led to
    believe they have a right to medical care in military hospitals for the
    rest of their lives following retirement. (A historical perspective of
    the lifetime health care commitment is provided in Attachment A.)
    Unfortunately, the American public--and many in Congress--have the
    misperception that uniformed services retirees have better-than-average
    health care benefits. This is a myth. The uniformed services are
    virtually the only large employer that, except for rapidly diminishing
    space available care, terminates its retirees' health coverage when
    they turn 65.
        In contrast, nearly all of the largest U.S. corporate and
    government employers provide their retirees substantial employer-paid
    health coverage in addition to Medicare. Data from a 1994 survey by Hay
    Associates (one of the nation's most respected firms in the area of
    employee benefits), indicate that the majority of corporate employers
    provide at least some employer-paid coverage in addition to Medicare--
    and the larger the employer, the more provided. For example, the four
    largest U.S. corporations either fund virtually the entire health care
    premium (including heavily subsidized prescription drug benefits) or
    cap their retirees' out-of-pocket medical expenses at modest levels.

                                                    HEALTH PLANS OF THE FOUR LARGEST U.S. CORPORATIONS FOR THEIR RETIRED MEDICARE-ELIGIBLE EMPLOYEES
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Employer      Employer
                                                           Subsidized       Paid
                      Corp.                     No. of     Health Plan    Share of    Retiree Deductible Single/Fam                  Retiree Cost Share                 Other   Subsidized  Coverage
                                                  Ret   ----------------  Premium                                                                                     Prescrip    Dental     Vision
                                                           Ret     Fam   (percent)
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    GM.......................................   350,000     Yes     Yes      75-80  $300/600.........................  Zero \1\.....................................      Yes        Yes        Yes
    Ford.....................................    90,000     Yes     Yes        100  $200/250.........................  20 percent off visits; $500 out-of-pkt cap         Yes        Yes        Yes
                                                                                                                        for all other.
    IBM......................................    74,000     Yes     Yes        100  $250 ($340 hosp).................  20 percent outpatient; 0 percent inpatient...      Yes        Yes        Yes
    Exxon....................................    36,000     Yes     Yes         95  $250/500.........................  20 percent copay; $2,500 out-of-pkt cap......      Yes        Yes         No
    ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
    \1\ GM plan pays all charges above Medicare payment.

        In a similar vein, the United States government provides
    significantly subsidized health care insurance coverage for retired
    Federal civilian employees and their families--including retired
    Members of Congress and retired Congressional staff members. Yet, over
    the years, Administration and Congressional cost containment efforts
    have progressively stripped older uniformed services retirees of nearly
    all DOD-funded health benefits.
                   bad news for retirees--it's getting worse
        The greatest problem facing all retirees, especially Medicare-
    eligible retirees and their families who rely on military medicine for
    their health care, is the rapid decline of access to care in military
    treatment facilities (MTF's), and with each passing day, it's getting
    worse. Approximately 1.168 million uniformed services beneficiaries age
    65 and older (projected to increase to 1.436 million by 2002) are
    entitled to Medicare insurance coverage. These individuals are also
    eligible to receive health care in MTF's, but only on a ``space
    available'' basis. Although exact figures are not available, DOD
    estimates that an equivalent of about 27 percent, or 323,000 of these
    dual-eligible beneficiaries, receive space available care in the
    military health care system. In fiscal year 1997, DOD will pay an
    estimated $1.2 billion per year out of its annual appropriations to
    deliver health care services to this population. However, as the
    retired population ages, facilities are closing or being downsized, and
    the lock-outs are getting dramatically worse. The downward spiral is
    not lost on uniformed services beneficiaries. As the media is quick to
    note, some beneficiaries have picketed recruiting stations, while
    others have flocked to the judicial branch for relief by joining in the
    health care equity lawsuits being pursued by the Class Act Group, led
    by Medal of Honor recipient Col. George ``Bud'' Day, USAF (Ret.) in
    Florida, and the Council of Retired Military Veterans (CORMV) in South
    Carolina. The Class Act Group recently had its day in District Court in
    Pensacola, Florida, where a standing room only crowd (with countless
    others turned away), rallied behind Col. Day in his effort to have the
    government provide retired servicemembers free medical care for life.
    The judge in the case has indicated he will issue a written ruling on
    whether or not he will allow the case to proceed. That decision is
    expected momentarily.
        To best summarize the feelings of uniformed services retirees,
    particularly those who are older, we would like to quote from a letter
    we recently received from an 81 year old veteran of World War II.
        ``I can't help but believe that half of those in the Pentagon and
    Congress can't wait for us to hurry up and die.''
        That's a sad commentary, Mr. Chairman, and should serve as an
    imperative for immediate action now, rather than waiting for a
    miraculous recovery of the MHSS.
                   medicare subvention would open some doors
        In order to better manage the Military Health Services System
    (MHSS), Congress directed DOD to implement the Tricare program
    throughout the CONUS by September 1997. Although Tricare was predicted
    to provide improved access to health care in the MTF for CHAMPUS
    eligibles who enroll in Tricare Prime, recent reports suggest the jury
    is still out on the real value of Tricare. To make matters worse,
    Medicare-eligible beneficiaries have not been given the opportunity to
    enroll in the Tricare program.
        One of the alternatives strongly endorsed by The Military Coalition
    is Medicare subvention (where Medicare is authorized to reimburse DOD
    for care provided to Medicare-eligibles in DOD medical facilities). The
    principle behind the proposal is that, if DOD is reimbursed for such
    care, it would be able to allow Medicare-eligibles to use military
    facilities and enroll in Tricare Prime. Since DOD's care is less costly
    than private sector care, it will actually save Medicare money--a win-
    win-win situation for Medicare, the taxpayers, and Medicare-eligible
    beneficiaries. The Coalition has pushed the Medicare subvention idea
    for years, but it was not until 1995 that the first subvention bills
    were introduced. On January 19, 1995, Rep Joel Hefley (R-CO) introduced
    H.R. 580 to allow Medicare to reimburse DOD for the care it now
    provides to Medicare eligible uniformed services retirees. The
    Congressional Budget Office (CBO) initially contended that H.R. 580
    would increase Medicare expenditures by $1.4 billion per year. To
    overcome this funding dilemma, DOD expressed a willingness to maintain
    its current level of effort and to seek reimbursement only for new
    beneficiaries who have not previously used the military health system,
    but have opted instead to use their Medicare benefits in the civilian
    sector at Medicare's expense.
        After many months and considerable effort, several bills were
    introduced in Congress calling for a demonstration project to test the
    financial viability of subvention and the methods for documenting the
    savings of subvention to DOD and Medicare. The Coalition was greatly
    encouraged that language was included in the Fiscal Year 1997 Defense
    Authorization Act, directing DOD and the Health Care Financing
    Administration (HCFA) to deliver a detailed plan for a Medicare
    subvention test program to Congress by September 6. On September 4, DOD
    and HCFA signed an agreement for a Medicare subvention test, and
    subsequent hearings on the plan were conducted by three House
    Subcommittees. However, despite favorable reports, at the very last
    possible minute, Congressional leaders decided not to include Medicare
    subvention in the fiscal year 1997 omnibus spending bill.
        To pick up where we left off, Rep. Hefley (R-CO) has introduced two
    new Medicare subvention bills in the 105th Congress. H.R. 414 calls for
    Medicare subvention nationwide; H.R. 192 would establish a Medicare
    subvention demonstration program to test the concept at selected sites.
        On March 12, a high level meeting between House and Senate
    Republican leaders paved the way for a Medicare subvention
    demonstration in fiscal year 1998. Among the participants were Senators
    Trent Lott (MS), Phil Gramm (TX), William Roth (DE) and Strom Thurmond
    (SC). At the meeting, a decision was made to press on with Medicare
    subvention as soon as possible. To expedite the process, a joint task
    force, comprised of Senators Roth and Gramm, and Representatives
    William Thomas (CA) and Joel Hefley (CO), has been charged with the
    responsibility of developing a consensus subvention demonstration
    proposal, on a priority basis. The Military Coalition requests your
    Subcommittee's strongest support for a true Medicare subvention test,
    based on the agreement entered into by the Departments of Defense and
    Health and Human Services last September.
                     fehbp--a bridge to health care equity
        Mr. Chairman, The Military Coalition would like to express its
    deepest appreciation for your leadership and strong support last year
    for one of our most important legislative initiatives, FEHBP-65
    (opening the Federal Employees Health Benefits Program to Medicare-
    eligible uniformed services beneficiaries). Although efforts to work
    out provisions for a demonstration of the FEHBP-65 initiative in the
    conference on the Fiscal Year 1997 Defense Appropriations Act fell
    short of its goal, considerable progress was made. Significantly,
    Section 8129 of the Conference Agreement directed the Department of
    Defense to submit a report to you and the House Committee on
    Appropriations by February 1, 1997, on a demonstration project offering
    Medicare-eligible retirees, who do not have access to Tricare, the
    option of enrolling in FEHBP. This report is to include an assessment
    of the benefits which could be derived from such a demonstration
    program, the anticipated costs to both the government and potential
    enrollees, the potential impacts on military medical readiness, and
    recommendations regarding the size and scope of a demonstration
    program.
        As far as we can determine, the DOD report has not yet been
    released to the public. Even then, unless the draft report we have seen
    undergoes significant revision, it will not satisfy the requirements of
    Section 8129.
        Given this disappointment, these hearings take on added
    significance. First, DOD may require a legislative imperative to design
    and set up an FEHBP-65 demonstration program. Second, the Tricare
    program is not measuring up to expectations. In many areas of the
    country--notably Florida, and more recently, Colorado--physicians are
    refusing to participate in Tricare because of unacceptably low
    reimbursement rates. The obvious outcome is that even if Medicare
    subvention (Medicare reimbursement to DOD for care provided to
    Medicare-eligible uniformed service beneficiaries in the Military
    Health Services System) is enacted, hundreds of thousands of Medicare-
    eligible uniformed services beneficiaries will still be denied the
    medical care promised to them in return for serving arduous careers in
    uniform.
        A point worth underscoring now is that even if Tricare Prime is a
    resounding success, there is little likelihood that its doors can be
    opened to more than 40 percent of the Medicare-eligible uniformed
    services beneficiaries. Of the other 60 percent, data available to the
    Coalition suggest that: about 10 percent are enrolled in Medicare at-
    risk Health Maintenance Organizations (HMO's) and would likely remain
    in these programs; another 10 percent already participate in FEHBP or
    comparable private sector insurance plans; and the rest--about 40
    percent, or 480,000, would be given short shrift and would not have any
    access to the government sponsored health care program DOD promised
    them as an integral part of the lifetime health care commitment.
        Mr. Chairman, uniformed services retirees receive considerable
    literature from organizations like the Coalition extolling the health
    care advantages Federal civilian retirees and retirees from large
    corporations have when they become eligible for Medicare. Military
    retirees are well aware that DOD and other agencies in the Federal
    government will spend more than $4 billion in fiscal year 1997 to
    provide federal civilian retirees health care that is second to none.
    Military retirees do not understand, and neither do we, why they should
    not be given the opportunity to participate in this extraordinary
    program as well. Therefore, The Military Coalition is seeking your
    support to authorize Medicare-eligible uniformed services
    beneficiaries, including those eligible for Medicare due to disability,
    to enroll in the Federal Employees Health Benefit Plan (FEHBP), the
    health care benefit available to 9.6 million Federal employees and
    annuitants, including Members of Congress. The Coalition is of the firm
    belief that Medicare-eligible uniformed services retirees have earned
    the right to participate in FEHBP-65 and that it is a viable means of
    satisfying the lifetime health care commitment. We believe our members
    would consider this option a reasonable alternative to the virtually
    non-existent military health care because FEHBP premiums are less
    expensive than most Medicare supplemental policies, and most FEHBP
    plans provide better coverage, including a prescription drug benefit,
    at less cost than Medicare supplements.
        Mr. Chairman, last year, two bills that would have allowed FEHBP to
    be offered to Medicare-eligible uniformed services beneficiaries on a
    nationwide basis were introduced in Congress. H.R. 3012 was introduced
    by Rep. Jim Moran (D-VA) on March 5, 1996, and S. 1651 was introduced
    by Senator John Warner (R-VA) on March 28, 1996, as a companion to H.R.
    3012. Although we were unsuccessful in getting these bills enacted, we
    accomplished a critical first step when this Subcommittee directed DOD
    to examine and report on the merits of an FEHBP-65 demonstration
    program.
        Senator Warner has now introduced a new bill for FEHBP-65
    nationwide (S. 224) and Representative Moran has introduced the House
    companion bill (H.R. 76). Although The Military Coalition strongly
    endorses implementation of FEHBP-65 nationwide, we recognize there are
    many unanswered questions that need to be addressed to raise the
    comfort level about the viability of the initiative. Therefore, the
    Coalition strongly urges this Subcommittee to spearhead the enactment
    of a demonstration program to test opening the FEHBP program to
    Medicare-eligible uniformed services beneficiaries. A test of FEHBP-65
    would provide concrete information on the number of uniformed services
    beneficiaries who would avail themselves of the option if offered. If
    the number of enrollees is less than the 95 percent participation rate
    predicted by the Congressional Budget Office (CBO)--an estimate we
    believe is extremely high--the actual cost of the FEHBP-65 option would
    be considerably less than current estimates. Secondly, since a separate
    risk pool would be established, there is every likelihood the cost to
    DOD would be further reduced. One fundamental reason is that the vast
    majority of uniformed services beneficiaries are covered by Medicare.
    According to CBO, when FEHBP is combined with Medicare Part B, the
    health care outlays for FEHBP insurers is only 70 cents for every
    dollar of premiums paid. CBO estimates that for individuals age 65 and
    older who are not eligible for Medicare--frequently the case for
    federal civilians--FEHBP insurers pay out $2.50 for every dollar of
    premiums paid.
        The Coalition, therefore, supports a test of FEHBP-65 as a critical
    bridge to health care equity and requests that this Subcommittee
    appropriate an amount not to exceed $50 million to test this program at
    two sites in fiscal year 1998. Given the reality that Congress will
    approve more than $4 billion to provide FEHBP to Federal civilian
    retirees, some with as few as five years of service, it does not seem
    unreasonable to ask this relatively insignificant sum be allocated to
    those who sacrificed to keep the nation free as long ago as War World
    II.
                          shore up the tricare program
        While the Coalition recognizes that Tricare Prime is generally
    consistent with managed care plans being adopted all over the country,
    the Coalition also believes there are many ``bugs'' in the Tricare
    program that must be worked out in order to make this program an
    effective health care benefit for uniformed services beneficiaries. Our
    major concerns are summarized below.
        Tricare does not provide a uniform health care benefit for all
    uniformed services beneficiaries.--Medicare-eligibles cannot enroll in
    Tricare Prime; bare bones reimbursement rates, plus the statutory
    requirement to file claims, are causing providers to reject
    participation in Tricare; Tricare Prime will not be implemented in all
    areas of the U.S.; and DOD is planning to implement an ``alternative
    financing'' methodology in several Tricare regions which will create a
    ``civilian'' Tricare Prime and a ``military'' Tricare Prime.
        There are problems with the fee structure and payment policies in
    Tricare Prime.--Prime enrollees are often charged separate co-payment
    charges for lab tests and x-rays when such services are provided
    separately from an office visit; Prime enrollees are being charged the
    higher Tricare Standard fees by some civilian health care providers,
    such as anesthesiologists and pathologists; and Prime enrollees have
    occasionally been referred to non-network providers, thus invoking
    point of service charges (with copayments of 50 percent), without being
    informed about these extraordinary copayments.
        Tricare Standard (CHAMPUS) Access and Quality are Diminishing.--
    Reimbursement levels are frequently too low to attract quality health
    care providers; there are unreasonable delays in reimbursement to
    providers and beneficiaries; the change in law (eff. 1 Oct 96)
    mandating that all providers now have to file claims has caused many
    providers to decline CHAMPUS patients, thus providing access-to-care
    problems for many beneficiaries residing outside Tricare Prime service
    areas; and the 115 percent billing limit, especially in the case of
    third party insurance, has resulted in increased out of pocket costs
    for beneficiaries.
        There are problems that arise with the implementation of Tricare in
    each region.--Access standards for Tricare Prime are not being met; DOD
    has yet to implement a policy to provide portability and reciprocity
    for Prime enrollees in different Regions; Prime benefits are sometimes
    changed in the middle of an enrollment year; and DOD has not
    established an effective Ombudsman Program for each Tricare Region.
        There are problems with the regional Managed Care Support
    contractors.--Health care provider lists are not adequately developed
    in several Regions; contractors often provide beneficiaries the wrong
    information; contractors are not notified of changes in CHAMPUS
    benefits and policy; and contractors have not established an adequate
    system of communication with beneficiaries.
        The Military Coalition recognizes that many of the problems
    outlined here could result from ``growing'' pains as Tricare is
    implemented for the first time throughout the country. We are
    concerned, however, that if current trends continue, or if budgetary
    constraints inhibit the necessary remedial action, the problems will
    not lessen as Tricare matures. It will take a team effort involving
    Congress and DOD to enable Tricare to provide a uniform health care
    benefit for all military beneficiaries. Implementation of Medicare
    subvention to allow Medicare-eligibles to enroll in Tricare Prime, and
    FEHBP-65 to bridge the gap for those who do not or unable to enroll in
    Prime, will help correct this inequity.
        The Coalition urges DOD, with the assistance of Congress, to take
    immediate measures to strengthen Tricare so that it becomes a
    meaningful program instead of a substandard health care benefit. The
    Military Coalition is ready to assist DOD and Congress in whatever way
    possible to make the Tricare program a superb health care plan for all
    military beneficiaries regardless of their age, status or location of
    residence.
      prescription drug proposals are not a substitute for comprehensive
                                  health care
        Mr. Chairman, the Coalition would now like to address what some
    have suggested would go a long way toward reassuring Medicare-eligible
    uniformed services beneficiaries that Congress and DOD are genuinely
    interested in addressing the tremendous inequity in the military health
    care benefit. This proposal--the establishment of a worldwide mail-
    order prescription program for all retirees regardless of age or
    location--would provide welcome relief to countless retirees who have
    lost access to prescription drug coverage upon becoming eligible for
    Medicare. Nevertheless, although it would be greatly appreciated, in
    and of itself, the proposal falls far short of the more comprehensive
    coverage (like FEHBP-65) that is inherent in the lifetime health care
    commitment.
        Even before the advent of Tricare, MTF commanders were gradually
    limiting access to the MTF pharmacy. Medicare does not provide drug
    coverage, and only three of the ten standardized Medicare supplemental
    insurance policies provide a prescription benefit. These Medigap
    policies are relatively expensive and only provide limited coverage
    ($250 deductible and 50 percent copayment). Some, but not all, of the
    Medicare ``at-risk'' HMO's offer a prescription benefit. However, only
    about 11 percent of all Medicare-eligible beneficiaries (7-10 percent
    of uniformed services beneficiaries) belong to one of these HMO's,
    which are not currently available in all regions of the country. With
    the high cost of pharmaceuticals, it is little wonder that the
    Coalition has anecdotal evidence that military retirees have been
    willing to drive long distances to fill their prescriptions at an MTF.
        As pharmaceutical budgets have been cut back, MTF commanders have
    begun to drop some of the more expensive, less widely used
    pharmaceuticals. Some MTF commanders have also restricted access by
    honoring only those prescriptions written by military physicians,
    instead of also accepting prescriptions written by civilian physicians.
    And some MTF commanders have rather liberally, and, erroneously,
    interpreted a recent DOD memorandum on prioritization for care in the
    MTF to mean they have carte blanche authority to ``ration'' some
    pharmaceuticals by withholding them from retirees and only offering
    them to active duty members and their family members.
        The Coalition was pleased to receive DOD's briefing on its initial
    proposal for expansion of DOD's mail-order program to cover all
    Medicare-eligible uniformed services beneficiaries. However the
    Coalition cannot support the proposed program as it was initially
    presented. In particular, the Coalition is concerned that to make the
    proposal cost neutral, DOD would terminate filling civilian
    prescriptions at an MTF for Medicare-eligible retirees who now have
    that benefit and additionally require users to pay a premium (or
    enrollment fee) of $11 to $14 per month. This lockout from the MTF for
    civilian prescriptions is guaranteed to create an understandable uproar
    from beneficiaries who would correctly interpret it as a further breach
    of the lifetime health care commitment.
        The Coalition applauds DOD's efforts to create a more comprehensive
    prescription benefit, and would like to continue to work with DOD and
    with this Committee to structure the program in such a way that it does
    not penalize current users of the prescription benefit.
                                closing comments
        This Nation has the daunting challenge of restoring health care for
    uniformed services beneficiaries to a level comparable to that of
    Americans employed by large corporations and of all retired federal
    civilians. In this regard, Mr. Chairman, the Coalition respectfully
    requests that you follow up on last year's initiative and forcefully
    champion an FEHBP-65 demonstration program. The 81-year old World War
    II retiree we mentioned earlier, and thousands more of his comrades,
    cannot afford to wait for Tricare to run its course before relief is
    forthcoming. They need the health care benefit they earned through
    years of dedicated service and they need it now. We, therefore, urge
    you to include provisions and appropriations in the fiscal year 1998
    Defense appropriations bill for an FEHBP-65 demonstration program at a
    minimum of two sites. One final point, Mr. Chairman, since DOD
    facilities will be operating at maximum capacity under Tricare and
    subvention, there will be no impact on medical readiness if FEHBP-65 is
    enacted. FEHBP-65 will begin the bridge to honor the commitments that
    were made to those who served their country so bravely and honorably
    when called to do so. They did not equivocate then and this Nation
    should not equivocate now.
        Mr. Chairman, in closing, we wish to express our profound
    appreciation to you and this Subcommittee for the opportunity to
    present our views on this critically important topic. We will be glad
    to answer any questions you may have.
                                     ______

               Attachment A.--Commitment to Lifetime Health Care
        In brief, this lifetime right to health care had its genesis in the
    U.S. Navy and U.S. Marine Corps, in 1798, when service members made a
    monthly contribution to pay for such care over a period of 145 years--a
    contribution that continued after retirement. When the contribution was
    discontinued in 1943, the hearings made it clear that members were to
    retain the right to care. It is equally clear that members of the other
    services have been similarly led to believe they would be provided care
    for life in military treatment facilities. The assurance of such care
    was one of the important factors in inducing service members to endure
    the extraordinary demands and personal sacrifices inherent with a
    career in uniform.
        In 1965, Congress enacted Medicare legislation. One year later,
    Congress established the Civilian Health and Medical Program of the
    Uniformed Services (CHAMPUS). In adopting this legislation and limiting
    CHAMPUS to those under age 65, the House Armed Services Committee
    reasoned `` * * * military retirees would continue to have two medical
    programs upon reaching age 65--the use of the military medical
    facilities on a space-available basis and the Social Security Medicare
    program. Under the circumstances, it appears that the two remaining
    medical sources would provide a fair program of assistance.''
        Key officials have also acknowledged that the government has a
    responsibility to provide a lifetime health care benefit. It was
    clearly affirmed by the Deputy Assistant Secretary of Defense for
    Special Projects, Office of the Assistant Secretary of Defense for
    Manpower, during hearings on the 1963 military pay bill. And as further
    evidence of the lifetime health care commitment, it is instructive to
    reflect on a 1991 study by the Congressional Research Service, titled
    Military Health Care/CHAMPUS Management Initiatives, prepared by David
    F. Burrelli, an analyst in National Defense, Foreign Affairs and
    National Defense Division, on May 14, 1991.
        ``* * * The Dependents' Medical Care Act (Public Law 84-569; June
    1956; 70 Stat. 250) described and defined retiree/dependent eligibility
    for health care at military treatment facilities (MTF's) as being on a
    space-available basis. Thus, for the first time, the dependents of
    active duty personnel were entitled to health care at MTF's on a space-
    available basis. Authority was also provided to care for retirees and
    their dependents at these facilities (without entitlement) on a space-
    available basis. * * * Although no authority for entitlement was
    extended to retirees and their dependents, the availability of health
    care was almost assured, given the small number of such persons.
    Therefore, while not legally authorized, for many the `promise' of
    `free' health care `for life' was functionally true. This `promise' is
    widely believed and it was and continues to be a useful tool for
    recruiting and retention purposes.''
        More recently, this obligation was reaffirmed in remarks made by
    Dr. Stephen Joseph, MD, then Assistant Secretary of Defense for Health
    Affairs, at a hearing on September 12, 1995, before the House
    Government Reform and Oversight Committee's Subcommittee on Civil
    Service. Dr. Joseph acknowledged that recruiters and commanders had led
    members to believe that they had a lifetime commitment to military
    health care. Dr. Joseph was resolute in his belief that the government
    has an implied moral commitment to provide health care to those
    currently serving and those who retired following their service
    careers.
        A review of recruiting and retention literature further
    corroborates the implied, if not real, commitment to lifetime health
    care by the Services to all uniformed services beneficiaries. The
    following provides indisputable evidence that the lifetime medical
    promise was being made as late as 1993.
    Marines, Life in the Marine Corps--(Undated, but in use)
        ``Benefits * * * These are only a few of the great extras you'll
    find when you join the Marine Corps. And the nice part is, should you
    decide to make a career of the Corps, the benefits don't stop when you
    retire. In addition to medical and commissary privileges, you'll
    receive excellent retirement pay * * *.''
    Air Force Pre-reenlistment Counseling Guide. (Chapter 5 Medical Care,
            Section 5-2.f., dated 1 April 1986)
        ``One very important point, you never lose your eligibility for
    treatment in military hospitals and clinics.''
    United States Coast Guard Career Information Guide. (USGPO 1991-)
        ``Retirement benefits mean more than pay too. You continue to
    receive free medical and dental treatment for yourself plus medical
    care for dependents.''
    Guide to the Commissioned Corps Personnel System, March 1985
        ``Noncontributory medical care during active duty and retirement
    for both officer and dependents.''
    Army Recruiting Brochure, ``Army Benefits (RPI 909, November 1991)
            (Still in use by recruiters in 1993).
        ``Superb Health Care. Health Care is provided to you and your
    family members while you are in the Army, and for the rest of your life
    if you serve a minimum of 20 years of active Federal service to earn
    your retirement.''
    STATEMENT OF MASTER SERGEANT MICHAEL P. CLINE
                (RETIRED), EXECUTIVE DIRECTOR, ENLISTED
                ASSOCIATION OF THE NATIONAL GUARD
        Senator Stevens. And now we will hear from Master Sergeant
    Cline.
        Sergeant Cline. Good morning, Mr. Chairman, Senator Inouye.
    As you have heard this morning, as the active component suffers
    from increased deployments, the Army has turned to the Guard
    and Reserve to assist in the deployments, thereby relieving the
    stress on our active duty brothers and sisters.
        The Guard is faced with a serious $743 million shortfall in
    the fiscal year 1998 President's budget proposal. The
    President's proposed shortfall will reduce funding and 60
    percent of the Army Guard's units will not have school funds.
    OPTEMPO in 60 percent of the units will be reduced to 8 percent
    of requirements. A tank driver will only be allowed to drive
    his tank 23 miles in 1 year.
        The Air Guard is also having shortfalls and $6.1 million is
    needed for the Montgomery GI bill education benefit that is
    required by law. We are also short $17.1 million that is
    required to maintain 5 C-130 units and 12 primary authorized
    aircraft.
        The Army also needs $185.5 million for the procurement
    account and it is necessary to add four MLRS batteries that the
    Army wants to put into the National Guard.
        There is also a proposal in the administration's budget to
    eliminate paid military leave for Federal Civil Service
    employees who are in the Guard and Reserve. Some 154,700
    Government employees are members of the Guard. One out of eight
    members of the Guard are Government employees.
        Paid military leave was enacted in 1968 to have the Federal
    Government set an example for private employers of Guard and
    Reserve personnel as well as provide a small compensation to
    offset the personal sacrifices of family separation, increased
    stress, physical damage, and loss of civilian career
    opportunities.
        Eliminating this now would also decrease compensation to
    Guard and Reserve members, but would also send a message that
    the Federal Government has lessened its support of Guard and
    Reserve members.
        All State and local governments, as well as private
    employers who currently provide paid leave, will soon follow
    the Federal Government's example. The result would most likely
    be that qualified, trained personnel will fail to reenlist in
    the Guard and Reserve.
        Mr. Chairman, I want to make it quite clear that our
    association actively supports our active duty brothers and
    sisters. We believe that they must be 100 percent funded as our
    Nation's first line of defense. The enlisted association goes
    on record as opposing any additional cuts to our active, Guard,
    or Reserve forces.
        Although our Air Force and Navy can deploy anywhere in the
    world and literally bomb the heck out of a potential enemy, it
    takes trained, educated, and well disciplined and motivated
    soldiers and marines to occupy the real estate to say we now
    have full, undeniable control.

                               prepared statement

        Mr. Chairman, again, thank you for letting the Enlisted
    Association of the National Guard present its views on the
    fiscal year 1998 Defense budget.
        Senator Stevens. Thank you very much, sir. We appreciate
    your courtesy.
        [The statement follows:]
             Prepared Statement of Master Sergeant Michael P. Cline
                                  introduction
        Mr. Chairman, Members of the Defense Subcommittee of the Senate
    Appropriations Committee: I am honored to have this opportunity to
    present the views of the Enlisted men and women of the National Guard
    of the United States. Our members are very appreciative of the support
    extended to them in the past, and are very confident that you will,
    through your diligent and conscientious efforts, give serious
    consideration to the most critical issues facing the National Guard
    today.
        During fiscal year 1996, the Army Guard provided a record 1.6
    million workdays in support of both federal and state missions. More
    than 25,200 soldiers deployed overseas in support of operations and
    training for a total of 417,506 workdays. Of this total, 331,038
    workdays were directed to Operational Mission Support (OMS) in relief
    of active Army operations/personnel tempo. The OMS missions were
    supported by the Office of the Assistant Secretary of Defense for
    Reserve Affairs and funded with $7.3 million in Reserve Component-to-
    Active Component support funding.
        The Army Guard also provided over 389,700 workdays in support of
    the Presidential Selected Reserve Call-up (PSRC) for Operation Restore
    Democracy (Haiti) and Joint Endeavor (Bosnia) as well as 19,177
    workdays in Temporary Tours of Active Duty (TTAD) to various overseas
    and continental United States Army commands. Additionally, a record
    716,120 state active duty workdays were provided to support 419 state
    call-ups for various emergencies, natural disasters and 1996 Summer
    Olympics requirements.
        These mission requirements were accomplished simultaneously with
    the inactivation of 145 Army Guard units, personnel reductions in
    excess of 17,700 positions, changes to unit missions as well as
    individual soldier job reclassifications, and ambitious annual training
    and equipment modernization programs.
        The Air National Guard (ANG) has been involved in every major Air
    Force operation and exercise, and most of the smaller ones conducted
    during fiscal year 1996. Participation highlights included hurricane
    relief efforts; Operation Joint Endeavor; Operation Uphold Democracy;
    Operation Southern Watch; Partnership for Peace mission in Rumania;
    Exercise Nuevos Horizontes in Honduras, and providing limited medical
    support to some undeveloped countries.
        The Air National Guard was involved in peace enforcement and
    peacekeeping operations including continued enforcement of the no-fly
    zones over Iraq and Bosnia-Herzegovina and other theaters of operation.
    During fiscal year 1996, Air National Guard units provided medical
    services to communities in 18 states under the Medical Innovative
    Readiness Training (MIRT) program. This program enables National Guard
    health care professionals to obtain training in wartime clinical skills
    while concurrently providing medical care to the indigent or under-
    served civilian population.
        The citizen soldiers of today are truly the finest ever. You may
    ask yourself, Mr. Chairman, why are NCO's and Enlisted people so
    concerned about the budget? This is the bottom line: It is the NCO's'
    direct responsibility to train the troops that the administration and
    Congress want to deploy around the world. If the National Guard does
    not have adequate funding to train their people, they are placing them
    in harm's way. They must be adequately prepared and resourced to
    complete the varying missions that they so gladly accept. Not only
    that, Mr. Chairman, but without adequate funding and training, the
    Guard will succumb to the criticism of adversaries who say that the
    National Guard is not prepared. Without these additional funds, the
    National Guard will fall into the hollow force that is being predicted
    by some individuals in the military community.
        As the drawdown of the active forces continues, the Guard is being
    called upon more and more to provide peace time and combat-ready
    support for contingencies around the world. Shortages in specific areas
    are becoming acute. While we assert that the use of the National Guard
    is the most cost effective means of implementing a strong national
    defense strategy during these financially constrained times, we also
    believe that we must have adequate funds to maintain the best possible
    services to our nation.
                              army national guard
        Mr. Chairman, based on information received from the Department of
    Defense and on the budget submission presented by the administration,
    the Army National Guard has a major shortfall in the fiscal year 1998
    appropriations.
        The current fiscal year 1998 funding level for the ARNG will not
    maintain the minimum readiness level necessary to fulfill our
    obligation to National Defense. The funding in fiscal year 1995 was
    adequate to maintain the minimum required readiness levels. Therefore,
    the fiscal year 1998 unfunded requirements are based on the ARNG
    maintaining the same level of effort in fiscal year 1998 that was
    attained in fiscal year 1995. Fiscal year 1995 funding levels for each
    program were adjusted according to the inflation rates and personnel
    strength changes to produce the required fiscal year 1998 funding
    level.
        Annual Training is underfunded due to the legislative proposal that
    will limit the amount of military basic pay a federal civilian employee
    receives while on military leave. The proposal has not passed, but the
    funding was taken from the National Guard Pay, Army Appropriation
    (NGPA) by the Office of the Secretary of Defense (OSD). If it does not
    pass, 27,000 National Guard soldiers will not be able to attend Annual
    Training. We believe this is an issue that the Pentagon itself does not
    support; this initiative was part of Vice President Al Gore's
    ``Reinventing Government.''
        Following is a list detailing the funded levels from fiscal year
    1995 through fiscal year 1997 and the requested funding for fiscal year
    1998 for underfunded programs (UFR). The ``Req. fiscal year 1998''
    column represents the amount of funding in fiscal year 1998 necessary
    to maintain the fiscal year 1995 level of effort. The ``'UFR fiscal
    year 1998'' column is the additional fiscal year 1998 funding necessary
    to achieve a fiscal year 1995 level of effort.

    ----------------------------------------------------------------------------------------------------------------
                                                                  Fiscal year--          Request    Req.       UFR
                                                         ------------------------------  fiscal    fiscal    fiscal
                                                                                          year      year      year
                                                            1995      1996      1997      1998      1998      1998
    ----------------------------------------------------------------------------------------------------------------
    Annual Training.....................................       499       549        50       480       513        33
    IDT/Overstrength (Drill Pay)........................     1,044       992     1,031     1,061     1,081        20
    IET (Basic Training)................................       144       124       157       132       174        42
    Schools.............................................       164       111        64        50       174       124
    Special Training....................................       190       184        26         7        95        88
    Bonuses/GI Bill/Disability..........................       102        98       146       124       161        37
                                                         -----------------------------------------------------------
          Total National Guard Personnel Account........  ........  ........  ........  ........  ........       344
                                                         ===========================================================
    OPTEMPO/FHP.........................................       417       387       449       420       449        29
    Base Operations/Real Property Maintenance...........       281       327       188       203        32       117
    Depot Maintenance...................................       104        46        41        54       111        57
    SFSI................................................       145       123        58        56       154        98
    Info Manage.........................................        66        66        54        32        79        47
    AT/IDT Sup. and Services............................        75        69        57        35        74        39
    NGB Support.........................................        20        22        15        15        18         3
    Medical Support.....................................        27        25        19        27        36         9
                                                         -----------------------------------------------------------
          Total OMNG....................................  ........  ........  ........  ........  ........       399
                                                         ===========================================================
          Grand Total...................................  ........  ........  ........  ........  ........       743
    ----------------------------------------------------------------------------------------------------------------

        IDT (Drill Pay) funding falls short of requirements because the
    Guard is surpassing its minimum end strength objective. The Guard is
    required to pay all soldiers for 48 drill periods per year and critical
    funding shortages in the rest of the appropriation prevent transferring
    funding from another program.
        The Initial Entry Training (Basic Training) funding shortfall will
    prevent 6,633 soldiers who will be recruited into the Army National
    Guard from attending Basic Training. Serious retention and readiness
    problems will result if recruits cannot attend Basic Training within a
    reasonable amount of time from their enlistment date.
        Current fiscal year 1998 school funding covers only 20 percent of
    the requirements for Military Occupational Specialty (MOS)
    Qualification and career development courses. Current funding will
    cover the Force Support Package (FSP) unit requirements and three of 15
    Enhanced Brigades. No School funding is available for 60 percent of
    Army National Guard units. The inability of Guard soldiers to attend
    MOS and career development training will seriously undermine the
    Guard's readiness. Retention will become a problem as soldiers cannot
    be promoted because they cannot receive qualification.
        Special Training is funded at only 3 percent of special training
    requirements. The only Special Training funding available is for
    selected Intelligence units and some Special Operations units. Lower
    priority units cannot maintain the current readiness level without
    additional training funding. Again, this will seriously impact
    readiness and retention.
        Currently the ARNG operates under a reduced requirement of OPTEMPO
    of the active duty Army. Whereas an active duty unit may be required to
    drive and train with an M-1 ABRAMS tank 1,200 miles per year; the ARNG
    requires only 288 miles per year. Based on the fiscal year 1998 budget,
    60 percent or more of ARNG units will be reduced to 23 miles per year.
    This reduction in OPTEMPO will put soldiers in harm's way. A young tank
    crew cannot train on a 69 ton tank and become proficient in such a
    short time. Professional truck drivers receive more training than this.
    How are these military personnel, part of the Total Force and America's
    Army, to be prepared to answer the call, when it comes? Dedication and
    conviction are not substitutes for quality training. As they say, more
    sweat in training is less blood shed on the battlefield.
                               air national guard
        The Air National Guard (ANG) has proven to be one of the most cost-
    effective means of maintaining Total Air Force capability within the
    constraints of a shrinking defense budget. This is evident with the
    continued involvement in worldwide contingencies by the ANG C-130
    airlift forces.
        Air National Guard units are more involved today than ever before.
    Last year, former Secretary of Defense Perry recognized the Air
    National Guard units for their participation in support of the Bosnia
    peace effort. He made special reference to the C-130 airlift units
    participating in Provide Promise which was the longest ongoing airlift
    in history. ANG airlift units are also supporting Southwest Asia (SWA),
    Southern Command and Army airdrop missions. The Air National Guard's
    participation in airlift roles continues to increase.
        Based on Congressional direction, the United States Air Force and
    the Air National Guard agreed to maintain 12 Primary Authorized
    Aircraft (PAA) in those units in fiscal year 1997. However, the fiscal
    year 1997 President's Defense Budget contained only enough funds to
    continue a reduction from 12 PAA to 10 PAA. In fiscal year 1997,
    Congress reversed the reductions by providing manpower and operating
    resources and directing that the PAA level be maintained at twelve. The
    fiscal year 1998 President's Defense Budget reduces all five units to
    eight PAA.
        To retain these five units at 12 PAA through fiscal year 1998,
    Congress must restore a total of $17.1 million in ANG accounts and
    authorize manpower increases above the budget request of 55 AGR's, 625
    drill, and 100 military technician positions.
        Following is a breakout of funding necessary to maintain the five
    ANG units at fiscal year 1997 levels of 12 PAA each during fiscal year
    1998. Funding accommodates restoration of four PAA at each of the five
    units.

                                  [In millions]

                                                            Fiscal year 1998

    O&M Costs:
        Civilian Pay (50 workyears)...............................    $2.950
        Depot Maintenance (20 aircraft)...........................     3.060
        Flying Hours (6,160)......................................     7.043
                        --------------------------------------------------------------
                        ____________________________________________________

          Total O&M...............................................    13.063
                        ==============================================================
                        ____________________________________________________
    Military Personnel Costs:
        10 Officer and 45 Enlisted AGR............................     1.710
        85 Officer and 540 Enlisted Drill.........................     2.290
                        --------------------------------------------------------------
                        ____________________________________________________

          Total Military Personnel................................     4.000
                        ==============================================================
                        ____________________________________________________
          Grand Total.............................................    17.063

        Personnel Authorizations.--Maintaining ANG C-130 force structure at
    fiscal year 1997 levels requires the following additional personnel
    authorizations: 55 AGR's--Two Officers and nine Enlisted at each of
    five units; 625 Drill--17 Officer and 108 Enlisted at each of five
    units; and 100 Technicians--Twenty at each of five units.
        EANGUS believes that the Air National Guard force structure should
    remain stable until such time as a new national security review is
    concluded. In addition, we feel that the C-130 airlift units for 12 PAA
    in West Virginia, Kentucky, North Carolina, Tennessee and California
    should be retained at the 12 PAA and a total of $8.7 million be
    restored to Air National Guard accounts.
                             mobilization insurance
        Another issue worthy of attention is the Ready Reserve Mobilization
    Income Insurance Program. This program was enacted in the Defense
    Authorization Act for Fiscal Year 1996 to provide Reservists protection
    from economic losses when mobilized. The program was designed to be
    self-funded from member premiums. Almost immediately after the
    implementation of the program on October 1, 1996, major flaws became
    apparent. During the enrollment period, a third rotation for Operation
    Joint Endeavor (Bosnia) was announced and there was insufficient time
    to accumulate the funds to cover the immediate expenses.
        OASD/RA made a supplemental request of $72 million to shore up the
    fund and this has been included in the fiscal year 1997 supplemental
    appropriation currently in conference. Thank you for recognizing the
    need for these funds and continuing the support the Guard and Reserve
    with the supplemental appropriation.
                montgomery gi education bill--air national guard
        Mr. Chairman, the Montgomery GI Education Bill (MGIB), Chapter
    1606, is also shorted in the President's Budget. The Air National Guard
    received a new factoring formula last year which pays for MGIB
    differently than in the past. Anyone who enlists/reenlists for six
    years is considered ``eligible'' for MGIB at the date of enlistment and
    the Air National Guard must budget for the funds. Prior to last year,
    eligibility began after the first 6 year enlistment/reenlistment of
    eligible members.
        With the new factoring formula, the Air National Guard Military
    Personnel account for fiscal year 1997 was approximately $2.8 million
    short but the ANG was able to reprogram their budget to pay these
    members. This year the ANG Military Personnel Account is $6.2 million
    short. The Air National Guard needs these funds to fulfill its
    obligation to its members. Requiring the ANG to continue to reprogram
    these funds will cause a shortage in other areas.
                              paid military leave
        Paid military leave for federal civilian employees was authorized
    by Public Law 90-588 and was enacted in 1968 (Title 5, Chapter 63,
    Section 6323). The Public Law was intended to have the federal
    government set an example for private employers of Guard and Reserve
    members. This also provided a small compensation to offset the personal
    sacrifices of family separation, increased stress, physical damage and
    loss of civilian career opportunities by Guard and Reserve members who
    are also federal employees.
        The Presidential budget submission for fiscal year 1998 excludes
    funding for all government employees who currently receive 15-day paid
    military leave. This action will result in a direct decrease in income
    to all Military Technicians and government employees in the Guard or
    Reserve.

    ------------------------------------------------------------------------
                                                     Number of    Percent of
                   Agency/Department                 Reservists   Work Force
    ------------------------------------------------------------------------
    Defense.......................................      100,300         11.6
    Veterans' Affairs.............................       11,000          4.3
    Justice.......................................        5,100          5.2
    Transportation................................        2,200          3.4
    Agriculture...................................        2,000          1.9
    Health and Human Services.....................        1,400          1.1
    Interior......................................        1,300          1.8
    Labor.........................................          300          1.8
    Other Agencies................................       31,200          2.3
                                                   -------------------------
          Total...................................      154,700          5.2
    ------------------------------------------------------------------------

        This proposal may cause a variety of problems for the National
    Guard, as many Guard members may decide not to attend drill. The
    National Guard may become unable to accomplish non-mobilization airlift
    missions. Sixty percent of day-to-day missions are flown by Guard
    members and Reservists, mainly full-time Technicians. Efficiency and
    performance would drop. Readiness would surely diminish. It is expected
    that loss of this entitlement will cause a large exodus of federal
    employees from the Reserve forces.
        Military Technicians, who are required to hold military positions
    to hold civilian positions, would be required to work two jobs and
    receive basically very minor compensation for the second job (military
    duty). It would create two categories of Guard and Reservists who
    attend 15 days annual training: those who are paid their military pay
    and those who are not, except for small benefits such as BAS and BAQ.
        This proposal may also cause recruiting problems. Prior service
    recruiting efforts, as required by law, are already maxed out. A change
    by the federal government would be seen as a lessening of support of
    all Guard/Reservists. This change could cause significant degradation
    in civilian support for Reservists. There will be a tremendous effect
    on state and local governments which currently provide paid military
    leave.
                               full-time support
        The National Guard's role under the Total Force Policy is
    substantial; it requires high levels of readiness. The ability of Guard
    units and personnel to mobilize, deploy, integrate and operate was
    amply demonstrated during Operation Desert Shield/Desert Storm and now
    Bosnia. The level of full-time support manning has a direct and
    demonstrated influence on readiness capabilities and is dictated by
    mission and equipment levels rather than by end strength. Full-time
    support manning is a pivotal element in day-to-day operations and
    functions in administration personnel, supply and training preparation
    and in enhancing the quality of training by making inactive duty
    training periods and annual training more efficient and effective. A
    need exists for full-time spaces to support organizing and maintaining
    state health and dental clinics.
                               controlled grades
        Enlisted grades E-8 and E-9 are controlled grades; Congress
    authorizes controlled grades in the annual Defense Authorization Act.
    Controlled grades are frequently under-authorized, not meeting requests
    from National Guard Bureau (NGB). Many airmen and soldiers have been
    selected to hold controlled grade positions, performing the duties at
    or above standard without proper monetary compensation and have to wait
    for a controlled grade to be released from NGB. Additional Controlled
    Grade Authorizations for AGR's in the Air and Army National Guard need
    to be authorized.
        Full Time Support (FTS) positions in the Army National Guard units
    were previously authorized to be filled by AGR or Military Technicians.
    In fiscal year 1997, the unit FTS positions will only be authorized to
    be filled by AGR's. This policy will cause Military Technicians to be
    displaced or lose their full-time employment. The loss of full-time
    positions will cause dedicated and valuable military members to become
    unemployed or retire at a reduced annuity. The displacement of Military
    Technicians will cause severe financial hardship as well as individual
    embarrassment. Funding for FTS positions at unit level to be filled
    with either AGR or Military Technician personnel should be reinstated.
                         student loan repayment program
        The Federal Student Loan Repayment Program provides an incentive to
    many soldiers to reenlist in the National Guard to obtain assistance in
    paying off student loans. Many soldiers and airmen could not attend or
    complete college without this program. The program assists in meeting
    the Armed Forces' goal of obtaining and retaining educated, quality
    soldiers, thus maintaining a quality force. Also, it is expected that
    it will cost DOD a significant dollar amount to reprogram computers.
                                      rcas
        Another area of concern is the Reserve Component Automation System
    (RCAS).
        It seems evident that in any future armed conflict, the Army
    National Guard must be prepared to respond, along with the active Army,
    not only with combat support and combat service support units, but with
    first-line combat forces as well. This will require that the National
    Guard achieve much higher levels of preparedness and much shorter
    reaction times. With these new demands and expectations, the fielding
    of the RCAS infrastructure assumes critical importance and a new sense
    of urgency.
        There is an urgent need for automated information management in the
    Army National Guard that will simplify and expedite all administrative
    functions, and reduce the time and expense of preparing, maintaining
    and processing personnel, pay, inventory and other such planning. RCAS,
    which is being developed and fielded under the direction of the
    National Guard Bureau, is the answer to these pressing concerns. The
    resulting database will ensure more accurate and accessible data for
    the generation of routine reports as well as special requirements for
    information. Yet, its development is being hampered by funding
    restraints. The current funding profile does not allow for completion
    of fielding of the RCAS infrastructure until year 2002. This fiscal
    year, only 7,633 of its 46,194 workstations will be fielded, and the
    system will be fully deployed to only 16 of the 94 Army National Guard
    and Reserve commands.
        Mr. Chairman, this automation equipment is needed now. We ask for
    your support in mandating expedited fielding of the RCAS system, and
    that sufficient out-year funding be shifted to fiscal year 1998 and
    fiscal year 1999 to ensure successful accomplishment. This will save
    tax dollars and also relieve manpower restraints that currently exist
    in units.
                                      mlrs
        In its first combat deployment in Operation Desert Storm, the
    Multiple Launch Rocket System (MLRS) dominated the artillery
    battlefield. The Army National Guard units from Oklahoma and Arkansas
    performed admirably utilizing the capabilities of MLRS. These units not
    only performed magnificently, but also assisted coalition forces from
    the United Kingdom and France during the advance into Iraq. From
    January 17, 1991, until February 26, 1991, units from the 1-158 Field
    Artillery MLRS fired more than 934 rockets at Iraqi defenses. The
    overwhelming success of MLRS in Desert Storm emphasizes the importance
    of a modernized artillery force.
        Today, the National Guard represents two-thirds of the total Army's
    artillery. MLRS is a mission which the Army National Guard can
    reasonably train and be prepared in short notice to assist the regular
    Army in future contingency missions. Modernization with MLRS is far
    from complete; 11 National Guard battalions and seven National Guard
    divisions are unfunded. The Army's limited budget would stop National
    Guard modernization, denying MLRS's firepower to many units who would
    be called to serve in national emergencies. $185.5 million in
    additional appropriations to the Army's procurement account is
    necessary to add four MLRS batteries in fiscal year 1998.
                                youth challenge
        The National Guard has begun youth programs in 19 states. These
    programs capitalize on National Guard facilities and equipment and take
    advantage of the experience and training of Guard men and women. The
    National Guard is involved in Starbase and National Guard ``Challenge''
    programs which are financed separately from primary readiness accounts.
    The goal in these programs is to be a positive influence on the youth
    of America with National Guard men and women serving as role models to
    portray a spirit of pride, tradition and service to community, state
    and nation. To date, none of the graduates of the ``Challenge'' program
    have been in trouble with the law.
                                    closing
        Mr. Chairman, it is our association's belief that the National
    Guard, in conjunction with the active component, represents the most
    cost-effective weapon at our disposal to defend our nation. The
    National Guard's potential has barely been tapped. Yet, it stands
    ready, willing and accessible to meet our defensive needs. It is
    imperative to ensure that the Guard has support to fully develop into
    an integral part of the Total Force. This can only be accomplished
    through modernization of equipment, a stable force strength, and
    training. Shortchanging any one of these areas could prove fatal to the
    effectiveness of the National Guard in defense of our country.
        Mr. Chairman, the National Guard is your next door neighbor, he or
    she may be a truck driver, your lawyer, your son or daughter or your
    grandchildren's teacher. When the National Guard is called, America
    goes to war. The Guard is family, Americans at their best. The National
    Guard--protectors of freedom and defenders of peace.
        I would like to thank the Chairman and Members of this committee
    for the opportunity to provide testimony on the fiscal year 1998
    funding requirements for the Army and Air National Guard. Thank you.
    STATEMENT OF CAPT. JOHN GODLEY, LEGISLATIVE DIRECTOR,
                NAVAL RESERVE ASSOCIATION
        Senator Stevens. Next is Captain Godley of the Naval
    Reserve Association.
        Good morning, Captain.
        Captain Godley. Good morning, Mr. Chairman and Senator.
        I apologize for Admiral Carey not being here. He is on his
    way. I will just fill in for him and make it very brief, sir.
        You have Admiral Carey's statement for the record which we
    appreciate.
        We would like to start out by focusing on the fact that the
    Naval Reserve provides 20 percent of the naval forces for only
    3 percent of the Navy's budget. We believe that this is a very
    good deal, indeed.
        Our association, the Naval Reserve Association, is composed
    of about one-half of retired members of the Naval Reserve and
    the other are drilling reservists. So we are split in our views
    of what needs to be done for the Naval Reserve. One focuses on
    what needs to be done for the Selected Reserve, the other for
    the retirees.
        We fully support the position of the other associations
    that have spoken here on health care for retirees. We will not
    go into that.
        This morning, I would like to focus more on what is in the
    budget and what is happening to the Naval Reserve today.
        First of all is manpower. It has been determined that to
    meet the operational commitments that are placed on the Naval
    Reserve, the Naval Reserve force has to be between 100,000 and
    96,000 personnel. The President's budget reduces that down to
    94,300, without any change in missions applied to the Naval
    Reserve.
        The QDR, which has recently come out, reduces that figure
    down below 90,000. We do not believe that the Naval Reserve can
    meet the needs that the Navy is placing on it, the demands that
    the Navy is placing on it, with this force structure.
        We request that your committee look into it and support a
    Naval Reserve of between 96,000 and 100,000 personnel.
        Regarding National Guard and Reserve equipment money, we
    realize that money is tight this year. What we ask for is that
    the Naval Reserve receive their fair share of NG&RE money. The
    Navy, once again, has not budgeted for Naval Reserve equipment.
    We look for your continued support for replacement C-9
    aircraft. We look for support for the MIUW and the coastal
    warfare programs.
        On the topic of military construction/Navy, last year the
    budget had $38 million in it. This budget that has been
    presented to you is at the $40 million level. Our facilities
    are decaying rapidly. This is becoming a safety issue for our
    reservists in where they have to drill and work.
        Operations and maintenance money has been cut by $50
    million without any change in the mission requirements. We ask
    that your committee restore the $50 million to the budget.
        Very briefly, on the Reserve Mobilization Insurance
    Program, we believe that this fiasco of a program should be
    revamped but also that there is a definite need for the program
    and we ask you to charge DOD to revise the program and make it
    a viable program that will provide the income protection to our
    reservists.

                               prepared statement

        In closing, I have three point papers which I will provide
    to your staff that discuss these issues.
        I thank you for the opportunity to allow us to testify
    before you.
        [The statement follows:]
      Prepared Statement of Rear Adm. James J. Carey, U.S. Naval Reserve
            (Retired), National President, Naval Reserve Association
        Mr. Chairman, distinguished members of the Committee, it is a
    privilege to present the views of the Naval Reserve Association to the
    Committee for your consideration. Our more than 22,000 officer members
    include drilling Selected Reservists, Reservists on active duty, and
    retired Reservists, who all share the same goal--a strong Naval Reserve
    which is seamlessly integrated into One Navy with the active Navy. Our
    Naval Reserve is a strong and viable maritime force thanks to the past
    support of this committee, and we continue to provide 20 percent of the
    entire Navy for 3 percent of the Navy budget. We in the Naval Reserve
    Association want to work with you and the rest of Congress and with the
    Department of Defense and Department of the Navy to ensure that our
    Naval Reserve remains strong, viable and capable of meeting the
    increasing requirements that it faces. Additionally, along with other
    associations that are members of the National Military/Veterans
    Alliance, we advocate keeping the faith with the millions of active
    duty and retired service members by maintaining the pay and benefits
    which our nation has promised.
        Unfortunately, the Naval Reserve Association does not see in the
    President's Budget the support required to maintain a strong Naval
    Reserve or to provide the pay and benefits that our members believe
    they have earned.
                             naval reserve manpower
        Four years ago, the Naval Reserve began a drastic reduction in
    Selected Reserve and Full-Time Support (TAR) end-strength as part of
    the Navy Department's efforts to right size. Unlike the active
    component, the Naval Reserve programmed a rapid reduction from an end-
    strength of 153,400 in fiscal year 1991 to a bottom end-strength of
    96,000 in fiscal year 1997. After fiscal year 1997, the Naval Reserve
    was to maintain a Selected Reserve/TAR end-strength between 96,000 and
    100,000 members. These levels were determined by the study, ``The
    Future Naval Reserve: Roles & Missions, Size and Shape,'' which was
    presented to Congress by the Assistant Secretary of Defense (Reserve
    Affairs), and further validated by the Bottom-Up Review. In previous
    testimony, the Chief of Naval Operations and the Assistant Secretary of
    Defense (Reserve Affairs) assured Congress that the Naval Reserve would
    level out at 96,000 to 100,000 end-strength in fiscal year 1997 and
    beyond. Our members and members of the Naval Reserve took this
    testimony as a commitment by the Administration to maintain a Naval
    Reserve size within these boundaries. Surprisingly, and without
    tangible justification, the proposed President's budget shows a further
    decline to 94,294 in fiscal year 1998 and to 93,582 in fiscal year
    1999. This unexplained reduction comes at a time when fleet and shore
    commanders are requesting increasing support and participation by Naval
    Reservists. The Naval Reserve Association urges the members of this
    committee to support restoring this end-strength along with the
    appropriate funding to the budget.
                  national guard and reserve equipment account
        Last year, Congress directed the Department of Defense to submit a
    budget with separate line items for Guard and Reserve Equipment
    requirements. This requirement has not been complied with in the fiscal
    year 1998 budget proposed by the President. The Naval Reserve
    Association concurs with Congress that the Naval Reserve, and the other
    Reserve components, should be specifically budgeted for its equipment
    needs and that these requirements should be spelled out in budget
    proposals submitted by the Department of Defense. For years, the Naval
    Reserve has been forced to seek Congressional support for its equipment
    needs by asking for supplemental funds through the NG&RE account. While
    this practice must be abolished, it can only happen after DOD and the
    Services have shown their commitment to adequately provide Reserve
    equipment through separate line item funding in their budget
    submissions. Unfortunately, again this year, the Naval Reserve
    Association must come to you with our assessment of what is missing
    from the President's budget, and request that Congress again resort to
    providing this required equipment through the NG&RE account. The
    following table represents our association's assessment of the Naval
    Reserve's unfunded equipment needs.

    Fiscal Year 1998 Unfunded Naval Reserve Equipment Requirements

                              [Dollars in millions]

            Equipment Nomenclature                               Requirement
    C-9 Replacement Aircraft (3)......................................  $150
    Naval Coastal Warfare.............................................    91
    F/A-18 Precision Strike Upgrades..................................    92
    CESE TOA..........................................................    25
    F-14 Precision Strike Upgrades....................................    34
    Miscellaneous Equipment Items.....................................    95
    P-3 Modifications.................................................   116
    SH-60B Aircraft (5)...............................................   140
    E-2 Group II Aircraft (4).........................................   300
    ALQ-126B..........................................................    25
                            -----------------------------------------------------------------
                            ________________________________________________
          Total Unfunded Requirements................................. 1,068
                naval reserve operations and maintenance funding
        It is critical that the Operations and Maintenance funding for the
    Naval Reserve (O&M,NR) provide adequate resources to maintain the
    readiness of the Naval Reserve and operate its facilities and units in
    an efficient and safe manner. In the budget, as presented, O&M,NR funds
    decline from $885.3 million to $834.7 million in fiscal year 1998.
    Although some of this decline can be accounted for due to the decreased
    end-strength (which of course we disagree with), it does not adequately
    explain the lack of support by the Navy for the readiness and
    operations of the Naval Reserve. We urge you to restore the O&M,NR
    account to previous levels.
                  military construction for the naval reserve
        The Navy has been neglecting the operations, repair and maintenance
    of its Naval Reserve facilities for years. This included a neglect in
    constructing new facilities for the Naval Reserve to replace aging and
    grossly inefficient facilities. Through a concerned effort of the Naval
    Reserve leadership, and with full support of Congressional committees,
    this situation was gradually reversed, and a plan was conceived and
    pursued which would correct this unsatisfactory situation. This
    resulted in an MCNR account of $37.6 million for fiscal year 1997.
    Unfortunately, with the submission of this budget and a proposed MCNR
    account of only $13.9 million, the Navy has returned to its position of
    not supporting, at nearly adequate levels, the facility requirements of
    the Naval Reserve. The future of these facilities is being mortgaged
    and will result in rapidly deteriorating infrastructure in the
    outyears. We urge Congress to return the MCNR account to the $35 to $40
    million level for the Naval Reserve.
            reserve component mobilization income insurance program
        The Mobilization Income Insurance Program authorized by Congress
    and implemented by the Department of Defense last year is already
    severely under funded and unable to provide the income protection which
    Reservists and Guardsmen have signed up for. Currently, DOD is paying
    benefits at a rate of four cents on the dollar which we consider to be
    a complete break in faith with our Reservists of all services. We are
    at a loss to understand how the Department of Defense, acting under the
    direction of Congress, could initiate such a program, ask Reservists to
    support and participate in it, and then apparently manage the program
    in such a manner that results in such serious under funding. Indeed, we
    are unable to explain this situation to our members who are not
    receiving their due payments. DOD has requested supplemental funding of
    $72 million to get this program through the current fiscal year. The
    Naval Reserve Association supports the Department's request for these
    additional funds so that those Reservists and Guardsmen who are
    eligible for this protection receive what is due them. However, the
    Association does not support the Department's proposed method to offset
    this budget increase--taking money from Reserve equipment funds nor
    does the Association support the Department's plan to terminate this
    program. DOD needs to redesign the plan so that it meets the needs of
    Reservists while maintaining fiscal solvency.
                              pay and compensation
        The Naval Reserve Association fully supports the proposed pay
    increase for all military members as contained in the President's
    budget. However, we note that the proposed raise merely maintains the
    existing pay rates at a level which keeps pace with inflation and does
    nothing to recoup the cumulative loss of buying power suffered by our
    military members over the years due to historically inadequate pay
    raises. Of great concern to our members are the reports they see in the
    press regarding envisioned changes to the way the Consumer Price Index
    is calculated. The CPI is used as a basis for calculating the amount of
    Cost of Living Allowance adjustments. Realizing that their military pay
    has not kept pace with the cost of living over the years, our members
    view diminished COLA's in the future as a double burden placed on
    military retirees. We ask that Congress keep the special circumstance
    of military retirees in mind when, in the future, it determines COLA
    adjustments to retired pay.
                         federal military leave policy
        Contained in the proposed budget is a provision which would change
    existing policy pertaining to military leave for federal employees. For
    years, it has been the policy to provide Reservists, who are federal
    employees, with up to 15 days of military leave annually, with full
    pay, when they perform their annual training requirements. This leave
    and pay is in addition to normal annual leave to which federal
    employees are entitled and the pays and allowances which the individual
    may earn while performing Reserve duties. This long-standing policy was
    designed to encourage and support federal employees who were Reservists
    and Guardsmen. Additionally, the policy sent a strong message to
    private sector employers and encouraged employers to adopt similar
    support for their employees. This budget would change that policy to
    paying federal employees only the difference between their federal
    salaries and their Reserve compensation for the annual training period.
    We believe that this change in policy will discourage federal employees
    from joining the Reserve components and will result in a loss of
    trained Reservists from the rolls. Additionally, it will encourage
    private employers to reduce their support for the Guard and Reserve. I
    urge you not to support the administration's policy change and to
    restore the $84 million reduction from the Defense budget.
                              health care benefits
        There is growing concern among our members that the health care
    which has been promised to them during their retirement years will not
    be there. For decades, military leadership and recruiters promised that
    one of the benefits of a military retirement was that retirees, and
    their dependents, would receive free medical care for the rest of their
    lives. To ensure that this commitment to our retirees is met, the Naval
    Reserve Association and other members of the National Military/Veterans
    Alliance support Medicare subvention which would provide greater
    resources to military treatment facilities and thus allow increased
    medical service to retirees. Our association also supports either
    providing the Federal Employees Health Benefit Program option to all
    military retirees or to restore TRICARE Standard/CHAMPUS to the quality
    and level of care provided to all other Federal retirees. We ask your
    support to make this happen.
                             naval reserve's future
        As I pointed out to you in my recent letter, Mr. Chairman, the
    Department of the Navy has been discussing courses of action which, if
    approved by Congress and implemented, would in my opinion, gut and
    destroy the Naval Reserve as we know it. It would appear to me that
    these actions are not in response to changing naval requirements nor in
    lessening of demand by the Commanders-in-Chief for Naval Reserve
    support but are motivated by the desire to use the Naval Reserve as a
    ``bill payer'' for the Navy's share of reduced Defense budgets. Among
    the solutions being discussed are the elimination of the one remaining
    Reserve Carrier Air Wing, elimination of all 10 Naval Reserve Force
    frigates, elimination of seven of eight Reserve Maritime Patrol
    squadrons, elimination of all helicopter capability within the Naval
    Reserve and closing or severe downsizing of the bases which support
    these units. These actions would leave a Naval Reserve with little
    equipment to train on, become proficient with or to mobilize as a force
    multiplier in time of need. The Association urges you to question the
    wisdom of these radical proposals and to continue your support of a
    strong, well-equipped Naval Reserve.
        In closing, Mr. Chairman, we believe, that in this uncertain and
    dangerous world that we live in, the Naval Reserve provides the
    affordable leverage required to meet today's and tomorrow's
    requirements. Within this context, we have asked our Naval Reservists
    to mobilize for Desert Storm, for Haiti, for Bosnia and to provide
    increasing daily contributory support around the world. We asked them
    to do this in face of a 32 percent cut in end-strength, fewer operating
    funds, and in less than optimal facilities. They have responded in a
    magnificent fashion and have accepted the drawdown because they
    believed that there was a plan, a vision and stabilization in the
    future, They, and we, placed our faith in the integrity of the
    Department of Defense and the Navy. Now in the space of a few short
    months, that faith apparently is misplaced. I am sure that you, like
    we, are at a loss to understand this course reversal by DOD and the
    Department of the Navy. We believe there is, in fact, no good
    explanation for the change, except to solve other Navy problems on the
    backs of our loyal and dedicated Naval Reservists. Therefore, we appeal
    to you and ask you to correct this action and restore the levels of
    funding within the Naval Reserve accounts to the fiscal year 1997
    levels. We look forward to working with you and your staffs in solving
    this most pressing issue.
                                     ______

                                  Point Paper
               operation and maintenance, naval reserve (o&m,nr)
        Background.--The Defense Budget for fiscal year 1998 as proposed by
    the President includes a reduction in Operations and Maintenance, Naval
    Reserve funds of $50.6 million.
        Discussion.--O&M,NR funds support the daily operations of the Naval
    Reserve which includes providing the necessary flight hours for
    aircraft and steaming days for ships to maintain the readiness of these
    forces. The fiscal year 1997 budget provided $885.3 million in this
    account while the proposed fiscal year 1998 Defense budget reduces this
    funding to $834.7 million. Since the levels of contributory support
    provided by the Naval Reserve to the active Navy is not diminishing nor
    are the operational taskings levied on Naval Reserve forces being
    reduced, the Naval Reserve Association is unable to explain an
    operational necessity for this $50.6 million cut. The impact of this
    proposed reduction will be a decline in readiness of Naval Reserve
    units as well as a weakening of the ability of the Naval Reserve to
    operate its facilities and units in a safe and efficient manner.
        Recommendation.--The Naval Reserve Association urges the House and
    Senate Appropriations Committees to restore the O&M,NR account to
    previous levels.

                            [In millions of dollars]
    ------------------------------------------------------------------------
                                             Fiscal year--
                 Category             --------------------------    Change
                                           1997         1998
    ------------------------------------------------------------------------
    Air Operations...................        513.5        505.8         -7.7
    Ship Operations..................        161.4        140.3        -21.1
    Combat Ops/Support...............         82.2         73.3         -8.9
    Weapons Support..................          6.1          4.1         -2.0
    Administration...................        122.1        111.2        -10.9
                                      --------------------------------------
          Total O&M,NR...............        885.3        834.7        -50.6
    ------------------------------------------------------------------------

            naval reserve end-strength reserve personnel, navy (rpn)
        Background.--The Defense Budget for fiscal year 1998 as proposed by
    the President reduces Naval Reserve end-strength from 95,898 in fiscal
    year 1997 to 94,294 in fiscal year 1998 and 93,582 in fiscal year 1999.
    There is a commensurate reduction in Reserve Personnel, Navy funds of
    $29 million in fiscal year 1998.
        Discussion.--Over the past two years, the Chief of Naval Reserve,
    the Chief of Naval Operations, and the Assistant Secretary of Defense
    (Reserve Affairs) have all testified in the strongest possible terms
    that an end-strength of 96,000 to 100,000 was required for a viable
    Naval Reserve. This end-strength range was based on the conclusions of
    the Congressionally directed Roles and Missions Study for the Naval
    Reserve which was conducted by OSD. The Navy has apparently abandoned
    its plan to maintain the size of the Naval Reserve at the 96,000 to
    100,000 level. The Naval Reserve Association is at a complete loss to
    understand what analysis, world situation or daily/crisis requirements
    have changed so dramatically since the Department of Navy/OSD
    representatives last testified as to justify this about face in the
    plan and vision for the Naval Reserve. Clearly, the requirements of the
    Naval Reserve contributory support are increasing--not decreasing--
    world-wide. Mobilization requirements remain the same and every field
    commander is asking for more Reservists, not fewer. It is the Naval
    Reserve Association's view that these end-strength cuts and the
    resulting cut in RPN funds have no basis of analysis and in fact are
    ``bill payers'' for other Navy programs. If this is the case and it is
    not corrected, it will make a mockery of the testimony given in the
    past before Congress.
        Recommendation.--The Naval Reserve Association strongly recommends
    that Congress restore $29 million to the RPN account in fiscal year
    1998 and that it restore the end-strength of the Naval Reserve to its
    previous levels of 96,000 to 100,000. The Naval Reserve Association
    further recommends that the end-strength restoral for fiscal year 1998
    be implemented as follows:

    Medical...........................................................  +400
    Oceanography......................................................   +75
    Intelligence......................................................   +26
    Logistics.........................................................  +400
    Submarine.........................................................  +250
    Air...............................................................  +252
    Surface...........................................................   +76
    Expeditionary War.................................................   +50
    Special Warfare...................................................   +75
                            -----------------------------------------------------------------
                            ________________________________________________
          Total....................................................... 1,604
                          naval reserve cuts discussed
        Eliminate 7 of 8 Reserve P-3 squadrons (56 aircraft, 3,387 people,
    and 7 locations).
        Eliminate 10 Reserve FFG-7 class ships (10 ships, 2,436 people, and
    4 locations).
        Eliminate one remaining Reserve Carrier Air Wing (98 aircraft,
    3,508 people, and 7 locations).
        Eliminate SH-2G helicopter squadrons (14 aircraft, 676 people, and
    2 locations).
                         reserve patrol (p-3) squadrons
        Background.--The Navy Department is discussing various force
    structure reductions in conjunction with implementation of the
    Quadrennial Defense Review and Program Review--1999 (PR-99). Among
    these potential reductions is elimination of seven of eight existing
    Reserve Patrol (P-3) squadrons.
        Discussion.--Over the past 27 years, Reserve Patrol Squadrons have
    been one of the most successful, and most highly integrated examples of
    the Total Force within the Navy. They have been a shining example of
    contributory support to the active Navy throughout their existence.
    From a posture of four years ago when the Navy had 37 P-3 squadrons (24
    Active/13 Reserve) to a level today of 20 squadrons (12 Active/8
    Reserve), the Navy is proposing further reductions to a posture of 12
    squadrons (11 Active/1 Reserve). Reserve Patrol Squadrons are deployed
    world-wide in support of real-world operations and are, on a daily
    basis, contributing to forward presence operations. The existence of
    these Reserve squadrons and their qualified personnel has reduced the
    pers tempo and ops tempo of an already overtaxed active component. The
    Navy is further discussing the formation of three Maritime Augment
    Units (MAU's) with some of the personnel currently assigned to the
    Reserve P-3 squadrons. The MAU program has been tried in the past and
    has just not worked. Furthermore, the elimination of these squadrons
    based at existing Naval Air Stations, would signal the beginning of
    elimination of the Naval Air Stations themselves--this would constitute
    a defacto BRAC decision, without the advice, review, participation or
    consent of Congress. The elimination of these seven Reserve squadrons
    would constitute a reduction of 56 P-3 aircraft, 3,387 people based at
    seven locations. The potential closing of associated Naval Air Stations
    would significantly add to these totals.
        Recommendation.--Since these proposed reductions are not based on
    any change to operational requirements nor to a decrease in the demand
    for contributory support by the Fleet commanders-in-chief, they can
    only be viewed as a ``bill payer'' so the Navy can meet other funding
    shortfalls. Therefore, it is recommended that Congressional leaders
    question the Secretary of the Navy and the Chief of Naval Operations
    about the need for and prudence of these discussed reductions. Further,
    it is recommended that these seven squadrons and their personnel be
    restored to the budget should the Navy Department include such cuts in
    future budget proposals.
                     naval reserve force ffg-7 class ships
        Background.--The Navy Department is discussing the decommissioning
    of all ten FFG-7 class frigates currently assigned to the Naval Reserve
    Force.
        Discussion.--Naval Reserve Force FFG-7 class ships represent a
    critical part of the Navy's surface warfare capabilities. They provide
    forward presence through deployment to Europe, South America and Asia
    as well as providing counter-drug interdiction in the Caribbean and
    eastern Pacific. Many of these missions could not be accomplished
    without the services of these Naval Reserve Force ships. NRF FFG-7's
    significantly reduce the pers tempo and ops tempo of our hard-pressed
    active duty sailors. This potential reduction of ten NRF ships would
    involve 2,436 people at four locations.
        Recommendation.--Since these proposed reductions are not based on
    any change to operational requirements nor to a decrease in the demand
    for contributory support by the Fleet commanders-in-chief, they can
    only be viewed as a ``bill payer'' so the Navy can meet other funding
    shortfalls. Therefore, it is recommended that Congressional leaders
    question the Secretary of the Navy and the Chief of Naval Operations
    about the need for and prudence of these discussed reductions. Further,
    it is recommended that these eleven ships and their personnel be
    restored to the budget should the Navy Department include such cuts in
    future budget proposals.
                            reserve carrier air wing
        Background.--The Navy Department is discussing the elimination of
    the one remaining Reserve Carrier Air Wing (CVWR-20).
        Discussion.--This follows the elimination of one-half of the
    Reserve Carrier Air Wings with the disestablishment two years ago of
    CVWR-30. CVWR-20 represents the heart and soul of the Naval Reserve
    aviation arm with a well-seasoned force of significantly trained combat
    veterans who, have on an average over 3,000 flight hours and 300
    carrier landings. They are not only critical to our mobilization and
    contingency operational plans, but are also critical to achieving the
    active component mission through adversary services, electronic warfare
    training, counter-drug operations and a host of other missions that are
    vital to the training and support of the Navy. VFC-12 and 13 devote 100
    percent of their mission to accomplishing adversary training support
    for the United States Navy, a service unavailable elsewhere. The
    remaining tactical air squadrons in CVWR-20 routinely provide more than
    50 percent of their flight hours in training support of the active
    Navy. Elimination of CVWR-20 would involve 98 aircraft, 3,387 people
    and 7 locations.
        Recommendation.--Since these proposed reductions are not based on
    any change to operational requirements nor to a decrease in the demand
    for contributory support by the Fleet commanders-in-chief, they can
    only be viewed as a ``bill payer'' so the Navy can meet other funding
    shortfalls. Therefore, it is recommended that Congressional leaders
    question the Secretary of the Navy and the Chief of Naval Operations
    about the need for and prudence of these discussed reductions. Further,
    it is recommended that this wing and their personnel be restored to the
    budget should the Navy Department include such cuts in future budget
    proposals.
                      reserve helicopter (sh-2g) squadrons
        Background.--Discussion of eliminating both SH-2G helicopter
    squadrons that support the 10 Naval Reserve Force frigates.
        Discussion.--The two Naval Reserve HSL squadrons are the only SH-2G
    capable squadrons in the Navy and are therefore, the only squadrons
    capable of providing airborne anti-submarine warfare capability to the
    Naval Reserve Force frigate platforms. The SH-2G aircraft is the only
    current platform on which Magic Lantern, a system critical to
    successful mine location and elimination, is installed. This capability
    must be maintained with the NRF FFG-7 class ships. Elimination of these
    two squadrons would include loss of 14 aircraft and 676 people at two
    locations.
        Recommendation.--Since these proposed reductions are not based on
    any change to operational requirements nor to a decrease in the demand
    for contributory support by the Fleet commanders-in-chief, they can
    only be viewed as a ``bill payer'' so the Navy can meet other funding
    shortfalls. Therefore, it is recommended that Congressional leaders
    question the Secretary of the Navy and the Chief of Naval Operations
    about the need for and prudence of these discussed reductions. Further,
    it is recommended that these seven squadrons and their personnel be
    restored to the budget should the Navy Department include such cuts in
    future budget proposals.
                   reserve fleet logistics support (c-9) wing
        Background.--The Navy Department is discussing transfer of the
    Naval Reserve C-9 aircraft to the U.S. Air Force.
        Discussion.--The Fleet Logistics Support Wing provides 100 percent
    of the Navy's world-wide organic air logistics support. The wing
    consists of 12 squadrons which operate from CONUS bases as well as
    overseas at bases in Italy and Japan, providing support to forward
    deployed Navy forces. A unique and critical capability of these units
    is the ability to rapidly respond to international missions, often
    within a few hours of the initial request for services. Without these
    Navy Unique Fleet Essential Airlift Aircraft, the Navy would be
    incapable of providing responsive, flexible and rapidly deployable air
    logistics support required to sustain combat operations at sea and
    peacetime air logistics support for all Navy commands. Commanders of
    both Active and Reserve forces are dependent on the Fleet Logistic
    Support Wing to meet their world-wide air logistics support flexibly
    and responsively. Transfer of this capability to the Air Force would
    result in degraded responsiveness to Navy commanders and would involve
    27 aircraft and 1,854 people at 6 CONUS locations.
        Recommendation.--Since these proposed reductions are not based on
    any change to operational requirements nor to a decrease in the demand
    for contributory support by the Fleet commanders-in-chief, they can
    only be viewed as a ``bill payer'' so the Navy can acquire more
    hardware. Therefore, it is recommended that Congressional leaders
    question the Secretary of the Navy and the Chief of Naval Operations
    about the need for and prudence of these discussed reductions. Further,
    it is recommended that these logistic aircraft and their personnel be
    retained in the Naval Reserve and restored to the budget should the
    Navy Department include such cuts in future budget proposals.

        Senator Stevens. Thank you. Give the Admiral our best.
    Thank you very much.
        Captain Godley. I certainly will, sir.
        Senator Stevens. Is Dr. Kenneth Quickel here?
        [No response.]
        Senator Stevens. Our last witness this morning will be
    Chief Master Sergeant Mark Olanoff. The balance of the
    witnesses will be notified when our next hearing will be.
        We have just been notified that the conference that we are
    both part of will resume at 1 o'clock. We cannot reschedule you
    today. So we will reschedule this for another day and we must
    do it soon because we are going to start our markup soon.
        I apologize for the inconvenience, but we have no control
    over when the conference is called by the House.
        Sir, please proceed.
    STATEMENT OF CHIEF MASTER SERGEANT MARK H. OLANOFF,
                USAF (RETIRED), LEGISLATIVE DIRECTOR,
                RETIRED ENLISTED ASSOCIATION
        Sergeant Olanoff. Thank you very much, Mr. Chairman. I know
    that time is running out.
        I would like to thank you on behalf of the Retired Enlisted
    Association to allow us to testify today.
        At this time, very briefly, I would like to introduce
    Command Sergeant Major, retired, Woody Woodward, who is on our
    board of directors. He is our legislative chairman.
        Mr. Chairman, I have done a little research. I know that
    you and Senator Inouye are veterans of the military and we
    appreciate your service to your country and also to the
    veterans at large. But there are two members who are not here
    who probably heard the same sales pitch that we heard when we
    first enlisted. Those are a Sergeant Bumpers, who is now a
    Senator from Arkansas, and Corporal Lautenberg, from New
    Jersey, who is a U.S. Senator.
        If they were here, the question I would ask them is what
    did they think of this recruiting inducement that was used to
    recruit us when we first joined the military. I can tell you
    very briefly that when I enlisted in 1967, no recruiter or any
    other official of the Government ever told me that there was a
    Medicare bill passed in 1966 that said that I was not allowed
    to use CHAMPUS when I become 65.
        So I know that you have probably heard this story before
    about what we call the promise of the health care for our
    retirees. I am very new to this town, Senator, and just because
    Government quotes title 10, section 1074, about space
    availability, our retirees made their life plans based on the
    fact that these benefits would be there when they retired. Now
    that they are over 65, as some of the things I detailed in my
    statement show, a lot of them did not take Medicare part B
    because they were advised that it was not needed. Now they
    don't have Medicare. And we just have a lot of problems right
    now with the health care for our military retirees.
        What the Retired Enlisted Association's plan is for the
    Congress to correct this situation is we believe that we should
    have the same health plan that you have. In fact, I would like
    to read a quick quote from an article that was in People
    magazine.
        Senator Stevens. That we have?
        Sergeant Olanoff. ``As a Federal employee, I have a good
    health insurance policy. I pay 20 percent copayment. It would
    be terrible to have this happen to you without any insurance.''
    That Federal employee is the President of the United States,
    Bill Clinton.
        Senator Stevens. He doesn't get that when he retires, now.
    He pays the full amount when he retires.
        Sergeant Olanoff. Yes, sir; he pays. And our members are
    prepared to pay for something that they should have received
    for free.
        So we realize the budget constraints and we know that you
    cannot sit here today and promise me that I can go back to my
    membership and say that Senator Stevens is going to propose a
    bill to give us free health care. We realize that that is not
    going to be done.
        But, sir, what we do believe is that we would like to have
    the same health care that you have, that your staffers have,
    and that all other Federal employees have. There are some
    bills--as I am sure you are aware--that there are some Federal
    employee health plan bills that are out there. There are some
    demonstration projects that have been recommended for
    subvention for DOD and VA, and I am sure you are aware of those
    things.

                               prepared statement

        So on behalf of our association's president, Dorothy
    Holmes, who is also a chief master sergeant, retired, we would
    like to thank you for the time you have provided us today and
    would like you to consider the Federal employee health plan for
    military retirees.
        [The statement follows:]
          Prepared Statement of Chief Master Sergeant Mark. H. Olanoff
        Mr. Chairman, on behalf of The Retired Enlisted Association's
    (TREA) National President, Chief Master Sergeant Dorothy Holmes, U.S.
    Air Force (Ret) and over 95,000 members and auxiliary, we appreciate
    the opportunity to present testimony to this subcommittee concerning
    the fiscal year 1998 Defense Appropriations. TREA is a federally
    chartered organization representing retired, active, guard, reserve and
    family members who are serving (career military) or have served (and
    are now retired) in every component of the Armed Forces of the United
    States: Army; Marine Corps; Navy; Air Force; and Coast Guard.
        I am Chief Master Sergeant Mark H. Olanoff, U.S. Air Force (Ret),
    TREA's Legislative Director.
                                  health care
        This is TREA's number one issue. To quote our National Executive
    Director, Command Sergeant Major, U.S. Army (Ret) John E. Muench,
    M.S.W., ``retiree health care is always competing with bullets and
    billets.'' Muench continues ``Forced modernization requires a reduction
    of acquisition and services in order to resource the future.
    Unfortunately, part of DOD's reduction includes disregarding and
    disenfranchising those very warriors who fought and won the cold war
    and made the future possible. By cutting the support structure you
    automatically reduce services to active duty as well as retirees.'' The
    majority of our members (sixty-one percent) are over the age of 65 and
    have been disenfranchised from their ``earned'' military retiree health
    care benefit.
        Many of these retirees were counseled by active duty hospital
    representatives not to enroll in Medicare Part ``B'' stating that their
    care at military health care facilities would continue for the rest of
    their lives. Today, many years later, we have seen many rounds of Base
    Realignments and Closures (BRAC), hospital downsizing and future rounds
    of BRAC recommended by the Defense Quadrennial Review (QDR). Secretary
    Cohen stated at the QDR hearing concerning the dedication of men and
    women in uniform--``How does DOD reward that dedication in
    retirement?'' The future of military health care for retirees is bleak.
    We know you have heard the story about the promised health care
    benefits for military personnel upon retirement, but I must emphasize
    this again. For 20 years of active service or at age 60 for reserve or
    National Guard service, we were promised a range of retirement benefits
    including health care for us and our families for the rest of our
    lives. This is and was a very powerful recruiting inducement. Many of
    our members want to know where the benefits are now?
        Further, according to the definition of the VA, all enlisted
    retirees are considered ``indigent veterans''. Since no enlisted
    retiree receives a gross retirement of more than $25,600, we are
    considered ``indigent''. However, many of our enlisted retirees have
    successful second careers, by taking advantage of benefits like the
    G.I. Bill for college. But many of our retirees did not have all of the
    retirement options (for example IRA's, 401K's, mutual funds, etc). I
    want to speak for them right now and provide some solutions. Many of
    our medicare-eligibles have received letters from hospitals stating
    that ``space-availability'' no longer exits. We believe that a small
    investment for medicare-eligible retirees is necessary to provide
    health care to those who really need it.
        There are two bills currently in the House of Representatives; one
    for DOD Subvention (H.R. 192) and the other for VA Subvention (H.R.
    1362). Both are demonstration projects. These bills would allow
    medicare-eligibles to use DOD and VA facilities and receive their
    health care with Medicare reimbursing both DOD and VA. However, there
    has been some opposition to this concept due to costs. Only in
    Washington, DC, is there what I call ``creative accounting''. Both
    bills authorize reimbursement of 95 percent of what civilian medicare
    providers would receive. This saves the taxpayers 5 percent, but the
    Congressional Budget Office (CBO) ``scores'' these as having a cost. I
    called CBO's Assistant Director, Budget Analysis Paul N. Van de Water,
    and asked him how saving 5 percent of Medicare costs doesn't save the
    taxpayer money. His response was that the VA is not efficient so this
    will cost money.
        Further, there is another bill in the Senate and the House for
    Federal Health Employee Benefits Program (FEHBP) for medicare-eligible
    retirees (H.R. 76 and S. 224). TREA supports this as another option to
    solve the health care situation for military retirees. Our retirees
    have stated that they will accept paying a premium for the quality
    health care that was ``promised'' to be free. This is the same health
    care system that covers all federal employees including members of
    Congress and their staffers. Also, military retirees are the only group
    of federal workers who lose their employer sponsored health care when
    becoming eligible for Medicare. Why should there be a difference if an
    employee wears a uniform or a suit? We want equality. And, we are
    willing to pay for it. We understand that health care is not ``free''.
        Finally, another bill in the House authorizes the waiver of penalty
    for not enrolling in Medicare Part ``B'' for certain military retirees
    (H.R. 598). We believe that the small investment for DOD and VA
    Subvention; FEHBP and the waiver of penalties will restore health care
    benefits for our medicare-eligible retirees and allow the employer
    (Uncle Sam) to receive some needed creditability when it comes to
    keeping promises.
        Now, for the future solution of health care for new military
    retirees and their families. We believe that FEHBP (H.R. 1356) will
    solve the problem for the long-term. In return for legislation
    mentioned above for the medicare-eligibles, we and many other military
    associations, pledge to you that we will prepare the future retirees
    for continued health care after retirement. Just as other civil
    servants have the option to keep this benefit (and pay the premium), we
    will prepare the future retirees to pay for this benefit. This provides
    equality to all federal workers whether military or civilian.
                               concurrent receipt
        Now to the issue of concurrent receipt of military retired pay and
    VA disability payment. Currently, there is an offset dollar for dollar
    in VA disability and military retirement. There is a bill in the House
    and Senate that will correct this inequity (H.R. 65 and S. 657). Many
    of our retirees are severely disabled and unable to work. Other federal
    workers do not have such an offset, only the military retiree. The
    above mentioned bills provide equality to the concurrent receipt issue.
                         department of veterans affairs
        We are very concerned about the funding of VA programs,
    specifically VA Medical Centers. The recently agreed to budget
    agreement will reduce the VA's funding by $2.2 billion between 1998 and
    2002. We realize that there are bills to allow the VA to keep third
    party receipts (H.R. 1125) and VA Subvention (H.R. 1362), however,
    these bills are not yet law.
                          survivor benefits plan (sbp)
        Current law requires a survivor's offset at age 62 due to the
    eligibility of Social Security. We believe this law punishes our
    retirees. This is not a ``free'' benefit. Our retirees pay premiums to
    protect their survivors with 55 percent of their retired pay. Whether a
    survivor receives Social Security should not be a factor as SBP allows
    retirees more choices to provide for beneficiaries. Further, this
    offset does not apply to any other federal workers--again we demand
    equality.
                               other ``benefits''
        During the deliberations of BRAC, the impact of military retirees
    does not seem to be a very important issue. Further, 37 commissaries
    are being scheduled to close due to low sales and/or the lack of active
    duty personnel in those areas. What about the military retiree?
    Remember, military and retired pay is based on a concept called
    ``Regular Military Compensation'' (RMC). Health Care, Exchange and
    Commissary benefits are included in RMC. When a base or post is closed,
    the military retiree is not compensated for this loss of RMC. Please
    remember to think of us when these decisions are made.
                            reserve and guard issues
        Many of our members are serving or have served as citizen-soldiers.
    TREA recommends that members of the guard and reserve be given the same
    commissary benefit as their active duty and retired counterparts.
    Again--equality to all, regardless of current status.
        Also, another issue of great concern is the Reserve/Guard
    Mobilization Insurance. Many members are paying the required premium,
    but are receiving only four percent of their insurance benefit. We
    believe to attract and maintain a viable reserve component that
    mobilization insurance is an important ingredient to retain quality
    citizen-soldiers. TREA recommends that the committee approve the
    supplemental appropriation to pay current insurance claims.
                                   conclusion
        In the past few months I have heard the Government Accounting
    Office, the Assistant Secretary of Defense for Health Affairs and many
    other government officials state that Title 10, Section 1074 does not
    require the employer (U.S. Government) to provide ``free'' health care
    for life to military retirees. I would like to know what Lt. Stevens,
    Lt. (j.g.) Cochran, Lt. Specter, Lt. Inouye, Capt. Hollings, Sgt.
    Bumpers, Cpl. Lautenberg and Lt. Cmdr. Harkin think about the
    recruiting inducement of lifetime retirement benefits? Would you work
    for an employer who makes promises for the future and then does not
    deliver? Many of our members made their life plans based on the
    promises made to them at the time of entry into the military. My
    military career was spent in the military personnel field. As a
    ``personnelist'' and supervisor, I explained these retirement benefits
    to many service members.
        We are spending, and plan to spend, billions of dollars on TRICARE,
    yet DOD states that their responsibility ends with the active duty. We
    agree with DOD. Let's authorize a demonstration project for FEHBP and
    allow military retirees the choice of TRICARE or FEHBP. Further, under
    FEHBP, the retiree could still use DOD or VA facilities; choose
    civilian HMO's or continue to use CHAMPUS (TRICARE Standard). Also,
    FEHBP is needed for military retirees who live in remote areas and not
    located near DOD or VA facilities.
        Mr. Chairman, I would like to thank you and the Committee for
    giving The Retired Enlisted Association the opportunity to present its
    views and solutions on the important subject of military retirees and
    their ``earned'' retirement benefits.

        Senator Stevens. We do want to do something about it. You
    are the last witness today and we have to leave. But this is
    the most complex problem we have. If you are a retiree and you
    are near a hospital where they have surplus services, you will
    continue to get your promise fulfilled. But if you live in
    Holikachuk, AK, you are never going to get it filled whether
    you have FEHB or not.
        So the question really is how do we take care of a
    population that in years gone by retired quite close to
    military reservations. Today they do not do that. They retire
    and go off to somewhere where there is no hospital, a military
    hospital, and they want to have full payment of the services at
    the local hospital.
        We tried that and that has not worked, either, as you heard
    today. Doctors will not take the CHAMPUS certificate.
        So it is getting to be more complex as we close more bases.
    I think that is one of the reasons that Congress is going to be
    very slow about closing any more bases.
        I hope people keep that in mind. The closing of more bases
    is going to increase the medical problem, not help it at all.
    But we will look into it.
        You are right. The FEHBP proposal is there. We are trying
    to cost that out. As a matter of fact, there is a proposal now
    to include all those people who are not insured under any plan
    under FEHBP. That will kill it.
        So I don't know, really, what the answer is. You don't want
    to get into a system that is about ready to die. That would
    just exacerbate the problem of keeping commitments.
        Now I do think that we need some really consensus building
    among the retired population to see what they really want. I
    don't think there is a common thread here in what we are
    hearing about what the retired people want in terms of a
    substitute for access to a military hospital
        I appreciate your raising the issue and we will get back to
    you.
        Sergeant Olanoff. Thank you very much, Mr. Chairman.
        Senator Stevens. Thank you.
        We will have to go. Dr. Quickel, you are on our list and we
    will notify you when the hearing will resume.
        Thank you very much.

                        additional submitted statements

        Since conference with the House is meeting at this time any
    witnesses who are here and cannot testify, your statements will
    be included in the record.
        [The statements follow:]
    Prepared Statement of Greg Mundy, M.D., President, American Society for
     Bone and Mineral Research, Professor of Bone and Mineral Metabolism,
     Health Science Center at San Antonio, University of Texas; and Sandra
      C. Raymond, Executive Director, National Osteoporosis Foundation on
       behalf of the National Coalition of Osteoporosis and Related Bone
                                    Diseases
        Mr. Chairman and Members of the Subcommittee, on behalf of the
    National Coalition for Osteoporosis and Related Bone Diseases, we want
    to thank you for giving us the opportunity to discuss bone disease
    research funding in fiscal year 1998. My name is Sandra Raymond,
    Executive Director of the National Osteoporosis Foundation (NOF). I am
    accompanied by Dr. Greg Mundy, President of the American Society for
    Bone and Mineral Research (ASBMR) and Head of Endocrinology and
    Metabolism of the University of Texas Health Sciences Center at San
    Antonio, who will present part of this testimony. We are appearing
    before your Subcommittee bringing two experiences with the hope of
    realizing one common goal of improving bone health by reducing the
    incident of osteoporosis, Paget's disease of bone, Osteogenesis
    Imperfecta and other bone diseases. Dr. Mundy's perspective is from a
    scientific and medical angle. My objective is to educate the public
    about osteoporosis, its prevention, diagnosis and treatment. Together,
    I believe we make a convincing case for why the continuation of the
    Department of Defense (DOD) osteoporosis and related bone diseases
    program is critical to our national security.
        First, on behalf of the entire bone community, I want to thank you,
    Mr. Chairman, Senator Inouye, and your colleagues on the Subcommittee
    from the bottom of my heart for the $10 million you appropriated for
    bone research in the fiscal year 1997 DOD budget. It was truly
    appreciated and I assure you it will be put to good use. This amount
    builds upon the fiscal year 1995 appropriation of $5 million which has
    been distributed to five promising grants out of 105 submitted
    proposals. The $10 million, while it has still not been released by the
    Office of the Secretary of Defense for Army use, promises to focus on
    research that will more directly benefit people of military age.
        The bone coalition, representing the NOF, ASBMR, the Paget's
    Foundation and Osteogenesis Imperfecta Foundation, has had a very
    productive meeting with representatives from the new research unit
    which will have control of the dollars if and when the money is
    released. During that meeting, the Army Operational Medicine Research
    Program, Research Area Directorate III (RAD III) and the bone community
    realized that we are in full agreement as to the importance of bone
    research to military readiness with our current troops and future
    recruits.
        The DOD is developing its own focus on bone research with relevance
    to the military age population. This special focus is welcomed by the
    bone community as it is not duplicating the important work being funded
    by the National Institutes of Health. Much of our current knowledge of
    bone diseases has been derived from studying postmenopausal white
    women. Our understanding of bone metabolism would be greatly
    strengthened by this new DOD research emphasis.
        The goal of the DOD program is to enhance military readiness by
    reducing the incidence of fracture, which incur costs and lost time,
    during physically intensive training. Bone fractures are a major
    problem for the military population. We need research in determining
    approaches to making these fractures less common. This is a problem for
    both sexes, but it is particularly important for women. This is
    relevant now because first, more women are in the military and second,
    women have lower bone mass than men which makes them more susceptible
    to fractures. Research should be directed to finding ways of increasing
    bone mass above the fracture threshold.
        Military training programs require recruits to perform at a much
    higher physical stress level than is required by civilian life. Some
    civilians who become soldiers have stress fractures of the lower limbs
    only when performing their new duties. Those soldiers apparently suffer
    from ``relative osteoporosis'' in that their new bones are not strong
    enough to sustain their new intended use.
        Stress fractures are a problem in 10 to 15 percent of women
    recruits during the 8 weeks of basic training. With the increasing
    number of women in the military, the bone health of female recruits
    becomes a concern of growing proportions if they are to serve at
    maximum capacity and strength. According to the Army, the minimum time
    away from significant duty for a male or female soldier who develops a
    stress fracture is 6 to 8 weeks. Full recovery time for those with
    stress fractures generally takes as long as 12 weeks. Stress fractures
    are among the most frequent injuries that take men and women in the
    Army off duty.
        The leadership of the Army's osteoporosis and related bone diseases
    research project is aware that achieving military bone strength takes
    more than measuring the bone density of potential recruits and
    screening out the ones with low bone mass. To advance the understanding
    of overall bone health of military men and women, we must develop the
    ability to predict susceptibility to stress fractures through studying
    genetic and environmental influences.
        To achieve peak bone mass and retain the inner structural strength
    that bone provides, bone weakness must be attacked from several fronts.
    Important research questions must be answered. For example, how do
    different biomechanical forces such as weight-bearing and muscle
    development impact bone cells? What is the clinical physiological
    impact of physical fitness and diet on peak bone mass? To what degree
    do environmental factors such as smoking, carbonated beverages and
    alcohol intake relate to the achievement and retention of peak bone
    mass? What are the predictors of fracture risk such as genetics,
    physical characteristics and hormonal factors? What are the best
    prevention, diagnostic and treatment strategies for the young
    population.
        The military also has an exceptional opportunity to conduct
    longitudinal studies of bone physiology in young people because it
    retains individuals from ages 18 through 22. This is an opportunity
    which should be fully utilized through cooperation between military and
    civilian scientists. Nonetheless, while the military is primarily
    focused on this age group, it is also concerned about the health of its
    military families and retirees who will also benefit from the basic and
    clinical research performed under the guidance of the DOD.
        In conclusion, the military life asks much more of its people in a
    physical sense than does civilian life and it must, therefore, invest
    in discovering the means to achieve that top fitness. We urge you to
    continue your strong support for bone disease research and ask that you
    provide $20 million in funding for DOD's program in fiscal year 1998.
        To paraphrase Franklin Roosevelt and to echo your own words, Mr.
    Chairman, the total defense which this nation seeks, involves a great
    deal more than building airplanes, ships, guns and bombs. We cannot be
    a strong Nation unless we are a healthy nation. And so we must recruit
    not only men, women, and materials but also knowledge and science in
    the service of national strength.
        Thank you. We will be happy to answer any questions.
                                     ______

    Prepared Statement of Kenneth E. Quickel, Jr., M.D., President, Joslin
      Diabetes Center, Boston, MA; and Stefan E. Karas, M.D., Department
        Chief, Department of Ophthalmology, Straub Clinic and Hospital,
              Honolulu, HI on behalf of the Joslin Diabetes Center
        Mr. Chairman and Members of the Subcommittee, we appreciate this
    opportunity to appear before you to present Joslin Diabetes Center's
    proposal to improve the access to and quality of health care for
    Department of Defense personnel and to reduce costs and increase
    savings in the near term for Department of Defense health care outlays
    by establishing a new paradigm of health care.
        Diabetes among military and civilian Department of Defense
    personnel and their families mirrors the disease in the total overall
    population where sixteen million people are diabetic and annual costs
    associated with diabetes are $138 billion--more than 15 percent of
    health care costs annually in the United States. In this societal
    context, the 1998 Department of Defense Health Program covers 6,267,000
    people: 188,000 will be diabetics who generate in excess of $2 billion
    in health care costs annually; nearly an equal number will have
    diabetes and not know it; nearly 4,000 will die every year from
    diabetes and its complications; between 330 and 860 will become blind
    each year; nearly 1,200 will have amputations; and 300 will develop
    kidney failure.
        Though Joslin is the world's largest and most comprehensive
    independent diabetes research and patient care institution, we would
    like to put ourselves out of business by finding a cure for diabetes
    through research, but we are not quite there yet. Joslin would like to
    share our technology and methods with other institutions and networks
    in order to limit the effects of diabetes. The personnel structure,
    telemedicine technology and medical network within the Department of
    Defense offer a tremendous opportunity for the transfer of Joslin's
    technology and techniques to demonstrate the following: Early detection
    of diabetes and those who will develop diabetes; prevention of the
    onset of diabetes for those prone to diabetes development; and improved
    care for those who have diabetes.
        The real effects of this proposal offer improved quality of life
    for diabetes patients and significant cost savings for the Department
    of Defense as soon as the period 2000-2002, the period in which overall
    government expenditures must be reduced to meet balanced budget
    objectives.
        Joslin proposes to work with Department of Defense officials to
    develop a pilot program of diabetes detection, prevention and care. The
    objectives would be to institutionalize advanced techniques to detect
    diabetes and those most likely to develop diabetes within the
    Department of Defense civilian and uniformed ranks and their families,
    and to implement improved prevention and care protocols for diabetes
    patients employed by Department of Defense.
        Early detection, intervention for prevention and improved care
    techniques can reduce projected health care costs in excess of $400
    million throughout the Department of Defense/Veterans Administration
    population universe by the 2000-2002 period.
        Specifically, we propose to institute pilot programs of detection,
    prevention, and care in two sites (New England and Hawaii) for a two-
    year demonstration, training and technology transfer exercise of
    Joslin's expertise utilizing existing Department of Defense
    telemedicine infrastructure, personnel and employee/patient base. The
    cost would be $2.5 million annually.
        If patients with diabetes have eye examinations annually, current
    treatments can prevent 98 percent of the blindness of diabetes. Yet
    today, diabetes and diabetic retinopathy remains the leading cause of
    blindness in working age Americans. The primary causes for this dilemma
    are twofold, namely access of patients into mandated standards of care
    and patient and provider education.
        Equally important, the Joslin health care treatment programs can
    significantly reduce complications of diabetes including cardiovascular
    disease, kidney disease, and peripheral neuropathy with subsequent
    significant economic savings.
        We have developed the Joslin Vision Network and a Diabetes Eye
    Health Care Model to address these problems of access and education of
    diabetic eye disease.
        The Joslin Vision Network is a telemedicine based platform that
    services remote eye examination stations using video imaging
    technologies that take advantage of low light level sensitive video
    cameras and industry standard telecommunication protocols. Thus, at a
    remote site, patients can have their retinal images rapidly and
    comfortably acquired using the low light level sensitive video
    technologies, have these images transmitted to a central site where the
    images and related medical information is stored and reviewed. The
    review of the images at the central reading center resource produces an
    assessment of the level of diabetic retinopathy and a recommended
    treatment plan which can be transmitted back to the patient contact
    site before the patient has left from their visit. This function is
    performed using the real time teleconferencing functions of the Joslin
    Vision Network. Operation of the Joslin Vision Network has been made
    simple so that retinal images and related medical information can be
    acquired by ancillary staff without any prior expertise in computers.
    Minimal training is required for recognizing regions of the retina that
    will need to be imaged for diagnostic purposes.
        The Joslin Vision Network system can affect patient access,
    compliance, education and motivation using the Department of Defense
    test bed sites. The objectives are to establish Joslin Vision Network
    remote imaging stations at these sites and to implement and evaluate
    services aimed at addressing concerns regarding patient access across
    geographic and cultural barriers, cost effectiveness of the service,
    establishing and assessing health professional and patient education
    programs specifically with respect to behavioral, compliance and
    motivational issues.
        Using the Joslin Vision Network, all Department of Defense
    civilians and military personnel can be screened for diabetes at the
    test sites. Diabetes detection will be performed using a methodology
    that does not involve drawing blood or taking urine samples, which was
    developed by Joslin and is currently being commercially produced by
    Spectrx, an Atlanta based medical instrumentation company. The system
    provides a rapid assessment of diabetes without the need for a blood
    sample to be obtained and results from initial studies have shown that
    as a screening device for diabetes this system provides as good or
    better sensitivity than a fasting plasma glucose measurement.
        Diabetes care will be available using the Joslin Vision Network and
    the Diabetes Outpatient Intensive Treatment program developed at Joslin
    Diabetes Center. We have had experience at Joslin in applying a new
    approach toward patients with diabetes. From the beginning, this
    approach focused on two major areas: improving clinical outcomes and
    doing so in a practical, resource-efficient manner. Our clinical
    outcome goals were improved metabolic control (and thus fewer long-term
    complications) and reduced patient stress from having to take care of
    their diabetes. The program was focused on individual flexibility and
    was developed in a way to be more efficient in utilization of both the
    patient resources and the health care resources. Rather than have the
    continued intensive involvement of health care providers throughout a
    patient's lifetime, we put the patient through a short (but intensive)
    course of training which not only leads to an immediate improvement in
    their metabolic control, but gives them the foundation to take care of
    themselves in the future. We are also able to reduce the patient's
    diabetes-related stress. Training the patients to care for their own
    diabetes, seeking other input when they need it, is more appealing to
    the patient, more efficient in use of resources in the long-term, and
    produces good results.
        The Joslin Vision Network provides the technology structure and
    program for the Joslin Diabetes Eye Health Care Model and the Joslin
    Diabetes Outpatient Intensive Treatment program so that people with
    diabetes can closely monitor their disease and appropriately trained
    medical personnel can provide timely treatment to better control of
    glycemia, hypertension and cholesterol to alleviate and eliminate life
    threatening complications.
        The two proposed pilot programs would be expected to demonstrate
    significantly improved detection, prevention and care techniques for
    diabetes patients incorporated within the Department of Defense
    medicare/health arena, resulting in reduced costs, improved patient
    access and quality of life and increased personnel productivity.
        Thank you for this opportunity to appear before you today. We would
    be pleased to answer any questions you might have.
                                     ______

      Prepared Statement of Edith G. Smith, Citizen Advocate for Disabled
                               Military Retirees
        My name is Edith Smith from Springfield, Virginia. I am pleased and
    honored to present this statement to the Members of the Defense
    Subcommittee of the Committee on Appropriations, U.S. Senate. I would
    like to discuss military health care issues affecting disabled and End
    Stage Renal Disease military retirees and their family members who
    become eligible for Medicare under age 65. This small group of retired
    beneficiaries are unjustly cut off from equal eligibility for the
    Military Health Services System, and cost shifted to the lesser
    benefits of Medicare, simply because they have been employed and suffer
    the misfortune of severe disability or End Stage Renal Disease (ESRD.)
    Because I was not an employed spouse, were I to suffer disability, I
    would not lose my CHAMPUS benefit to Medicare. This ``inequitable''
    situation is hard for me to understand or accept.
       issues of inequitable tricare/champus benefit provided to retired
                      ``medicare eligibles'' under age 65
        The Department of Defense requirement to purchase Medicare Part B
    as a unique condition for disabled or ESRD retired beneficiaries
    (Medicare-eligibles under 65) to use their earned TRICARE/CHAMPUS
    health benefit.
        No DOD/SSA DATA match--The Defense Eligibility Enrollment Reporting
    System (DEERS) has failed to implement a system to identify and notify
    Medicare-eligibles under age 65 of their change in eligibility for
    CHAMPUS benefits.
        ``Equitable Relief'' waivers for Medicare B penalties requested by
    DOD.
        Waiver of CHAMPUS payments recoupment, Fiscal Year 1996 Defense
    Auth. Act, Sec. 743. This provision appears to have expired July 1,
    1996. DOD has not yet published regulations.
        Discriminatory payment of Federal funds through the CHAMPUS program
    denied to military beneficiaries because they are disabled should be
    prohibited by Public Law 93-112, Sec. 504, (The Rehabilitation Act of
    1973.)
        Complex issues of concern to retired Medicare-eligibles under 65
    center on an unfair requirement to purchase Medicare B in order to
    enroll in TRICARE PRIME or to use CHAMPUS as second payer to Medicare
    benefits.
      --Medicare-eligibles under 65 who are family members of Active Duty
            personnel have a voluntary option to purchase Medicare B. Part
            B is not required as part of their TRICARE/CHAMPUS eligibility.
            (Only family members who have worked to qualify for Social
            Security Disability in their own right suffer a loss of CHAMPUS
            eligibility. Non-working spouses do not lose CHAMPUS
            eligibility.)
      --Federal Civilian annuitants (any age) who are eligible for Medicare
            also have the voluntary option to purchase Medicare Part B.
      --Retired military beneficiaries who are eligible to enroll in other
            health insurance (OHI) through employment are not required by
            Federal law to do so as a ``cost saving'' action for TRICARE
            programs.
        Further, Congress mandated in Title 18 of ``The Social Security
    Act,'' Section 1836, that Medicare ``Part B'' be a voluntary option to
    all eligible beneficiaries. To deny equal CHAMPUS eligibility to
    military retirees under age 65 because of disability or ESRD should be
    considered a discriminatory use of federal funds paid through the
    CHAMPUS program and thus, prohibited by Public Law 93-112, Section 504,
    (The Rehabilitation Act of 1973.)
                                   background
        I consider myself to be a traditional military wife and I represent
    no organization. My husband, LtCol. Vincent M. Smith, USMC, Ret., and I
    became involved in this advocacy work when his CHAMPUS entitlement was
    terminated in 1989, basically because he became too sick to work. He
    was determined to be Social Security disabled in February, 1987, when
    he suffered an unexpected loss of health and work at age 49. Twenty-
    nine months later, the Department of Defense switched him from CHAMPUS
    to the lesser benefits of Medicare. He lost 14 years of his earned
    retired benefit of CHAMPUS. This unjust loss of the earned CHAMPUS
    benefit has caused us to join others in working to correct this
    inequity for all military beneficiaries who are at risk of severe
    disability or kidney disease.
        In 1965, Congress established the Medicare Program under Title 18
    of the Social Security Act. Medicare is a federal health insurance
    program administered in 2 parts: Part A and Part B. Part A is financed
    through taxes paid by workers and their employers (premium free to
    entitled individuals.) Part B is paid for in part by premiums from
    persons who voluntarily enroll in the program. Part B is required for
    participation in Medicare HMO's and for supplemental coverage. Private
    Sector nor the Federal Government require Part B in lieu of their
    ``employer provided'' health benefit.
        In 1966, the expressed intent of the Congress was to provide
    military retirees a premium free CHAMPUS benefit (in lieu of a reduced
    monthly compensation) equal to the Federal Employees Hi-Option Blue
    Cross/Blue Shield or other popular fee-for-service FEHBP Plan. Congress
    provides a Military Medical System that cannot provide a health benefit
    to all military beneficiaries and therefore is not adequate when
    compared to the ``employer provided'' benefit (FEHBP) offered equally
    to Federal Civilian Annuitants.
        In 1972, the Social Security Amendments (42 USC 1395c) expanded
    Medicare eligibility to entitled disabled CHAMPUS beneficiaries on or
    after July 1, 1973. There was a dual coverage benefit for these
    individuals until 1977. The CHAMPUS regulations (DOD 6010.8 dated
    January 10, 1977) terminated CHAMPUS coverage effective January 1,
    1978, for Medicare eligibles under age 65. Fiscal year 1979 testimony
    presented to the Senate Armed Services Committee by Mr. Vernon
    McKenzie, ASD(HA) described this change as a cost-saving administration
    action that did not reduce medical coverage.
        In 1980, Public Law 96-513, Sec. 511, an amendment to the ``Defense
    Officer Personnel Management Act'' signed on December 12, 1980,
    mandated a termination of CHAMPUS benefits for Medicare eligibles under
    age 65.
        In 1991, Congress quickly attempted to correct this unjust, and I
    believe, unintended situation by restoring CHAMPUS as second payer to
    Medicare. Congressman ``Bill'' Young, FL, and Senator John McCain, AZ,
    introduced legislation to restore all health benefits to retired
    military beneficiaries that they would have had, but lost prematurely
    because they were disabled.
        However, as DOD has implemented CHAMPUS as second payer to
    Medicare, beneficiaries experienced numerous unanticipated problems.
    The implementation was ``budget driven'' rather than using the
    guidelines for dual coverage benefits already in place for retirees who
    carry other health insurance.
           problems with the existing dual medicare/champus coverage
    Medicare Part B requirement for disabled military retirees
        Disabled retired military beneficiaries who receive dual coverage
    under Medicare and CHAMPUS are required to participate in Medicare Part
    B ($43.80 mo) in order to receive their earned CHAMPUS or TRICARE
    benefits. Medicare-eligible family members of Active Duty personnel are
    not required to purchase Medicare Part B as a condition to retain their
    TRICARE/CHAMPUS eligibility. When the AD member retires, the family
    member may not now enroll in Part B without severe penalties. At age
    65, the Part B ``old age'' enrollment period begins anew, without
    penalties during the initial enrollment window. Federal civilian
    retirees with dual coverage under Medicare and FEHBP have the option to
    purchase Medicare Part B. If the civilian retiree chooses to
    participate in Medicare B, the Office of Personnel Management rewards
    this decision by requiring the FEHBP plans to waive all deductibles and
    copays. Disabled military retirees must be provided similar
    considerations by our government.
    No DATA match with DEERS/Social Security
        Retired beneficiaries cannot be notified by DEERS of the change in
    their CHAMPUS eligibility and the mandated switch to Medicare Part A
    until DATA matches are accomplished. Beneficiaries must be held
    harmless by DOD until an accurate DATA system is in place to identify
    dual eligible beneficiaries. DOD(HA) has initiated a request to begin
    this process. End Stage Renal Disease patients cannot be identified by
    Social Security unless they have voluntarily applied and received
    Medicare Part A entitlement. ESRD patients do not receive Social
    Security Disability Income. DOD will have the responsibility to
    identify ESRD patients through the TRICARE enrollment--but late
    identification will result in financial hardship for the uninformed
    patient who incurs medical bills under the wrong program. A flawed DATA
    match is not fair to beneficiaries or to the Defense Health Program.
    Overseas coverage
        Medicare-eligible retirees under 65 who live outside the United
    States are required to purchase Medicare Part B ($43.80 mo.) in order
    to use CHAMPUS benefits. To apply this requirement outside CONUS is
    absurd as Medicare will not make payments on foreign soil. Federal
    civilian retirees living overseas use their FEHB plan with no Medicare
    B requirement.
    CHAMPUS and Medicare are different federal programs
        CHAMPUS operates on a fiscal year basis under criteria and covered
    services designed for more healthy persons under age 65. CHAMPUS is an
    employer-provided major medical comprehensive health benefit originally
    designed to equal the benefits of the Federal Employees Hi-Option
    Programs and to supplement the direct care system of the military.
    CHAMPUS was intended to be premium free in lieu of a reduced monthly
    military paycheck (Army $5,925.85 in 1994) and a $7,500 annual out-of-
    pocket cap.
        Medicare operates on a calendar year basis and was originally
    designed to serve only the ``over 65'' population. The Medicare program
    is funded with contributions from both the employer and the employee.
    Medicare was intended to assist with medical expenses in old age in
    combination with employer provided coverage. Medicare does not provide
    prescription drug coverage or world wide coverage.
    CHAMPUS is not a Medicare supplement
        The new CHAMPUS ``115 percent rule'' negates second payer CHAMPUS
    payment when the Medicare allowed amount is greater than the amount
    CHAMPUS would have paid, leaving the patient with unexpected out of
    pocket costs. A true medigap supplemental policy is designed to pay the
    amount defined as the patient's responsibility. For Medicare covered
    services where the allowed amounts are sometimes higher than CHAMPUS
    allowed amounts, CHAMPUS will not pay the patient's deductible or
    Medicare cost share, leaving the hospital or provider who thought they
    accepted a patient under Medicare standards suddenly faced with reduced
    payments that is a disappointment to both the provider and the patient.
    Coordination of benefits payment method--Medicare/CHAMPUS
        In 1994, Congress specified the traditional ``coordination of
    benefits'' payment when CHAMPUS is second payer to Medicare. After
    Medicare, CHAMPUS would pay remaining out of pocket costs up to the
    amount they would have paid as primary payer. Has DOD implemented this
    permanent law for these unique beneficiaries?
    Medicare Part A: Accepting assignment
        Hospitals who accept federal funding assistance are required to
    accept Medicare assignment. Hospitals accepting Medicare assignment
    also are required to accept CHAMPUS assignment. However, there are
    complex criteria and rules (including the new ``115 percent rule'')
    that may prevent CHAMPUS from paying the Medicare Part A deductible of
    $760.
    Medicare Part B: Accepting assignment
        Physicians and outpatient providers are not required by law to
    accept either Medicare or CHAMPUS patients. Even though the physician
    may be an authorized provider, it is his choice to ``accept
    assignment'' on a case by case basis. If the provider accepting
    Medicare is not also an authorized CHAMPUS provider, then CHAMPUS will
    not make payments as second payer.
    Pre-existing conditions
        The active duty member who is medically retired probably will not
    be enrolled in a CHAMPUS supplement sold by military associations
    without pre-existing condition exclusions. Federal law requires
    Medicare supplements to enroll individuals without pre-existing
    conditions only at age 65 during a 6 month window for the initial
    Medicare B enrollment period. DOD does not have oversight or control of
    supplemental insurance sold by Associations to military retirees
    similar to the government's oversight and coordination of the FEHB
    plans with Medicare.
    Insurance risk pools
        Supplemental policies sold by our military associations are
    community based risk pools by age and state. Premiums for these
    policies vary greatly with Associations, often the enlisted groups have
    the more expensive premiums. Prescription coverage with Medicare
    supplements is not generally offered because of the high premium costs
    rated with smaller community based risk pools. Current Senate and House
    FEHBP Bills include a provision for a separate trial risk pool for
    retired military beneficiaries which would seem to be an improvement
    over the restrictive risk pools now available to them.
            tricare prime enrollment for medicare eligibles under 65
    Repeal Medicare Part B requirement
        I ask the Committee to please support the removal of the mandated
    requirement to purchase Medicare Part B as an unnecessary and unfair
    condition to enroll in TRICARE PRIME for the Medicare-eligible
    beneficiary.
        DOD informational materials on TRICARE PRIME state that Medicare-
    eligibles may not enroll in PRIME at this time. ``Medicare eligibles''
    unable to enroll are over age 65, Medicare-eligibles under age 65 are
    eligible for TRICARE PRIME enrollment. TRICARE PRIME charts describing
    eligibility categories, enrollment fees, and copayments must be
    required to include unique Medicare-eligible requirements. All
    beneficiaries are equally deserving of full information about TRICARE
    to raise awareness about the change in benefit if they were to suffer
    disability or ESRD. DOD's explanation that the disabled group is too
    small or the dual coverage too complex to justify space in the
    marketing materials is not reasonable.
        I am told that TRICARE Contractors and MTF Commanders are advised
    to discourage enrollment of beneficiaries with other health insurance,
    to include Medicare. However, Medicare differs from other Major Medical
    policies in that it does not include prescription coverage. Who
    explains that? How many military medical administrators know that an
    active duty family Medicare-eligible member is not required to Purchase
    Part B, the retired beneficiary is required, and the not employed
    disabled spouse retains full CHAMPUS eligibility? Moreover, are the
    consequences of not purchasing Medicare B at the first enrollment
    period fully understood and explained by Health Benefits Advisors or
    other TRICARE officials?
        If the disabled retiree learns of his eligibility for PRIME, he is
    financially penalized with the requirement to purchase Medicare B
    ($43.80 mo.) as an added condition to enroll in TRICARE PRIME, then he
    is assessed the normal enrollment fee ($230 yr.) even though his
    CHAMPUS is now a second payer, not a normal benefit. Additionally, he
    may be restricted from freely using all providers in the PRIME network.
    While TRICARE contractors must ``attempt'' to sign up providers who
    accept both CHAMPUS and Medicare, TRICARE PRIME providers are only
    required to accept CHAMPUS under the PRIME contract.
        The disabled military retiree may choose to sign up in the PRIME
    network to free himself of paperwork that he may not be well enough to
    accomplish, or to save the 25 percent cost share for CHAMPUS
    prescription drugs and other preventive programs not offered by
    standard CHAMPUS. The disabled military beneficiary may desire to join
    his fellow retirees in the military health program with merely a sense
    of belonging, remaining in the ``military mainstream'' with his more
    healthy retired colleagues, or as a matter of convenience. Whatever his
    reason, the DOD must not seek to rid their programs of retirees because
    of age or health status as a way to meet budget targets.
    Equitable Relief for Medicare Part B Premium Penalties
        Prior to 1996, when a military beneficiary attempted late
    enrollment in Medicare Part B, DEERS furnished a letter requesting
    ``equitable relief'' and explained that DOD had misinformed the retiree
    about the requirement to enroll in Medicare Part B. (CHAMPUS does not
    provide each military retiree a CHAMPUS handbook as does Medicare and
    most other insurance programs.) Base closures caused many retirees who
    had depended on military medical care to turn to Medicare Part B with
    late enrollment penalties. The 10 percent per year penalty can result
    in a high Medicare monthly premium. Early in 1996, a change in DOD
    policy tightened rules traditionally used for providing ``Equitable
    Relief'' letters of request by DEERS to military beneficiaries seeking
    late enrollment in Medicare Part B. DOD forwarded legislation (fiscal
    year 1997 and fiscal year 1998 requesting ``equitable relief'' for
    ``over 65's'' in BRAC sites. Why would DOD single out BRAC site
    beneficiaries--is there a difference in closing a base or closing the
    Cardiology Dept. of an open hospital for a heart patient? The only
    criteria for ``relief'' should be whether DOD had notified a
    beneficiary by letter of the termination of CHAMPUS and the switch to
    Medicare. DOD's criteria for requesting ``equitable relief'' waivers
    must center on the beneficiaries who were not informed by DEERS letter
    of their changed CHAMPUS status.
      --``Over 65'' Medicare-eligibles receive DEERS notification letters
            shortly before their 65th birthday explaining the termination
            of their CHAMPUS benefit and how to proceed with the switch to
            Medicare. However, the changes in health coverage are not
            described. Federal law prevents the selling of duplicative
            health coverage to Medicare-eligibles--so why should Medicare
            eligibles purchase Medicare Part B if they have used the
            Military Health Services System successfully for many years.
            This older generation has unwavering faith that they are
            ``grandfathered'' in the Military Medical System.
      --``Over age 21 and 23'' dependent children CHAMPUS beneficiaries
            receive DEERS letters terminating their CHAMPUS benefit on the
            occasion of their birthday. ``Under 65'' Medicare-eligibles do
            not receive DEERS notification letters as there is no mechanism
            with Medicare to identify these beneficiaries who are disabled
            or have kidney disease. Since 1973, DOD has been aware of the
            need to develop a mechanism to notify Medicare eligibles and
            has failed to do so. Without ``Equitable Relief'' recommended
            by DOD, some beneficiaries are denied access to earned military
            Medical coverage for as long as a 15 month waiting period for
            Medicare enrollment in addition to the assessed stiff penalties
            for late enrollment.
        Attempting to correct a 24 years oversight by DOD officials, DOD
    has written to officials at the Health Care Financing Administration
    (Jan. 1997) asking for help to solve the problem with ``equitable
    relief'' and the required DATA Match. (See Attachment #1) Would the
    Committee monitor this initiative by Dr. Joseph? The problem may be one
    of ``who's going to pay?'' DOD must accept financial responsibility for
    failure to inform CHAMPUS beneficiaries of changed eligibility.
    Federal Employees Health Benefits--A Voluntary Option for Military
            Beneficiaries
        One Senate and 4 house bills have been introduced before the 105th
    Congress that will allow military beneficiaries the option to
    participate in the Federal Employees Health Benefits Program (FEHBP).
    Because Military retirees are the only Federal retirees whose employer
    provided health coverage ends at age 65, we appreciate these
    initiatives. This legislation will ``honor our commitment'' to provide
    lifetime medical care to those who serve our country through military
    service. As of now, there are four bills addressing this simple and
    most reasonable alternative source for a health benefit provided to the
    military: S. 224 by Senator John Warner, R-VA; H.R. 76 by Congressman
    James P. Moran, D-VA; H.R. 1356 by Congressman J.C. Watts, R-OK; H.R.
    1456 by Congressman ``Mac'' Thornberry, R-TX; and H.R. 1631 by
    Congressman John Mica R-FL.
        These bills offer various optional participation in the successful
    FEHB program to military beneficiaries. This legislation eliminates a
    gap in medical coverage especially for Medicare-eligible military
    retirees. It does not interfere the TRICARE program, nor does it
    establish a new, untested insurance program. In my opinion this is the
    best solution for retirees who are unable to access the free, ``Space
    Available'' care in a military facility.
        Currently the DOD provides the figure of 230,000 Medicare-eligibles
    who are able to access ``free'' medical care in Military treatment
    facilities at a cost to DOD of more than $1.2 billion. The remaining
    Medicare population (over 75 percent) receive no employer provided
    benefit. Using DOD's own figure of $1.2 billion to provide a $1,599.26
    government share of an FEHBP premium, about 782,500 Medicare-eligibles
    could participate in a popular FEHBP insurance program on a shared cost
    basis. Additional funding to secure an employer provided health benefit
    for all military beneficiaries is needed for about 400,000 retirees
    (less those ``Medicare-eligibles'' that participate in other programs.)
    Congress mandates over $4 billion annually (1995) for the government
    contribution to the FEHB program for federal civilian annuitants (see
    attachment #2.) Has Congress abandoned this same responsibility to
    provide a medical benefit for military retirees blaming budget
    constraints?
        Some are calling this legislation ``FEHBP-65.'' The use of this
    acronym could lead to the misperception that ``Medicare-eligibles''
    under 65 are not included in the legislation. An inadvertent exclusion
    of ``Medicare-eligibles'' under 65 might occur as this legislation goes
    forth. When this Committee considers FEHBP legislation, I ask that you
    protect the inclusion of ``Medicare-eligibles'' under age 65 for the
    following reason: CHAMPUS as second payer to Medicare does not provide
    the dual coverage situation envisioned and intended by Congress in a
    manner similar to FEHBP ``fee for service'' plans when they are second
    payer to Medicare.
        Conclusions that support the passage of FEHBP legislation as a
    voluntary option of retired military ``medicare-eligibles'' are:
      --FEHBP has no pre-existing exclusions.
      --FEHBP policies generally contain million dollar lifetime limits.
            When that limit is reached, the annuitant can switch to another
            plan and begin again. CHAMPUS boasts no lifetime dollar limits,
            however, when the CHAMPUS beneficiary gets too sick to return
            to an ``unprotected'' environment, CHAMPUS payments are
            terminated, usually retroactively.
      --FEHBP provides more comprehensive coverage at lower beneficiary
            costs than the coverage provided by military association
            supplemental policies.
      --Dual Medicare/CHAMPUS beneficiaries need two supplements for
            adequate protection. One FEHBP Medicare supplemental policy
            affords better, more seamless coverage, less paperwork, and
            lower premiums. The opportunity to join a well regulated FEHBP
            HMO is also available.
      --Medicare Part B participation is not a mandated condition for using
            benefits in the FEHBP plan. It is a voluntary choice by the
            retiree.
      --Federal civilian retirees over age 65 may use their FEHBP health
            coverage anywhere in the world.
        We thank Congressmen Moran, VA; Watts, OK; Thornberry, TX; Mica,
    FL; and Senator Warner, VA, for introducing legislation to allow
    military beneficiaries a voluntary alternative for an equal, individual
    health benefit. This legislation offers the military an equal
    opportunity for health coverage that is provided to all other Federal
    employees or retirees. It also ``Honors our Commitment'' for the
    promise of lifetime military healthcare. This legislation does not deny
    military retirees the access to traditional ``Space A'' care in a
    military hospital. Please make every effort to pass legislation that
    will provide an opportunity for equitable, accessible, affordable, and
    quality health coverage to all military retirees.
                              medicare subvention
        The Dept. of Defense has consistently testified that Medicare
    Subvention will provide the solution for the ``Medicare-eligible''
    dilemma. There is a lack of solid information provided to beneficiaries
    in order for them to have well-informed opinions on this complex health
    benefit alternative. Congressman have co-sponsored ``Subvention''
    legislation without realizing that they need a military hospital in
    their district for the legislation to benefit their constituents.
    Retirees say they desire ``Subvention,'' but do not know if it will be
    an HMO type plan--or business as usual--billed on a visit by visit
    basis. Will it provide guaranteed comprehensive care for all who opt to
    use it? Will it include only the medical services currently provided by
    the Military facility? Will any disabled retiree be denied enrollment?
    How does the Department of Defense consider Medicare Subvention the
    solution to the dilemma for the ``over 65's'' when 17 states have no
    military facility, and 9 states have only 1 small medical facility?
    Medicare Part B Enrollment and Surcharge Improvements
        The President's fiscal year 1998 Budget proposes language which
    restructures the Medicare enrollment process and the Part B Premium
    surcharges. The current general enrollment period for Part B and
    Premium Part A would be replaced with a continuous open enrollment
    period. Coverage would begin 6 months after enrollment.
        The Part B late enrollment surcharge (10 percent per year) is
    purely punitive--not at all linked to the costs borne by the program
    due to late enrollment. The President proposes to replace this punitive
    surcharge with a surcharge based on actuarially determined costs of
    late enrollment. These proposed improvements would decrease premium
    costs to military beneficiaries. Additionally, the actuarial table
    provided would be similar to life insurance premium tables that could
    be more easily understood by all. An individual could see, at first
    glance, the financial consequences of late enrollment.
        Passage of this legislative proposal would help to ease the complex
    and misunderstood rules that burden beneficiaries. I urge the
    Subcommittee to examine these Medicare improvements and to offer
    support for them.
                                   conclusion
        Military retirees were promised lifetime medical care in exchange
    for reduced compensation and service to their country. They earned it,
    often at the risk of their lives, and paid for Medicare through payroll
    deductions. Americans believe that the Uniformed Services provide free,
    lifetime healthcare. Most members of the Uniformed Services perceive
    that they are guaranteed lifetime health care for themselves and their
    family members. In fact, military retirees are the only federal
    retirees to lose their employer provided health care benefit at age 65.
    DOD and the military services fund the government contribution for
    FEHBP for their civilian employees. Disabled military retirees under 65
    are not provided a seamless health coverage similar to that provided to
    under 65 disabled federal civilian retirees.
        I ask the Defense Subcommittee to make every effort to be
    supportive of an equal, accessible, affordable, and quality retired
    health care benefit not now provided to the military retiree. Begin
    this effort by repealing the requirement to purchase Medicare Part B
    because it is an unjust condition to the TRICARE/CHAMPUS benefit earned
    as a benefit of retirement. Removing this requirement to purchase Part
    B is consistent with the voluntary options for other health insurance
    participation provided all other retired Federal beneficiaries, both
    Military and Civilian.
                                     ______

                                  Attachment 1
                        Assistant Secretary of Defense,
                                         Department of Defense,
                                      Washington, DC, January 15, 1997.
    Honorable Bruce C. Vladeck, Ph.D.,
    Administrator, Health Care Financing Administration,
    Baltimore, MD.
        Dear Dr. Vladeck: I am writing to request your assistance on issues
    pertaining to CHAMPUS beneficiaries who are entitled to Medicare on the
    basis of disability.
        As you are aware, beginning in 1992 CHAMPUS became second payer for
    beneficiaries entitled to Medicare on the basis of disability, only if
    they enroll in Medicare Part B. Unfortunately, the Department of
    Defense (DOD) has not and does not have the ability to identify this
    category of beneficiaries in order to notify them of the change in the
    law. As a result, many CHAMPUS beneficiaries were unaware of the change
    in the law, continued on CHAMPUS erroneously, and declined Part B,
    making them ineligible to use CHAMPUS as second payer under the new
    law. DOD is interested in pursuing equitable relief for those CHAMPUS
    beneficiaries entitled to Medicare due to disability.
        Section 732 of the Fiscal Year 1996 National Defense Authorization
    Act directs the administering Secretaries to develop a mechanism for
    notifying beneficiaries of their ineligibility for CHAMPUS when loss of
    eligibility is due to disability status. It is my understanding that
    the first step to implement this provision is to initiate a data
    exchange (on Medicare eligibles due to disability) from HCFA to DOD.
    Any assistance that you can provide to start the process of the data
    exchange and execute it in a timely manner would be greatly
    appreciated.
        Further, I would like to initiate a dialogue on developing viable
    options (agreeable to both Departments) to provide equitable relief for
    CHAMPUS beneficiaries who are entitled to Medicare on the basis of
    disability. It would be very beneficial if you could provide a point of
    contact within HCFA for this proposal of equitable relief for this
    category of beneficiaries as well as for the data exchange.
        I look forward to working together to address this important issue.
    Please feel free to contact me with any questions or comments.
                Sincerely,
                                             Stephen C. Joseph.
                                                           M.D., M.P.H.
                                     ______

              Attachment 2.--President's Budget, Fiscal Year 1997

                                 STATUS OF FUNDS
                            [In millions of dollars]
    ------------------------------------------------------------------------
                                             1995
     Identification code 24-9981-0-8-551    actual     1996 est.   1997 est.
    ------------------------------------------------------------------------
         Unexpended balance, start of
     year:
    0100     Treasury balance...........          13          17          17
             U.S. Securities:
    0101         Par value..............       7,573       7,890       7,966
    0102         Unrealized discounts...         -96         -93         -93
                                         -----------------------------------
    0199           Total balance, start
     of year............................       7,490       7,814       7,890
         Cash income during the year:
             Offsetting collections:
    0280         Contributions from
     Employing Agencies.................       4,562       4,338       4,506
    0281         Contributions from
     Postal Service for Active Employees       2,442       2,612       2,725
    0282         Contributions from
     Postal Service for Annuitants......         743         602         690
    0283         Government Payment for
     Annuitant Health Benefits..........       4,018       3,918       4,153
    0284         Interest Earned........         399         436         405
    0285         Contributions from DC
     Government.........................          85          80          76
    0286         Contributions from
     Active Employees...................       2,147       2,143       2,233
    0287         Contributions from
     Annuitants.........................       1,814       1,811       1,923
                                         -----------------------------------
    0299           Total cash income....      16,210      15,940      16,711
         Cash outgo during year:
    0501     Benefit Payments...........     -15,714     -15,668     -16,289
    0502     Payments to Carriers from
     OPM Contingency Reserve............        -157        -180        -200
    0503     Administration.............         -15         -16         -18
                                         -----------------------------------
    0599       Total cash outgo (-).....     -15,886     -15,864     -16,507
         Unexpended balance, end of
     year:
    0700     Uninvested balance.........          17          17          17
         U.S. Securities:
    0701     Par value..................       7,890       7,966       8,170
    0702     Unrealized discounts.......         -93         -93         -93
                                         -----------------------------------
    0799       Total balance, end of
     year...............................       7,814       7,890       8,094
    ------------------------------------------------------------------------

        This display combines the Federal Employees Health Benefits (FEHB)
    fund and the Retired Employees Health Benefit (REHB) fund.
        The FEHB fund provides for the cost of health benefits for: (1)
    active employees; (2) employees who retired after June 1960, or their
    survivors; (3) those annuitants transferred from the REHB program as
    authorized by Public Law 93-246; and (4) the related expenses of the
    Office of Personnel Management (OPM) in administering the program.
        The REHB fund, created by the Retired Employees Health Benefits Act
    of 1960, provides for: (1) the cost of health benefits for retired
    employees and survivors who enroll in a Government-sponsored uniform
    health benefits plan; (2) the contribution to retired employees and
    survivors who retain or purchase private health insurance; and (3)
    expenses of OPM in administering the program.
        Budget program.--The balance of the EHB fund is available for
    payments without fiscal year limitation. Numbers of participants at the
    end of each fiscal year are as follows:

    ------------------------------------------------------------------------
                                       1995 actual   1996 est.    1997 est.
    ------------------------------------------------------------------------
    Active employees.................    2,282,000    2,254,000    2,225,000
    Annuitants.......................    1,771,000    1,794,000    1,815,000
                                      --------------------------------------
          Total......................    4,053,000    4,048,000    4,040,000
    ------------------------------------------------------------------------

        In determining a biweekly subscription rate to cover program costs,
    one percent is added for administrative expense and three percent is
    added for a contingency reserve held by OPM for each carrier. OPM is
    authorized to transfer unused administrative reserve funds to the
    contingency reserve.
              * * * * * * *
                                     ______

     Prepared Statement of Col. Charles C. Partridge, U.S. Army (Retired),
                  National Association for Uniformed Services
                                  introduction
        Mr. Chairman and distinguished members of the Committee, the
    National Association for Uniformed Services would like to express its
    appreciation to you for holding these important hearings. The testimony
    provided here represents the collective views of our members.
        The National Association for Uniformed Services represents all
    ranks, branches and components of uniformed services personnel, their
    spouses and survivors. Our nationwide nonpartisan association includes
    all personnel of the active, retired, reserve and National Guard,
    disabled and other veterans of the seven uniformed services: Army,
    Marines, Navy, Air Force, Coast Guard, Public Health Service, and the
    National Oceanic and Atmospheric Administration.
        Our affiliate, the Society of Military Widows, is an active group
    of women who were married to uniformed services personnel of all grades
    and branches and represents a broad spectrum of military society. From
    our membership of over 160,000 and 300,000 family members and
    supporters, or almost half a million voters, we are able to draw
    information from a broad base for our legislative activities.
        Surveys of military personnel and their families consistently show
    that medical care along with adequate pay and inflation protected
    retired pay and commissaries are the top concerns of the military
    community. In fact, with base and hospital closures and reductions in
    medical personnel, the increasing lack of available health care is a
    major concern to active and retired personnel alike. I will focus on
    military medical care during this hearing.
                                   background
        The promise of lifetime medical care for career service members,
    their families and survivors is contained in law and tradition that
    dates back to the 18th century. Later, in 1885 the 48th Congress
    provided in a War Department Appropriations Bill that, ``The Medical
    Officer of the Army and Contract Surgeon shall, whenever practicable,
    attend the families of officers and soldiers free of charge.''
        Prior to the early 1950's, the promise to provide military medical
    care for retired military personnel was not questioned because
    throughout their military careers and in retirement, medical care was
    provided in military medical treatment facilities (MTF's) for personnel
    who could use those facilities. During the early 1950's and since that
    time the services, in official documents and literature, used the
    lifetime promise of free medical care as a recruitment and retention
    incentive for the large military force required to fight the Cold War.
        In 1956 Congress made space available medical care an entitlement
    for active duty dependents by the enactment of the Dependents' Medical
    Care Act (Public Law 84-569; June 7, 1956; 70 Stat. 250). The law also
    specified care for retirees and their dependents at these facilities
    (without entitlement) on a space available basis.
        Also in 1956, Congress concluded that the direct care medical
    system was inadequate to care for the dependents of active duty
    personnel and enacted legislation authorizing the Defense Department to
    contract with private sources to supplement the inadequate in-house
    care for dependents of active duty members who due to travel distances
    or other reasons could not use MTF's. This was the forerunner of the
    Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)
    enacted by Congress to be effective in 1967. With the enactment of
    CHAMPUS, military retirees, their families and survivors were included.
        The CHAMPUS program was designed to provide a quality health care
    benefit comparable to ``Federal Employees Health Benefits Program hi-
    option Blue Cross/Blue Shield or hi-option Aetna health insurance'',
    (The Military Medical Act, Public Law 89-614).
      --CHAMPUS required the Defense Department to pay 80 percent of
            medical costs for active duty dependents and 75 percent of the
            cost for retired members under age 65, and their dependents.
            CHAMPUS beneficiaries were required to pay the remaining
            balance of the cost of the medical care they received from
            private sector providers.
      --Changes in the CHAMPUS program over the years have been disastrous
            for beneficiaries. In many areas because of the low allowable
            payment rates, physicians either will not accept CHAMPUS or
            consider CHAMPUS beneficiaries as charity patients. This is
            embarrassing and insulting to our military personnel and their
            families.
        Exhibit A is an extract of some of the promises made in recruiting
    and retention literature over the years. Despite these promises, the
    availability of health care continues to be a problem. Deep cuts in
    both military and civilian medical personnel have left MTF's severely
    understaffed. Physicians are preparing examining rooms and performing
    administrative tasks which means they see fewer patients than do
    private sector physicians who have adequate nursing and administrative
    help available to them. Meantime, patients not seen in MTF's must be
    referred to more expensive CHAMPUS or TRICARE contractor care.
        Today no single option will solve the problem of providing medical
    care to DOD's diverse beneficiary population. However, improving access
    to cost effective, top quality care while meeting wartime training and
    mobilization requirements can be accomplished at reasonable cost.
                               current situation
        Over 58 hospitals have been closed as part of the Base Realignment
    and Closure Commission or other closure actions. Services have been cut
    back at many of the hospitals remaining open and many of them are being
    downgraded to clinics. Hundreds of thousands of retirees and military
    family members who received care in MTF's are now finding no care
    available. Retirees are being denied prescription drugs by MTF
    pharmacies in increasing numbers. They are told the prescribed drugs
    cost too much, or are restricted for issue to active duty or for some
    reason are no longer available.
        The TRICARE Program has been in development or implementation for
    nearly a decade, yet the TRICARE-Prime program still does not cover
    many parts of the United States. For example, in California where the
    military managed care system has been in place the longest--over eight
    years--there are still areas without TRICARE-Prime networks. This is
    because DOD is not willing to spend the money necessary to have top
    quality providers sign up. Therefore, if they cannot or will not
    establish networks, then an adequate TRICARE Standard/CHAMPUS program
    should be available. Unfortunately, the CHAMPUS Maximum Allowable
    Change (CMAC) is so low many physicians will not accept it. Although
    DOD has asked for and gotten authority to link CHAMPUS rates to
    Medicare rates, in some areas and for some procedures the rates are
    lower than Medicare. Linking CHAMPUS rates to Medicare is
    unsatisfactory in any case. A better solution would be linking them to
    reasonable and customary charges similar to the Federal Employees
    Health Benefits Program service charge with provisions for further
    negotiating. The current system is broken, and must be fixed.
                                 the sheep pen
        One retired Non-Commissioned Officer described the current military
    medical system as a sheep pen. He said military retirees waiting for
    care can be compared to sheep in a holding pen. They have three gates
    to go through for care. A very narrow gate represents decreasing access
    to MTF's, a slightly larger gate represents TRICARE and the largest
    gate represents Medicare (See Exhibit B). This describes a system that
    saves money by restricting or denying access to care.
                                 the naus plan
        NAUS/SMW fully supports keeping a strong, effective direct care
    system for the delivery of health care and medical readiness. We also
    support making full use of the military treatment facilities and
    TRICARE networks as DOD's primary providers. However, retirees who are
    not guaranteed access to these primary sources of care should be given
    the option of participating in the Federal Employees Health Benefits
    Program (FEHBP). Greater use could also be made of VA health care
    facilities. (See Exhibit C).
                               fehbp as an option
        NAUS supports offering FEHBP as an option to Medicare eligible
    military retirees, their families and survivors. Further, TRICARE
    Standard must be improved for TRICARE eligible beneficiaries to provide
    a benefit that is at least comparable to that provided to beneficiaries
    of the Federal Employees Health Benefits Program (FEHBP) as originally
    intended by Congress. If this is not done then military beneficiaries
    should be allowed to participate in FEHBP.
        Presently, DOD does not officially endorse giving military retirees
    the FEHBP option stating it may cost more, weaken readiness or siphon
    off funds from other programs already underfunded.
        However, Congress appropriates some $4 billion annually for FEHBP
    for Federal civilian retirees including DOD civilian personnel while
    DOD is closing military hospitals and disengaging its military retirees
    from health care to save money.
        Military retirees deserve to have a health care program at least
    comparable to that of the President, the Congress and every current and
    retired Federal civilian employee. CHAMPUS/TRICARE-Standard has been
    destroyed by DOD and Congress by severe funding cuts and administrative
    restrictions; DOD/Congress must restore CHAMPUS/TRICARE-Standard to its
    original high quality status. If these improvements are not made, FEHBP
    will be required as an option for younger TRICARE eligible retirees and
    their families. The government now funds FEHBP for its DOD civilian
    employees and retirees. Shouldn't the government also provide a
    guaranteed benefit for the nation's retired warriors--the men and women
    who put their lives on the line to defend this nation?
        Concerned members of Congress have introduced legislation to
    provide FEHBP to military beneficiaries:

    --------------------------------------------------------------------------------------------------------------------------------------------------------
                      Bill                                  Sponsor                                               Description
    --------------------------------------------------------------------------------------------------------------------------------------------------------
    H.R. 1356...............................  Rep. J.C. Watts....................  Restores CHAMPUS/TRICARE Standard to original standards intended by
                                                                                    Congress; allows Medicare eligibles option to enroll in FEHBP; under 65
                                                                                    would have FEHBP option if restored benefit not available.
    H.R. 1456...............................  Rep. Thornberry....................  Provides TRICARE-Prime for Medicare eligible retirees w/Medicare
                                                                                    reimbursements to DOD; allows them to participate in FEHBP; waives Part
                                                                                    B penalties; requires benefits under TRICARE Standard to be comparable
                                                                                    to highest level FEHBP plan or opens FEHBP as an option to military
                                                                                    retirees, survivors, and family members.
    H.R. 1631...............................  Rep. Mica..........................  FEHBP, as an option, is open to active duty families, military retirees,
                                                                                    family members and survivors; coverage/costs same as Federal civil
                                                                                    service. Cost controlled by limiting elections--100,000 first year;
                                                                                    200,000 second year; 400,000 third year.
    H.R. 76.................................  Rep. Moran.........................  Provides FEBHP, as an option, to Medicare eligible retirees.
    S. 224..................................  Senator Warner.....................  Companion bill to H.R. 76.
    --------------------------------------------------------------------------------------------------------------------------------------------------------

    Medicare Reimbursement (Subvention)
        NAUS supports Representative J.C. Watt's H.R. 1357 and Joel
    Hefley's bill, H.R. 192 which would set up Medicare subvention
    demonstration projects at up to five sites and Joel Hefley's H.R. 414
    would fully implement Medicare subvention. We also support
    Representative Mac Thornberry's bill H.R. 1456 which includes Medicare
    subvention. We understand that Senator Phil Gramm plans to introduce
    subvention reimbursement legislation in the Senate soon. We would like
    to see full Medicare reimbursement legislation passed promptly. If that
    cannot be done we would support a demonstration project. However, the
    longer we delay full implementation the greater the injustice to
    military retirees.
        Some features which we recommend be incorporated into all Medicare
    subvention include:
      --A fee-for-service option. The current demonstration would limit
            participation to those who are willing to give up their
            Medicare benefit except as part of the DOD TRICARE Prime
            program. We believe those who do not want to enroll in TRICARE-
            Prime should be allowed to use military treatment facilities on
            a space available basis and the MTF should be allowed to bill
            Medicare for treatment at a DOD/HCFA negotiated rate.
      --Waive TRICARE-Prime enrollment fee for Medicare eligibles.
            Currently, Medicare HMO's require no enrollment fee for
            beneficiaries. We believe ``fee stacking'' by requiring
            participation in Part B Medicare and payment of TRICARE
            enrollment fees will place the TRICARE-Prime out of reach for
            some beneficiaries. A couple would pay $1,164 for Medicare Part
            B plus $460 for the enrollment fee for a total of $1,624 per
            year. This would be before co-payments and other fees required
            under the TRICARE program.
      --Solve Medicare Part B premium problems. Waive Medicare Part B
            penalties for Medicare eligibles who do not have Medicare Part
            B, but would like to enroll in Part B and participate in a
            Medicare subvention program.
      --Ensure that Medicare eligible beneficiary enrollees are given the
            same priority care that other enrollees receive.
      --Include authority for all uniformed services Medicare eligibles to
            participate, not just those of the Armed Services.
      --Provide clear guidance and safeguards to make participation by
            Medicare eligibles completely voluntary. Some retirees are in
            satisfactory health care programs and would object to any
            provision that would require participation in a Medicare
            subvention program.
                          seniors health care program
        NAUS applauds DOD's efforts to provide a pharmacy benefit for
    Medicare eligibles. However, we oppose the elimination of the current
    pharmacy program to fund it. The high enrollment fees, deductibles and
    lack of provisions for name brand drugs while eliminating the current
    program would make it unacceptable to most retirees.
        However, we could support a properly funded pharmacy benefit that
    would give beneficiaries the choice of participating in a guaranteed
    mail service program with a prescription cost structure similar to
    TRICARE-Prime. To be acceptable, a large formulary would be required.
    Further, the provisions of brand name drugs at a modest mark-up over
    the base cost would also be needed. We would consider a well designed
    pharmacy benefit for Medicare eligibles an excellent step toward
    eliminating the age discrimination in the DOD health program; however,
    we would not consider that to be an adequate answer to the need for the
    FEHBP option for retirees which has a prescription drug benefit part of
    the plan.
                              retiree dental plan
        NAUS strongly supports development of a retiree dental plan. Cost
    will be a major factor in its success among retirees. A long lock-in
    period to keep rates down in conjunction with stable rates would be
    acceptable to retirees. A proposal that encourages competition to
    provide the best service at reasonable costs is desirable.
              uniformed services university of the health sciences
        The Alliance thanks this Committee for its strong support for
    providing funds for the continued operation of the Uniformed Services
    University of the Health Sciences. Study after study has shown that
    when all factors are considered USUHS is more cost-effective than the
    U.S. Health Profession Scholarship Program. We urge you to continue
    your support for this school. We also urge all members of Congress with
    responsibility for the health and safety of our servicemen and women to
    visit this fine institution and see first hand the critical role it
    plays in military medicine and in providing top quality training to
    uniformed medical personnel.
                                    funding
        Last year the Defense Health Program was under funded by the
    Administration by about $500 million. The Defense Authorization and
    Appropriations Committees restored the funds. Again this year the DHP
    is under funded. Therefore, Mr. Chairman, we again ask that you and the
    members of this panel provide necessary funds for fiscal 1998. We are
    also concerned that there are insufficient funds allocated for fiscal
    1999 and beyond. According to a GAO report (GAO/NSIAD 97-83BR Defense
    Health Program) provided to the Chairman and Ranking Minority Member of
    the Subcommittee on National Security, House Committee on
    Appropriations, DOD's health care budget assumptions under fund the
    Defense Health Program from $3.2 to $8.4 billion through the year 2003.
        Further, we ask that the Defense Department be directed to present
    this committee with a plan to provide health care accessible to all 8.5
    million beneficiaries and to provide a specific date when the plan will
    be in place. We believe the plan should include FEHBP.
        Finally, NAUS thanks this committee for its support of Medicare
    reimbursement, for holding this hearing and its interest and concern
    for our service members, their families and survivors.
                                     ______

                   Exhibit A.--Military Medical Care Promises
        Army Recruiting Brochure, ``Superb Health Care. Health care is
    provided to you and your family members while you are in the Army, and
    for the rest of your life if you serve a minimum of 20 years of active
    Federal service to earn your retirement.'' [RPI 909, November 1991
    U.S.G.P.O. 1992 643-711]
        Life in the Marine Corps, p. 36. ``Benefits * * * should you decide
    to make a career of the Corps, the benefits don't stop when you retire.
    In addition to medical and commissary privileges, you'll receive
    excellent retired pay * * *.''
        Guide for Educators and Advisors of Student Marines, p. 35.
    ``Retired Marines are generally eligible to receive any type of health
    and dental care at those facilities provided for active duty
    personnel.''
        Navy Guide for Retired Personnel and Their Families, p. 51.
    ``Covered under the Uniformed Services Health Benefits Program (USHBP)
    are retired members, dependents of retired members and survivors of
    deceased active duty or retired members. This care is available
    anywhere in the world either in a uniformed services medical facility
    (meaning Army, Navy, Air Force and certain Public Health Service
    facilities) and under the part of the USHBP called CHAMPUS.'' [NAVPERS
    15891D November 1974]
        The Bluejackets Manual, p. 257. ``What Navy Retirement means to
    you--pay. Continued medical care for you and your dependents in
    government facilities.'' [1969]
        Air Force Preretirement Counseling Guide, Chapter 5 Medical Care 5-
    2f.. ``One very important point, you never lose your eligibility for
    treatment in military hospitals and clinics.'' [1 April 1986]
        Air Force Guide for Retired Personnel, Chapter 1. ``Treatment
    authorized. Eligible retired members will be furnished required medical
    and dental care.'' [1 April 1962]
        United States Coast Guard Career Information Guide, USGPO.
    ``Retirement * * * You continue to receive free medical and dental
    treatment for yourself plus medical care for dependents.'' [1991]
        U.S. Coast Guard Pamphlet Be Part of the Action, ``Reap the Rewards
    * * * You can earn retirement benefits--like retirement income * * *
    Plus medical, dental care * * *.'' [1993]
        Hearings on CHAMPUS and Military Health Care, HASC No. 93-70, 93rd
    Congress ``* * * the government has a clear moral obligation to provide
    medical care to retired personnel and their dependents * * * this
    Committee has found numerous examples of recruitment and retention
    literature which pledged * * * medical care for the man and his family
    following retirement.'' [Oct-Nov 1974]
                                     ______

                                   Exhibit B

        Many retired NCO's (``ol' sarges'') have characterized DOD's
    current military health services system (MHSS) as a ``Sheep Pen'' with
    military retirees being kept in a holding pen waiting for rationed
    care.
        Under this concept, there are 3 gates out of the pen but only 2
    lead to DOD sponsored health care:
        MTF Gate--is designed to restrict access to care: Space A Only;
    Hospital Closures; Specialty Program Cuts; Reduced Hospital Pharmacies;
    Doctor, Nurse and Support Personnel Cuts; and Hospitals ``Cherry Pick''
    the Medical Cases for ``Practice'' [Graduate Medical Education (GME)
    Program].
        TRICARE Gate--is designed to restrict access to care TRICARE Prime:
    Inadequate Prime Networks; Low Physician Payments; High Point-of-
    Service Costs; High Cost of Contract Administration; and Over 65
    Medicare Eligibles Not Allowed to Participate.
        TRICARE Standard (CHAMPUS): Restrictive Non-Availability Statement
    Requirements; No Care for Medicare Eligibles; and Considered Charity by
    Many Physicians.
        Medicare Gate--Where DOD herds the sickest and oldest sheep. Saves
    DOD Money; Allows DOD to renege on its lifetime medical care promise;
    No Prescription Drug Coverage (Must attempt to get needed prescription
    drugs from MTF which has cut some expensive drugs to save money.); 26
    states have no major military treatment facility (MTF); 58 hospitals
    have been closed; 17 are to be considered for downsizing to clinics;
    Even when DOD's TRICARE program is fully implemented in the 21st
    century, only 50 to 60 percent of the 8.5 million beneficiaries will be
    cared for (what about the other 40 percent?); And, Medicare
    reimbursement (subvention) will care for only about one-third of the
    Medicare eligible beneficiaries who live near MTF's.
        Keeping the beneficiaries in the ``sheep pen'' holds costs down.
    Shouldn't DOD's old warriors have a health care plan at least
    comparable with that of DOD's civilian staff?
                                     ______

     Exhibit C.--NAUS Health Care Plan to Serve All Military Beneficiaries
        NAUS proposes a plan that would allow DOD to provide health care to
    all 8.5 million beneficiaries without keeping military beneficiaries in
    a ``sheep pen'' with rationed care.

    Primary Medical Care Providers:
        Military Treatment Facilities (MTF's).--Care would continue to be
    provided on a space available basis to all eligible military
    beneficiaries. Medicare reimbursement would be provided for care of
    Medicare eligibles. FEHBP would reimburse MTF's for beneficiaries who
    elect the FEHBP option. These steps support the Graduate Medical
    Education (GME) program.
        TRICARE Prime/Extra/Standard.--NAUS supports TRICARE with
    improvements. Medicare eligibles would be eligible to participate.
    Medicare reimbursement would be provided for care of Medicare
    eligibles.
    Secondary Medical Care Providers:
        Federal Employees Health Benefits Program (FEHBP) Option.--FEHBP
    would be offered as an option for all retired military beneficiaries
    who cannot be guaranteed care within MTF's and TRICARE networks and are
    willing to pay premiums and/or co-payments. FEHBP option could still be
    used in MTF's on space available basis with full reimbursement to
    MTF's. Under age 65 retirees would be offered FEHBP or a high quality
    restored CHAMPUS/TRICARE Standard option.
        VA Facilities.--Agreements would allow all military beneficiaries
    near Veterans Administration (VA) hospitals to use them and be
    reimbursed by Medicare, TRICARE/CHAMPUS and other third party payers,
    including FEHBP.
        All 8.5 million military beneficiaries would be provided promised,
    guaranteed, accessible, quality health care by DOD through these four
    alternatives while providing MTF's with the necessary number and
    variety of patients needed for training for battlefield casualty and
    other medical readiness training. Additional cost should not be great
    because it will be offset by restricting individuals to one primary or
    secondary medical care provider. Cost should not be a primary factor
    since Congress appropriates $4 billion annually for FEHBP for Federal
    civilian retirees (including DOD civilian retirees). Military
    retirees--our nation's warriors--should be afforded comparable health
    care. Congress should appropriate sufficient funding to accomplish
    this.
                                     ______

       Prepared Statement of the National Association of Energy Service
                                   Companies
        The National Association of Energy Service Companies (NAESCO)
    appreciates the opportunity to submit the following written testimony
    in support of the Department of Defense (DOD) fiscal year 1998 budget
    request for energy efficiency contracting and other energy efficiency
    project support services.
        NAESCO is a trade association of energy service companies (ESCO's)
    and their trade allies, including utility and manufacturing companies.
    NAESCO's current membership of over 100 organizations includes firms
    involved in the design, manufacture, financing and installation of
    energy efficiency equipment and services in the private and public
    sectors, including Federal buildings.
        The thousands of energy efficiency retrofits installed by NAESCO
    member companies to date enable energy consumers to save an average of
    25 percent of their previous building energy costs. NAESCO's energy
    service company (ESCO) members offer capital constrained customers the
    opportunity to upgrade their facilities without any up-front capital
    expenditures. In addition, ESCO's assume the performance and technical
    risk so that repayment for project costs comes only from measured and
    verified energy savings generated by a successful, ongoing project.
    department of defense initiatives in support of federal budget savings
                 through energy savings performance contracting
        The DOD has an excellent history of reliance on the private sector
    to provide energy efficiency services, including Energy Savings
    Performance Contracts (ESPC's), on behalf of DOD facilities. In recent
    years, the DOD appears to have increased its use of ESPC's, a trend
    that NAESCO strongly endorses, since the award of an ESPC requires a
    competitive procurement, which helps to ensure the selection of the
    highest quality and most cost effective services. Attached to this
    testimony as Exhibit A are case studies of two such contracts, one at
    Fort Polk (LA) and the other at Hill Air Force Base (UT). Both projects
    illustrate the magnitude of energy and dollar savings achievable.
    Solicitations for Energy Efficiency Services
        While NAESCO is extremely supportive of the DOD's commitment to the
    use of ESPC's to reduce energy costs and generate dollar savings,
    NAESCO nonetheless would like to express strong reservations concerning
    the Department of the Army's recent decision to issue a 46 state
    solicitation for energy efficiency services. NAESCO strongly encourages
    Congress to advise Federal agencies to continue their past practice of
    holding Request For Qualification (RFQ) competitions on a region-by-
    region basis. It has been suggested by some that a single ``national''
    RFQ would be simpler to manage, both for procurement personnel and for
    bidding ESCO's. However, solicitations on the magnitude of the Army's
    46 state RFQ are far ahead, in terms of size, of the development of the
    procurement infrastructure for evaluating proposals and awarding and
    negotiating contracts. ``Mega solicitations'' such as this are likely
    to create contracting delays rather than facilitate the contracting
    process as projects are lined up in the pipeline without sufficient
    contracting staff in place to negotiate and finalize contracts.
        By continuing the practice of holding regional competitions,
    Federal agencies also enable smaller Energy Service Companies, that are
    active on a regional basis, to remain in the competition for Federal
    facilities' projects. One of the dangers of such a large competition is
    that only the largest companies may be able to meet the qualifications
    requirements of such competitions. Thus, the smaller companies, who may
    be able to offer excellent and competitive energy efficiency services,
    but who are not backed by a national support system, would be excluded
    from the competition. A result such as this would represent a
    disservice to those companies as well as to the DOD facilities covered
    by the RFQ, since those facilities would not receive the benefit of the
    broadest possible competition among energy services providers.
    Centralized Contracting Initiatives
        The DOD also has taken the initiative, ahead of other Federal
    agencies, in developing centralized contracting offices, in particular
    at the Huntsville Army Base and at Tyndall Air Force Base. NAESCO
    supports this move since it offers the potential to decrease the
    administrative costs of implementing Energy Savings Performance
    Contracts (ESPC's) by creating centers of procurement and contract
    management expertise. Therefore, NAESCO fully supports specific line
    item (``fenced'' funding) for energy conservation necessary to support
    this infrastructure. Without such fenced funding, the monies generally
    allocated to operations and maintenance simply go to other mission-
    related functions.
        However, NAESCO would like to suggest that some flexibility in the
    organizational structure be encouraged. In the experience of our member
    companies, each project site identified for an energy efficiency
    retrofit tends to have unique characteristics. The level of knowledge,
    understanding and skills related to energy efficient equipment, the
    potential for energy and cost savings, and the facility upgrades
    available through energy efficiency retrofits varies widely among
    facility managers and contracting officers. Also, there is a broad
    range of capability in terms of the contracting tools available for
    procuring these services. At some project sites, facility engineers,
    contracting officers and legal counsel may be poorly equipped to
    oversee, procure and develop these highly cost effective projects. In
    cases like this, the centralized offices can offer invaluable support
    services to help make energy efficiency projects possible.
        At other sites, however, facility staff and their on-base support
    personnel may be the most qualified to bring such a project together.
    In cases such as this, mandatory exclusive use of centralized office
    personnel has the potential actually to increase the cost of these
    projects through the duplication of efforts and the inefficient use of
    personnel time.
        We strongly encourage the DOD and Appropriators to ensure that the
    centralization of support services for energy savings contracts creates
    more efficient and expeditious contracting procedures in all cases, by
    the provision of site-appropriate support.
    all qualified energy service providers should be given equal access to
                               the federal market
        Federal agencies have adopted the view that sole-source contracting
    with existing regulated utility companies is a preferred method of
    obtaining energy efficiency services, when compared with the
    competitive procurement of Energy Savings Performance Contracts
    (ESPC's). This reliance on the use of utility sole-source contracts
    violates Federal requirements for full and open competition. Utility
    power services historically have been procured on a sole-source basis
    due to the traditional compact with the utility franchise. The national
    trend toward both wholesale and retail competition in the utility
    industry weakens this traditional unilateral relationship and there are
    questions about whether such a sole-source relationship is appropriate
    or beneficial in a changing marketplace. In addition, it has never been
    clear that the statutory authority for this sole-source power supply
    extended to the provision of energy efficiency services. The policy
    that DOD and other agencies have adopted, absent public review or
    comment, is that federal facilities may contract directly with
    utilities for energy efficiency services, but that all other providers
    must engage in a competitive procurement process.
        The use of non-competitive procurement practices in energy
    efficiency contracting denies the Federal government and U.S. taxpayers
    the benefits of competition in the market for energy efficiency
    services. Furthermore, it is not supported by any rational
    justification. Therefore, NAESCO strongly encourages the DOD and
    Federal Appropriators to prescribe the use of competitive procedures
    for all providers when DOD is engaged in the procurement of energy
    efficiency services.
    through the competitive procurement of energy efficiency services, the
       federal government can reduce the energy costs borne by american
                                   taxpayers
        Within the United States' economy, residential and commercial
    buildings, including those dedicated to the Federal sector, consume
    one-third of all primary energy and 65 percent of all the electricity
    we produce. By investing in energy efficiency, we can capture more than
    25 percent of this energy for use elsewhere within our economy. If the
    same amount of capacity for energy production were to be provided from
    the construction of new electric power plants, it would require eighty
    1,000 megawatt plants with their attendant environmental impacts and
    siting concerns.
        A 1994 macroeconomic study demonstrates that by meeting a 2010
    energy use reduction target of 30 percent, the U.S. will reduce annual
    electricity generation by 27 percent and decrease the need for the
    construction of new generating facilities by over 50 percent. U.S.
    electricity customers will enjoy an 18 percent overall reduction in
    their electricity bill (a savings of $50 billion), while electric
    sector emissions of carbon dioxide and oxides of nitrogen will be
    reduced by 33 percent and 12 percent, respectively. These lower costs
    for energy, available through private energy efficiency investments,
    will enable U.S. consumers to increase their annual consumption of non-
    electricity goods and service by $45 billion. (``DSM and the Broader
    Economy,'' Edward Moscovitch, The Electricity Journal, May 1994.)
        In the Federal sector, cost savings through energy efficiency
    investments enable agencies to pursue their missions while reducing
    budget outlays through reductions in infrastructure costs. However, the
    full benefits of energy efficiency investments will not be realized by
    the Federal Government or by the taxpayers if Federal agencies continue
    to pursue non-competitive practices in acquiring these services.
                                   conclusion
        The competitive procurement of privately funded energy efficiency
    investments in Federal facilities offers a win-win budget initiative
    for the Congress and the U.S. taxpayer. These initiatives will increase
    energy productivity by reducing the energy consumption and therefore
    the dollar cost of operating and maintaining Federal facilities.
        NAESCO supports the DOD's centralization of support services for
    energy savings contracting to the extent that it can be implemented in
    a way that creates more efficient and expeditious contracting
    procedures in all cases, by the provision of site-appropriate levels of
    support.
        NAESCO strongly encourages the DOD and the Congress to continue to
    support a Federal-private sector initiative for reducing energy costs
    in Federal facilities. We further encourage the Congress and Federal
    agencies to provide U.S. taxpayers the maximum budget savings and other
    benefits available through these investments by employing competitive
    procedures for their procurement.
                                     ______

         Prepared Statement of Cyrus M. Jollivette, Vice President for
                  Governmental Relations, University of Miami
        Mr. Chairman and Members of the Subcommittee: I appreciate the
    opportunity to present testimony on behalf of the University of Miami.
    The University has long enjoyed your thoughtful support, and my
    colleagues in Florida are deeply appreciative of your leadership, and
    the Subcommittee's confidence. At no time in the past have you and your
    colleagues on the Committee on Appropriations faced more difficult
    constraints. Yet, I am certain that you will continue to make the
    difficult choices with the best interests of the nation guiding your
    decisions. My colleagues and I hope that you will find it possible to
    fund the important initiatives detailed below in the fiscal year 1998
    appropriations cycle.
        The University is seeking your support for several initiatives
    within your purview: (1) an International Center for Health Research;
    (2) a Children's Research Center; (3) a South Florida Ocean
    Measurements Laboratory; (4) an oceanographic research vessel for the
    Southeastern Consortium for Ocean Research (SECOR); and (5) the Ocean
    Surface Current Radar (OSCR).
    The University of Miami International Center for Health Research
        The University of Miami's International Center for Health Research
    is dedicated to improving controls on the emergence and migration of
    infectious diseases. The incidence of emerging and re-emerging
    infectious diseases has dramatically increased within the past two
    decades. The United States is vulnerable to these emerging and re-
    emerging diseases as evidenced by the advent of the HIV virus, and
    resurgence of tuberculosis, particularly in densely populated areas,
    and among ethnic minorities. Other infectious diseases have emerged,
    including malaria, dengue, and cholera. Introduction of these diseases
    into the United States is enhanced by increased air travel and
    migration among the countries of the Western Hemisphere, particularly
    from Latin America and the Caribbean.
        Controlling disease outbreaks in other countries is important not
    only for humanitarian reasons, but also to prevent these diseases from
    entering the United States, where they could endanger our national
    health and security. Three International Centers are needed to improve
    collaboration between scientists from the U.S., Latin America and
    Caribbean countries. The Centers' mission will be to investigate and
    develop innovative strategies to determine etiology, the spread, and
    the unique interactions between nutritional status and susceptibility,
    as well as disease progression and disease control for HIV, TB, and
    other infectious diseases. These Centers need to be located in the
    gateways to the Americas and the Caribbean, which have established
    collaborative relationships with the Latin American and Caribbean
    countries, and are susceptible to high numbers of visitors, as well as
    legal and illegal immigrants. The resulting infrastructure and
    knowledge will enhance effective hemispheric disease control. Direct
    and indirect funding of $750,000 per year for five years per Center
    will be awarded.
    The Batchelor Children's Research Center
        The Batchelor Children's Research Center is the research and
    diagnostic institute of the Department of Pediatrics at the University
    of Miami School of Medicine, which is one of the larger academic
    pediatric departments in the country, with an impressive teaching/
    educational program, extensive clinical care activities and major
    research efforts. When the University of Miami School of Medicine was
    formed, the Department of Pediatrics had little research, and was not
    assigned significant research space. Today, the Department has over 125
    full-time salaried faculty, and a total faculty and staff of over 700.
    In recent years, the research effort of the Department of Pediatrics
    has grown phenomenally, and now receives more external grant and
    contract funding than any other Department within the University. This
    success has resulted in a serious shortage of quality space, and an
    even more serious problem in the organization of the space available,
    which is scattered in small units throughout the medical campus.
        Recognizing the need, Miami has embarked on the construction of one
    of the major children's research facilities in the nation. Initiated
    with a ten million dollar gift from Mr. George Batchelor and the
    Batchelor Foundation, and quickly augmented with a five million dollar
    grant from the Harcourt M. & Virginia Sylvester Foundation, the project
    was well on its way. The University has employed an architectural firm
    to design a state of the art research building to house all basic and
    clinical research of the Department of Pediatrics. Additional funding
    commitments have come from the Florida Cystic Fibrosis, Inc. in the
    amount of one million dollars, and a gift of two million dollars from
    an anonymous supporter for pediatric AIDS research. The goals and
    mission of the facility are for the benefit of the children of Florida,
    the United States, and beyond, to create a children's clinical and
    basic research center of unmatched excellence, to facilitate
    consolidated, coordinated, interdisciplinary research efforts in
    pediatrics, and to study, treat and ultimately cure childhood diseases.
        In the critical arena of marine and atmospheric research in which
    the Department of Defense has long played a leading role, we would like
    to submit testimony on the following initiatives: the South Florida
    Ocean Measurements Laboratory and South Florida Test Facility, the
    Southeast Consortium for Oceanographic Research and Oceanographic
    Research Vessel, and finally, the Ocean Surface Current Radar
    Technology Demonstration.
    The South Florida Ocean Measurements Laboratory
        The South Florida Ocean Measurements Laboratory is a partnership
    currently being defined between Florida Atlantic University (FAU), the
    South Florida Test Facility (SFTF), and the University of Miami for the
    purpose of developing a unique Ocean Measurements Laboratory. This
    laboratory would expedite ocean research and testing by direct access
    to the sea with high speed fiber optic cables that are connected to the
    Port Everglades facility operated by the SFTF and the new FAU facility
    in Dania, Florida. The partnership would afford FAU, SFTF, and UM equal
    input in proposals for infrastructure on a State and Federal level, and
    on the working level, individual investigators from each organization
    would compete within the peer review process for specific research
    projects. Natural spheres of interest amongst participants are: FAU has
    programs in autonomous underwater vehicles and the applications of high
    frequency underwater acoustics to problems in sub-bottom profiling,
    underwater communication and mine warfare; SFTF is involved with the
    at-sea tests and trials of U.S. Navy ships, submarines, sonars, and
    other systems; and UM has nearly a 40 year history of research in the
    Florida Straits on low frequency long-range acoustic propagation in
    shallow water, bioacoustics, and the development of underwater signal
    processing methods. UM can successfully contribute to the design of the
    general purpose instrumentation suite for defining the oceanic and
    atmospheric environments at the FAU and SFTF sites.
    The Southeast Consortium for Oceanographic Research (SECOR)
        The Southeast Consortium for Oceanographic Research (SECOR) is a
    partnership of three universities: the University of Miami, Texas A&M
    University, and the University of Texas. Additionally, the NOAA
    Atlantic Oceanographic Meteorological Laboratory has joined SECOR as an
    associate member. The three universities seek funding for and propose
    to operate a new regionally-based fisheries-oceanography ship in
    cooperation with the National Marine Fisheries Service of NOAA.
    Research trends in the past five years, as well as national needs, make
    the Gulf Coast and Caribbean an area of great opportunity and
    international coordination. Such a vessel could fill the need for sub-
    intermediate class ship, capable of working on fishery-oceanographic
    projects on the continental shelf, as well as conducting NMFS fishery
    stock assessment surveys. SECOR has already implemented joint
    operations. The combined strengths of the universities and NOAA
    laboratories can create an efficient use of existing facilities and can
    lead to enhanced regional multidisciplinary research programs. SECOR
    anticipates that there would be scientific and cost-saving benefits in
    coordinating the operation of a regionally-based ship.
    The Ocean Surface Current Radar Technology Demonstration
        The Ocean Surface Current Radar system is a shore-based, dual-
    frequency Doppler radar which transmits short pulses of electromagnetic
    radiation in the radio frequency band. The signal is scattered back
    from the moving ocean surface and received by a linear phased-array
    antenna system erected along the shore. The radar measures the Doppler
    shift of resonant surface waves by the underlying flow. This measuring
    principle is identical to that used by police to clock speeding cars.
    The result is a map of surface vector currents over a large domain at
    high spatial and temporal resolution. With increasing interests in the
    coastal ocean there is also a requirement to acquire high-quality
    surface current data for long-term monitoring of the surface
    circulation to study their effect on a broad spectrum of societal and
    environmental issues, such as coastal pollution, oil spills, beach
    erosion, and sediment transport. A wide variety of management decisions
    would be enhanced with the ``real-time'' knowledge of the circulation
    patterns in a body of water.
        The Ocean Surface Current Radar system operated by the University
    of Miami has been rigorously tested and used in numerous application
    over the past several years, such as experiments to study the transport
    of reef fish larvae, the detection of eddies and fronts, the evolution
    of fresh water plumes in the coastal ocean and validation of airborne
    and satellite-based remote sensors. Recently, we have expanded the
    measurement capability of OSCR to extract sea state information on the
    height of ocean waves. Other studies are also underway to specify the
    wind speed and direction from the OSCR measurements.
        Once again, we appreciate the opportunity to submit testimony on
    these vitally important projects to the Subcommittee, and respectfully
    request your support of these initiatives.
                                     ______

    Prepared Statement of Dr. Raymond E. Bye, Jr., Associate Vice President
                     for Research, Florida State University
        Mr. Chairman, thank you and the Members of the Subcommittee for
    this opportunity to present testimony. I would like to take a moment to
    acquaint you with Florida State University. Located in the state
    capitol of Tallahassee, we have been a university since 1950; prior to
    that, we had a long and proud history as a seminary, a college, and a
    women's college. While widely-known for our athletics teams, we have a
    rapidly-emerging reputation as one of the Nation's top public
    universities. Having been designated as a Carnegie Research I
    University several years ago, Florida State University currently
    exceeds $100 million per year in research expenditures. With no
    agricultural nor medical school, few institutions can boast of that
    kind of success. We are strong in both the sciences and the arts. We
    have high quality students; we rank in the top 25 among U.S. colleges
    and universities in attracting National Merit Scholars. Our scientists
    and engineers do excellent research, and they work closely with
    industry to commercialize those results. Florida State ranks seventh
    this year among all U.S. universities in royalties collected from its
    patents and licenses. In short, Florida State University is an exciting
    and rapidly-changing institution.
        Mr. Chairman, let me describe two projects that we are pursuing
    this year. The first is a continuation of a successful collaboration
    between the Learning Systems Institute at Florida State University and
    the Institute for Machine and Human Cognition (IMHC) at the University
    of West Florida, assisting the Chief of Naval Education and Training
    (CNET) with critical technology and training related issues.
        During the current fiscal year, CNET has asked for assistance in
    assessing the effectiveness and efficiency of the Navy's Leadership
    Continuum training program. Early in fiscal year 1994, CNET approved
    the development of this program to provide uniformed Navy personnel--
    both enlisted and non-commissioned officers--with a systematic program
    of leadership education and training. The program consists of eight
    courses, four for enlisted men and four for officers, that form the
    cornerstone of the program. These courses are taken at different times
    during each individuals military career. These courses are now in place
    and over 50,000 personnel will attend one of these courses each year.
        CNET has asked the Learning Systems Institute (LSI) at Florida
    State University to assist in the development of a system to assess the
    effectiveness of the entire Leadership Continuum. Part of the work will
    be the identification of organizational performance-related data that
    can be linked to specific program training objectives.
        Working with CNET professionals, LSI will identify what data are
    required for leadership continuum evaluation and continuous
    improvement, identify data collection schedules, obtain and reduce the
    data, identify evaluation and continuous improvement criteria, identify
    possible data collection instruments and vehicles, assist CNET staff in
    design and development of the instruments and vehicles, support the
    implementation of the instruments and vehicles, assist in data analysis
    and interpretation, and make recommendations for continuation and
    revision to the program and leadership continuum.
        Simultaneously, CNET has also asked for assistance in the
    development of specific Internet tools for supporting training
    worldwide. Initial work in this area is being done this fiscal year by
    the Institute for Machine and Human Cognition at the University of West
    Florida. This initial work will expand in subsequent years and FSU will
    collaborate with UWF in the further development of appropriate
    Performance Support Systems for the Navy that will involve the use of
    World Wide Web and other Internet technologies. This will result in the
    development of electronic tools that use elements of artificial
    intelligence and distance learning technologies to provide needed
    information and training at the moment and place of greatest need,
    which will simultaneously improve job performance while reducing
    training time and costs.
        The experience and skills of the Learning Systems Institute at
    Florida State University, specifically the Office of Interactive
    Distance Learning, and the Institute for Human and Machine Cognition at
    the University of West Florida, are complimentary and synergistic. It
    is a powerful partnership that brings some of the best expertise
    available in the world to bear on critical education and training
    issues. This will be increasingly important in the world of the future
    when technology will be moving at an even faster pace.
        Continuation funding is being sought at the $2 million level for
    fiscal year 1998 through the Department of Defense.
        Our second project is a cooperative effort between the Florida
    State University (FSU), the joint FAMU-FSU College of Engineering
    (CoE), the National High Magnetic Field Laboratory (NHMFL), and the
    private sector. This project will establish a multidisciplinary center
    for simulation-based design, research, and testing, focused on
    multimodal advanced transportation systems. The proposed center
    combines the unique resources and expertise of a national Carnegie
    Foundation Class One graduate research institution, a supercomputing
    center, and the state and federal departments of transportation and the
    DOD. This center has as a long-term goal the advancement of
    transportation technology through the development of integrated design
    systems based on computational modeling which include the disciplines
    of fluid dynamics, materials and structures, manufacturing processes,
    and virtual reality performance simulation supported by a comprehensive
    program of materials development and critical component testing.
        The Center for Advanced Transportation Simulation and Design will
    bring together several existing programs at FSU and FAMU to address
    advanced transportation needs critical to the State of Florida
    Department of Transportation (FDOT) and the United States Department of
    Transportation (DOT) and Department of Defense (DOD). Such a goal
    further demands the development of tools in the areas of decision
    support systems, optimization, and high-performance computing. The
    Center will focus on simulated design, manufacturing and performance
    evaluation, and will include an integrated program of high performance
    materials development, economic feasibility, and component testing. The
    expected exponential growth in computer power and memory permits one to
    envisage such a design environment where multi-objective, multi-
    criteria optimization processes manage the interaction among the design
    and manufacturing disciplines to arrive at a design configuration that
    represents the best compromise between the often conflicting design and
    performance requirements. High level system simulation, coupled with
    selective component and materials testing, offers unparalleled
    opportunity to evaluate the performance and development risks
    associated with novel systems before committing to the expense of full
    scale system deployment.
        The Center will focus on several emerging transportation
    technologies including high speed rail, high speed ocean transport, and
    non-fuel burning individualized surface transport. The common
    underlining thrust within these areas is to address innovative new
    approaches to the utilization of electromagnetics leading to cost
    effective alternatives to existing technologies. The program will
    address both short-term and long-term goals through the development of
    massively paralleled codes. The program also will provide more detailed
    and realistic simulations of system performance and optimization with
    sensitivity to manufacturing and cost issues. The simulated design and
    performance evaluation will be paralleled by experimental programs
    directed at critical component prototype development and testing and
    materials development needs as identified by optimization modeling. The
    program will build on the world-class facilities and human resources
    developed at the NHMFL, the FSU Supercomputer Computational Research
    Institute (SCRI), the FAMU-FSU CoE, and FSU, in general, coupled with
    strong partnerships with the private sector.
        The FDOT has funded a private-public partnership to develop high
    speed rail linking the Miami, Orlando and Tampa metropolitan areas. It
    has invested in a magnetic levitation demonstration project that
    provides alternatives for high speed inter-modal transport thought to
    be critical to the future of Florida and the United States. The NHMFL
    has been charged by the National Science Foundation to advance magnet
    and magnet materials technology in support of United States'
    competitiveness. In response to this charge, the NHMFL has developed
    extensive partnerships with the private sector to advance a variety of
    magnet-related technologies including a partnership that supports
    maglev development, demonstration, and implementation.
        The NHMFL also has been approached to help develop the next
    generation of high speed ferry and ship transport with targets for
    ships with large freight capacity traveling at 60+ mph. There are also
    efforts within the DOD, in particular, the Navy, to pursue similar high
    speed options to existing technologies. A critical component to the
    development of high speed water transport is the redesign of the ship
    hull and power system to provide greater flexibility in weight
    distribution, while simultaneously reducing overall weight. Both the
    Navy and private sector are looking at the complete electrification of
    ship drive systems as the only option that will meet the needs of this
    new technology. The NHMFL has a joint project with Westinghouse and the
    Navy to conduct prototype testing of compact superconducting magnetic
    energy storage devices, a critical component of a buffered electrical
    drive system for the new generation of ship transports.
        There are also significant opportunities to re-examine compact
    motor designs with a focus on weight, power, and efficiency issues.
    These designs incorporate new high energy density permanent magnet
    materials and high strength, high conducting composites that are ripe
    for further advancements. Paralleling these interests, there are clear
    opportunities in the future for incorporating the recently discovered
    high temperature superconductors in even higher power density motors,
    generators, and transmissions subsystems. The Navy has some emerging
    programs to address these opportunities.
        The above technologies have a common underpinning in the
    development of innovative approaches to electromagnetic propulsion
    systems. They also share some similar design concerns, for example,
    hydrodynamic response at high speeds and shape-optimization to address
    this, and weight-to-performance limitations requiring materials
    development and testing.
        Finally, the development of any simulated design program to address
    transportation needs should include a computer-aided performance
    program to evaluate safety, environmental, and sociological factors. A
    very successful program exists at the FAMU-FSU CoE and will be expanded
    to address the broader scope of this program.
        The Center, by focusing on simulated design manufacturing, and
    performance evaluation supported by materials development and component
    testing, will provide systems that can be readily applied to a wide
    variety of transportation problems, both civilian and military. It
    offers excellent opportunities for military and civilian joint
    development activities that can result in major advances in surface
    transportation technology for both applications.
        The CATSD will be developed through a new state-federal-private
    sector partnership and will be modeled after the very successful state-
    federal partnership that led to the establishment of the NHMFL. Center
    activities will be supported from a combination of state, federal, and
    private sector support and will be managed by an External Advisory
    Board that includes members from the private sector, national
    laboratories, FDOT, and DOT, who were selected in consultation with the
    FDOT and DOT.
        Funding for the Center for Advanced Transportation Simulation and
    Design is being sought at the $3 million level.
        Mr. Chairman, these activities discussed will make important
    contributions to solving some key problems and concerns we face today.
    Your support would be appreciated, and, again, thank you for an
    opportunity to present these views for your consideration.
                                     ______

     Prepared Statement of Michael P. Kenny, Executive Officer, California
    Air Resources Board; Robert J. Cabral, Supervisor, San Joaquin County,
    Chairman of the Board, San Joaquin Valley Unified Air Pollution Control
       District; Manuel Cunha, Jr., President, NISEI Farmers League; Les
      Clark, Vice President, Independent Oil Producers' Association; and
      Catherine H. Reheis, Managing Coordinator, Western States Petroleum
        Association on behalf of the California Industry and Government
                           Coalition on PM-10/PM-2.5
        Mr. Chairman and Members of the Subcommittee: On behalf of the
    California Industry and Government Coalition on PM-10/PM-2.5, we are
    pleased to submit this statement for the record in support of our
    fiscal year 1998 funding request of $750,000 for the California
    Regional PM-10/PM 2.5 Air Quality Study.
        The San Joaquin Valley of California and surrounding regions exceed
    both state and federal clean air standards for small particulate
    matter, designated PM-10/PM-2.5. The 1990 Federal Clean Air Act
    Amendments require these areas to attain federal PM-10/PM-2.5 standards
    by December 31, 2001, and the proposed PM-2.5 by mid 2003. Attainment
    of these standards requires effective and equitable distribution of
    pollution controls that cannot be determined without a major study of
    this issue.
        According to EPA and the California Air Resources Board, existing
    research data show that air quality caused by the PM-10/PM-2.5 problem
    has the potential to threaten the health of more than 3 million people
    living in the region, reduce visibility, and impact negatively on the
    quality of life. Unless the causes, effects and problems associated
    with PM-10/PM-2.5 are better addressed and understood, many industries
    will suffer due to production and transportation problems, diminishing
    natural resources, and increasing costs of fighting a problem that begs
    for a soundly researched solution.
        PM-10/PM-2.5 problems stem from a variety of industry and other
    sources, and they are a significant problem in the areas that are
    characteristic of much of California. Typical PM-10/PM-2.5 sources are
    dust stirred up by vehicles on unpaved roads, and dirt loosened and
    carried by wind during cultivation of agricultural land. Soil erosion
    through wind and other agents also leads to aggravation of PM-10/PM-2.5
    air pollution problems. Chemical transformation of gaseous precursors
    are also a significant contributor to PM-2.5, as combustion sources.
        Several aspects of the research are important to the U.S.
    Department of Defense:
      --DOD has a number of facilities within the affected region, such as
            Edwards Air Force Base and China Lake. Degradation of air
            quality and visibility could impact their operations.
      --Poor air quality also degrades the health and quality of life of
            personnel stationed at Valley bases.
      --Operations at DOD facilities in the Valley produce emissions which
            contribute to the Valley's air quality problem.
      --Transport out of the Valley may impact operations in the R-2508
            airspace in the Mojave Desert. Visibility reduction in
            particular could interfere with the ability to conduct
            sensitive optical tracking operations at DOD desert test
            ranges.
        In summary, the Department of Defense is a double stakeholder with
    respect to the PM-10/PM-2.5 issue and this important study. DOD
    activities not only contribute to the problem, they also are negatively
    affected by it.
        The importance of this study on PM-10/PM-2.5 is underscored by the
    need for more information on how the Federal Clean Air Act Amendments
    standards can be met effectively by the business community, as well as
    by agencies of federal, state and local government whose activities
    contribute to the problem, and who are subject to the requirements of
    Title V of the Clean Air Act. There is a void in our current
    understanding of the amount and impact each source of PM-10/PM-2.5
    actually contributes to the overall problem. Without a better
    understanding and more information--which this study would provide--
    industry and government will be unable to develop an effective
    attainment plain and control measures.
        Numerous industries, in concert with the State of California and
    local government entities, are attempting to do our part, and we come
    to the appropriations process to request assistance in obtaining a fair
    federal share of financial support for this important research effort.
    In 1990, our Coalition joined forces to undertake a study essential to
    the development of an effective attainment plan and effective control
    measures for the San Joaquin Valley of California. This unique
    cooperative partnership involving federal, state and local government,
    as well as private industry, has raised more than $14 million to date
    to fund research and planning for a comprehensive PM-10/PM-2.5 air
    quality study. Our cooperative effort on this issue continues, and it
    is our hope that private industry, federal, state and local governments
    will be able to raise an additional $13 million over the next three
    years to fund this important study.
        To date, this study project has benefited from federal funding
    provided through USDA's, DOD's, and EPA's budgets. In fiscal year 1995,
    $130,000 was appropriated for PM-10/PM-2.5. For fiscal year 1996, a
    total of $250,000 was appropriated through Department of Defense. For
    fiscal year 1997, a total of $750,000 was appropriated.
        The following is a list of PM-10/PM-2.5 research projects which are
    in progress:
        Planning.--Development of protocols for emissions, field
    monitoring, data analysis and modeling.
        Technical support studies.--Suitability of data base; 1995
    Integrated monitoring Study; micrometeorological parameters; fog
    formation/dissipation; ammonia from soils.
        Modeling.--Demonstration of modeling system for application in
    SIP's.
        Data analysis.--Analysis of existing data to aid project planning.
        Demonstration studies.--Almond, fig, walnut, cotton, harvesting;
    unpaved agricultural roads; unpaved public roads; unpaved shoulders of
    paved roads; dairies, feedlots, poultry, dry cereal grain.
        For fiscal year 1998, our Coalition is seeking $750,000 in federal
    funding through the U.S. Department of Defense to support continuation
    of this vital study in California. We respectfully request that the
    Appropriations Subcommittee on Defense provide this additional amount
    in the DOD appropriation for fiscal year 1998, and that report language
    be included directing the full amount for California.
        The California Regional PM-10/PM-2.5 Air Quality Study will not
    only provide this vital information for a region identified as having
    particularly acute PM-10/PM-2.5 problems, it will also serve as a model
    for other regions of the country that are experiencing similar
    problems. The results of this study will provide improved methods and
    tools for air quality monitoring, emission estimations, and effective
    control strategies nationwide.
        The Coalition appreciates the Subcommittee's consideration of this
    request for a fiscal year 1998 appropriation of $750,000 for DOD to
    support the California Regional PM-10/PM-2.5 Air Quality Study.
                                     ______

      Prepared Statement of Dr. E. Joseph Savoie, Commissioner of Higher
                         Education, State of Louisiana
        Mr. Chairman and members of the Subcommittee, I thank you for the
    opportunity to submit this testimony regarding the Department of
    Defense Experimental Program to Stimulate Competitive Research
    (DEPSCoR). This program is vitally important to our nation, to science
    and technology, to our national security, and to the state of
    Louisiana.
                                   background
        If our country is to maintain its position of world leadership in
    research and development, it is important that all areas of the
    country, rather than just a few states, be allowed to develop their
    research capability. Congress began EPSCoR as a program in the National
    Science Foundation due to concern that there were many missed
    opportunities in federally sponsored research resulting from the uneven
    geographic distribution of research funds. Due to the success of the
    NSF program, Congress created EPSCoR and EPSCoR-like programs in six
    additional federal agencies, including DOD.
        EPSCoR and EPSCoR-like programs help researchers and institutions
    in participating states \1\ improve the quality of their research so
    they can compete for non-EPSCoR research funds. The federal-wide EPSCoR
    effort funds only merit-based, peer reviewed programs that work to
    enhance the competitiveness of research institutions and increase the
    probability of long-term growth of competitive funding.
    ---------------------------------------------------------------------------
        \1\ States that have typically participated in the DEPSCoR program
    include Alabama, Arkansas, Idaho, Kansas, Kentucky, Louisiana, Maine,
    Mississippi, Montana, Nebraska, Nevada, North Dakota, Oklahoma, South
    Carolina, South Dakota, Vermont, West Virginia, Wyoming, and the
    Commonwealth of Puerto Rico.
    ---------------------------------------------------------------------------
        Of a federal R&D budget exceeding $12 billion per year, only $83
    million is directed to strengthening R&D through the seven federal
    agency EPSCoR programs to the 18 EPSCoR states and Puerto Rico. While
    the EPSCoR states still lag significantly behind in the distribution of
    R&D funds, EPSCoR is fulfilling its mission by improving the quality of
    research in participating states.
        EPSCoR is necessary because our country's R&D funds have typically
    been concentrated in a small number of institutions and states. As our
    nation moves toward a science and technology policy aimed at global
    economic competitiveness, it is imperative that all regions of the
    country have a strong S&T base. Students across the country need access
    to high-quality education and research opportunities.
        EPSCoR relies heavily on state involvement and participation,
    including non-federal matching funds. Due to the federal/state
    partnership upon which EPSCoR relies, EPSCoR is often considered a
    model program, and is a wise use of taxpayer funds during these
    difficult fiscal times.
                          department of defense epscor
        DEPSCoR contributes to the states' goals of developing and
    enhancing their research capabilities, while simultaneously supporting
    DOD's research goals. DOD awards DEPSCoR grants based on
    recommendations from the EPSCoR state committees and DOD's own
    evaluation and ranking. For the fiscal year 1997 competition, DOD will
    only fund proposals submitted through the EPSCoR State Committees.
        DEPSCoR also builds research competitiveness by fostering
    collaborations and developing human resources. Research proposals are
    only funded if they provide DOD with research in areas important to
    national defense.
        DOD has announced that the fiscal year 1997 DEPSCoR competition
    will be administered through the Army Research Office (ARO), Ballistic
    Missile Defense Organization (BMDO), Office of Naval Research (ONR),
    and Air Force Office of Scientific Research (AFOSR). DOD plans to award
    approximately $16 million of fiscal year 1997 appropriations and, if a
    sufficient number of meritorious proposals are received, DOD plans to
    award fiscal year 1998 funds subject to the availability of fiscal year
    1998 appropriations.
        DEPSCoR was authorized by Section 257 of Public Law 103-337 (as
    amended), which states that DEPSCoR's objectives are to: (1) enhance
    the capabilities of institutions of higher education in eligible states
    to develop, plan, and execute science and engineering research that is
    competitive under the peer-review systems used for awarding Federal
    research assistance; and (2) increase the probability of long-term
    growth in the competitively awarded financial assistance that
    universities in eligible states receive from the Federal Government for
    science and engineering research.
                              depscor in louisiana
        Louisiana is the nation's largest EPSCoR State. We are rich in
    resource-consuming industries, and poor in non-resource-based
    businesses. The R&D laboratories of its major chemical industries are
    located outside its borders, nor does it have a national laboratory
    upon which to build an R&D/S&T infrastructure. Although Louisiana has a
    large pool of higher education science and engineering personnel, it is
    a consumer--not an effective producer--of such talent. Through EPSCoR,
    we are working to turn that around.
        In 1985 the Louisiana Board of Regents, with the support of the
    National Science Foundation's EPSCoR program, established a statewide
    initiative to address barriers faced by scientists and engineers
    competing for federal research funding. This initiative is called the
    Louisiana Stimulus for Excellence in Education and Research. The LaSER
    Committee serves as Louisiana's EPSCoR committee and has been the focus
    of our efforts to enhance scientific and engineering research
    competitiveness and human resources development. Our priority fields of
    research are in biology, chemistry, chemical engineering, computer
    sciences, and environmental sciences.
        The Defense EPSCoR program is one of several strong activities of
    the Louisiana LaSER Committee. The diverse concentration of defense-
    applicable research in the sixteen Louisiana DEPSCoR funded proposals
    broadens scientific expertise in such areas as chronic stress, high
    temperature structural applications, computer simulation and noise
    control.
                                   conclusion
        Congress has funded DEPSCoR at approximately $20 million per year
    since fiscal year 1995. This year, for the first time, DEPSCoR was
    included in the budget request at the level of $10 million. While that
    is an important step, more funds are needed in order for the DEPSCoR
    states to participate fully in this important R&D program, and to
    provide DOD with the high-quality, mission-related research it needs.
    As a result, the Coalition of EPSCoR states urges the Subcommittee to
    fund DEPSCoR at the level of $25 million.
        I appreciate the opportunity to submit this testimony, and I thank
    the Subcommittee for considering carefully this request.
                                     ______

    Prepared Statement of Sergeant Major Michael F. Ouellette, USA (Ret.),
    Director of Legislative Affairs, Non Commissioned Officers Association
                        of the United States of America
        Mr. Chairman, the Non Commissioned Officers Association of the USA
    (NCOA) appreciates the opportunity to present testimony to this
    subcommittee concerning fiscal year 1998 Defense Appropriations. NCOA's
    comments will express the views and concerns of it's noncommissioned
    and petty officer membership and those of the Apprentice Division (E-1
    to E-3) concerning a wide range of compensation, personnel, medical
    care and quality-of-life issues considered to be of significant
    importance. Hopefully, the recommendations from the enlisted viewpoint
    will be of value and assistance to the members of this subcommittee
    during its deliberations.
        NCOA is a federally-chartered organization representing 160,000
    active-duty, guard and reserve, military retirees, veterans and family
    members of noncommissioned and petty officers serving in every
    component of the Armed Forces of the United States; Army, Marine Corps,
    Navy, Air Force and Coast Guard.
        This testimony has been endorsed by the National Military and
    Veterans Alliance (NMVA). The Alliance is comprised of nationally
    prominent military and veterans organizations who collectively
    represent over 3 million members of the seven uniformed services--
    officer, enlisted, active-duty, National Guard and Reserve, retired and
    veterans plus their families and survivors. The Alliance organizations
    endorsing this testimony are: American Military Retirees Association;
    American Retirees Association; Air Force Sergeants Association; Korean
    War Veterans Association, Military Order of the Purple Heart; National
    Association for the Uniformed Services; Naval Enlisted Reserve
    Association; Naval Reserve Association; and the Veterans of Foreign
    Wars.
                           active force money matters
        NCOA wishes to extend its appreciation to the members of the
    subcommittee for they're past efforts on behalf of enlisted men and
    women of the armed forces to improve their financial well being. The
    ability to recruit and retain quality-enlisted people is paramount to
    maintaining an effective military force. At the very top of enlisted
    members' list of priorities is the ability to meet the responsibility
    of financially supporting either themselves and/or their families.
    Understanding the difficult deficit reduction climate in which the
    Congress must operate, NCOA believes the efforts of this subcommittee
    to improve the financial capabilities of the enlisted force and reduce
    out-of-pocket expenses will be key to the military services' ability to
    retain quality noncommissioned and petty officers. The major point the
    Association wishes to make to members of this subcommittee is that any
    decision to maintain a credible military force automatically mandates a
    responsibility to take care of the men and women who comprise that
    force regardless of its size. Therefore, NCOA will offer a number of
    pay and compensation recommendations for the consideration of this
    subcommittee, which are viewed as being extremely important by enlisted
    members and their families:
        Military Pay Raise.--Enlisted people are very aware that their
    military pay raises have been capped below private sector pay growth as
    measured by the Employment Cost Index (ECI) in 11 of the last 15 years.
    They are also aware that military pay raises have lagged a cumulative
    12.9 percent behind those enjoyed by the average American. With the
    knowledge of these facts and after sustaining months of family
    separation and the hardship of deployment and working increasingly
    longer workdays because of force reductions and operations tempo,
    enlisted men and women feel they are being ``short-changed'' by those
    in charge of their destinies. Consequently, NCOA recommends this
    subcommittee fund a full ECI military pay raise of 3.3 percent and put
    military members on equal financial ground with the average American in
    future years by linking military pay to actual ECI growth. NCOA would
    further support an annual higher than ECI pay raise in order to reduce
    the current 12.9 percent pay gap.
        Housing Allowances (BAQ and VHA).--Although enlisted members were
    encouraged by the efforts of Congress over the past two years to
    provide separate Basic Allowance for Quarters (BAQ) increases above the
    annual military pay raise, there remained dissatisfaction with the
    yearly individual member survey method of determining the Variable
    Housing Allowance (VHA). NCOA believes the current Defense Department's
    ``cost-neutral'' proposed legislation to combine BAQ and VHA into a
    single housing allowance which would vary by location within the United
    States would have significant merit in the minds of enlisted people.
    The associated proposal of linking annual adjustments of this new
    allowance to actual housing cost growth rather than the current ECI
    basic pay increase would be welcomed by enlisted people. Still NCOA
    remains concerned that even these proposals will fall short of meeting
    the original intent of the allowances to cover 85 percent of median
    housing expenses associated with grade and location. NCOA strongly
    supports DOD's efforts to combine BAQ and VHA into a single variable
    housing allowance and encourages this subcommittee to ensure that the
    end result will provide enlisted people with sufficient money to meet
    at least 85 percent of civilian housing costs.
        Basic Allowance for Subsistence (BAS) Reform.--NCOA has been a
    long-time supporter of extending BAS to all single enlisted members who
    currently receive rations-in-kind except for those in the early
    training stages of their military service. Additionally, NCOA has no
    problem with the Defense Department's proposed legislation that would
    establish the U.S. Department of Agriculture's (USDA) ``moderate food
    plan cost'' as the standard for determining future BAS annual
    increases. However, NCOA points out to the members of this subcommittee
    that enlisted members, currently receiving monthly BAS money which
    increases in the amount of annual pay raises, will perceive this action
    as an offset to their annual pay raise. NCOA considers this proposal to
    be one that ``robs Peter to pay Paul.'' Since BAS is money paid for a
    specific purpose but is viewed by enlisted members as a family budget
    item, the Association believes that although BAS should be paid to
    single military members as an option, it should not be made available
    at the expense of those currently receiving the allowance. NCOA cares
    less as to what standard is ultimately used to determine BAS amounts,
    but recommends as part of this plan that BAS recipients be protected
    from loss of annual pay raises normally received.
        Removal of Exchange Merchandise Restrictions.--NCOA is quick to
    point-out to the members of this subcommittee that information received
    from Association members and obtained by NCOA representatives during
    on-site visits to military bases and installations, enlisted people
    indicate they no longer can afford to shop in the exchange for many
    items. In fact, many enlisted members have referred to the K-Marts,
    WalMarts and Target stores in the local communities as ``enlisted
    exchanges.'' Although the exchange systems report a shopper savings of
    approximately 30 to 40 percent on name brand items, enlisted people
    simply cannot afford to purchase many exchange products at the overall
    reduced price level. To support this statement, a copy of a recent
    exchange advertisement has been attached to this statement as Enclosure
    1. Notice the overall cost of this woman's name brand ensemble is $364.
    The weekly earnings of a Sergeant (E-5) including BAQ and BAS are
    approximately $524. Consequently, this Sergeant would have to spend
    roughly 70 percent of his weekly pay to purchase the advertised
    products. In this regard, NCOA believes the reports of enlisted members
    to be of significant value to the members of this subcommittee when the
    Defense Department's request to remove the restrictions placed on the
    types of merchandise sold in military exchanges. It only makes sense
    that Congress should do everything in its power to promote
    opportunities to increase Morale, Welfare and Recreation (MWR) funding
    by ``leveling the playing field'' so that military exchanges may
    compete for the enlisted members' dollar by promoting the availability
    of affordable merchandise and not necessarily the ``high-dollar
    items.'' NCOA supports the lifting of current restrictions on the sale
    of exchange merchandise as being in the best interest of potential
    enlisted shoppers and the MWR Program.
        Commissaries.--NCOA constantly receives inquiries from enlisted
    people, both active-duty and retired, concerning the continued
    availability of these very important non-pay benefits. Of course, the
    loss of this benefit would impact significantly on all eligible
    patrons; however, the impact would be the greatest on enlisted patrons
    simply because of their reduced pay levels. NCOA has supported
    initiatives to improve the management of the commissary system and
    would support the privatization of commissaries as long as the value of
    the benefit is not eroded and services are not reduced. NCOA, however,
    is not confident that a decision to privatize this benefit would not
    result in a reduction in the value of the benefit. Therefore, NCOA
    urges the members of this subcommittee to maintain required
    appropriated fund levels to protect the non-pay benefit in the best
    interests of the enlisted communities in mind.
                                  health care
        Mr. Chairman, surveys of military personnel and their families
    consistently show that medical care along with adequate pay and
    inflation protected retired pay and commissaries are the top concerns
    of the military community. In fact, with base and hospital closures and
    reductions in medical personnel, the increasing lack of available
    health care is a major concern to active and retired personnel alike.
    However, the loss or reduction of the medical care benefit has the
    greatest impact on the active-duty and retired enlisted members who are
    always on the lower end of the pay scales and consequently place a
    greater value on the benefit.
        Currently over 58 hospitals have been closed as part of the Base
    Realignment and Closure Commission or other closure actions. Services
    have been cut back at many or the hospital remaining open and many of
    them are being downgraded to clinics. Hundreds of thousands of retirees
    and military family members who received care in MTF's are now finding
    no care available. Retirees are being denied prescription drugs by MTF
    pharmacies in increasing numbers. They are told the prescribed drugs
    cost too much, or are restricted for issue to active duty or for some
    reason it is no longer being stocked.
        The TRICARE Program has been in development or implementation for
    nearly a decade, yet the TRICARE-Prime program still does not cover
    many parts of the United States. For example, in California where the
    military managed care system has been in place the longest--over eight
    years--there are still areas without TRICARE-Prime networks. However,
    despite the lack of established networks, the TRICARE-Standard/CHAMPUS
    program should be available. Unfortunately, the CHAMPUS Maximum
    Allowable Charge (CMAC) is so low many physicians will not accept it.
    The current system is broken, and must be fixed.
        NCOA fully supports keeping a strong, effective direct care system
    for the delivery of health care and medical readiness. The Association
    also supports making full use of the military treatment facilities and
    TRICARE networks as DOD's primary providers. However, retirees who are
    either ``locked-out'' of TRICARE Prime or not guaranteed access to
    these primary sources of care should be offered a number of
    alternatives or options. In this regard, NCOA supports:
      --No-Cost Health Care for Active-Duty Families Assigned to Isolated
            Areas.--Since many military personnel and their families are
            assigned to isolated areas without the support of a Military
            Treatment Facility (MTF) or a TRICARE Prime Program, NCOA urges
            this subcommittee to appropriate necessary funds to permit full
            payment of all health care costs (deductibles and cost-shares)
            incurred by the families of military members forced to use
            TRICARE Standard/CHAMPUS as their only option.
      --Medicare Subvention.--Representative Joel Hefley's bill H.R. 192
            would set up a three year Medicare subvention demonstration
            project at up to five sites and H.R. 414 would fully implement
            Medicare subvention. Senator Phil Gramm plans to introduce
            subvention reimbursement legislation in the Senate. NCOA
            believes Medicare subvention legislation must be passed
            immediately since demonstration of the concept will only
            prolong the need for immediate relief in order to minimize a
            greater injustice being done to military retirees.
      --FEHBP as an Option.--NCOA supports offering the Federal Employees
            Health Benefits Program (FEHBP) as an option to Medicare
            eligible military retirees, their families and survivors.
            Furthermore, the Association also supports offering FEHBP as an
            option to TRICARE-Standard eligible beneficiaries located
            outside of TRICARE-Prime catchment areas. Representative Jim
            Moran and Senator John Warner have introduced H.R. 76 and S.
            224 respectively to provide the FEHBP option for Medicare
            eligible beneficiaries. NCOA urges this subcommittee to support
            the funding of these bills and to direct DOD restores CHAMPUS/
            TRICARE-Standard as originally intended by Congress or
            authorize funding for FEHBP as an option for all retirees and
            their families.
      --Medicare Part B Enrollment Penalty Waiver.--NCOA urges the
            enactment of legislation to waiver the Part B Medicare late
            enrollment penalty for uniformed service members whose access
            to the military health care system has been curtailed because
            of base closures or implementation of TRICARE-Prime.
      --Expand Mail-Order Pharmacy Program.--NCOA urges this subcommittee
            to fund any legislation intended to expand the DOD mail-order
            pharmacy program to include all uniformed services
            beneficiaries, regardless of age, status or location.
      --Retiree Dental Plan.--NCOA urges this subcommittee to push for
            timely implementation of the Retiree Dental Plan as the
            eligible population is badly in need or protection such a plan
            would offer and further urges this subcommittee to support a
            legislative change to current law to permit the enrollment of
            the survivors of military retirees in any plan offered.
                              retired force issues
        Retired Pay Cost-of-Living Adjustment (COLA) Threats.--NCOA
    appreciates the efforts of this subcommittee to provide equity in the
    payment of COLA's to military retirees and Federal civilian retirees
    and to restore payment of annual COLA's to January 1. Nonetheless, NCOA
    remains extremely concerned with the recent indication that some
    suggesting that the current standard for determining inflation levels,
    the Consumer Price Index (CPI), overrates inflation by as much as 1.1
    percent. Such a change or reduction in COLA levels even if applied to
    all 57 million COLA recipients in the United States, would be
    particularly devastating to military retirees because of their younger
    retirement ages and enlisted retirees, in general, because of their
    lower retirement pay levels. Additionally, enlisted members who entered
    military service after August 1, 1986, are working under a retirement
    system which already reduces COLA by 1 percent from the date of
    retirement until age 62. At that point there is a one-time catch-up in
    lost COLA percentages, however, from that point until death annual
    COLA's will be COLA minus 1 percent. NCOA believes at this point any
    change or variation from the current CPI standard would break faith
    with those who are currently serving under an already reduced
    retirement system and constitute yet another ``broken promise'' to
    those who are serving. NCOA urges this subcommittee to continue to
    resist retirement or COLA proposals that would reduce the value or
    purchasing power of military retired pay. In the end, enlisted retirees
    would be hit the hardest because, once again, they are on the low end
    of the pay scale.
        Concurrent Receipt.--Despite the fact that cost is a major factor
    in changing the current offset between VA disability compensation and
    military retired pay, NCOA remains committed to correcting this
    inequity. Retired pay and VA disability compensation are made available
    to two distinctively different reasons. Yet, if a military retiree is
    adjudicated to a disability by the VA, there continues to be a dollar
    for dollar offset in the payment of the benefits. NCOA urges this
    subcommittee to work toward providing funds to reduce or eliminate the
    current VA disability offset to military retired pay at least for the
    100 percent or most severely disabled.
                                survivor issues
        NCOA fully supports and recommends legislative changes to the
    Survivor Benefit Plan (SBP) which would permit 30-year paid-up SBP
    coverage, award of the minimum SBP annuity to forgotten widows, full
    SBP coverage for all active-duty deaths, and a limited one-year exit
    option.
                            guard and reserve issues
        NCOA is committed to supporting legislation intended to improve the
    lives of members of the National Guard and Reserve and their families.
    In doing so, NCOA supports and urges this subcommittee to fund
    legislation which would:
      --Authorize unlimited commissary access for Guard and Reserve
            members.
      --Make the Reserve Component Transition Assistance Program (RCTAP)
            disability retirement provision a permanent part of law.
      --Authorize an annual review of Reserve members' elections for
            Mobilization Insurance (Income) Protection and allow for
            changes to reflect changes in income levels.
      --Provide long-term, low-interest loans to self-employed Reservists
            who suffered significant financial penalties as a result of
            their participation in Operation Desert Storm.
      --Reject any effort to eliminate the Military Leave Program for
            Federal civilian employees participating in the Reserves.
                                   conclusion
        Mr. Chairman, perhaps the single most valuable effort this
    subcommittee could make to the well-being of the military enlisted
    communities and the armed forces in general is to send a signal that
    Congress will provide some stability in pay and benefits. Every year
    Congress and the Administration churn military personnel programs
    looking for nickels in savings and producing dollars in damage to
    recruiting, retention and morale.
        The insecurity caused by this constant churning of benefits creates
    an environment of stress that takes a real toll on national security.
    Look back thirty years. More volunteers than conscripts served in
    Vietnam. They accepted the hazards of the duty as being part of the
    job, but, they also served with the knowledge that they and their
    families had assured medical care, access to commissaries, reasonable
    income, good retirement and survivor programs and great post-service
    support. Now, flash forward to Bosnia. Personnel serving there may have
    taken a pay cut for the privilege because their hazard pay is less than
    the subsistence allowance they forfeit. Reservists serving there are
    receiving four cents on the dollar under a badly bungled income
    replacement program while bureaucrats and politicians argue over who is
    responsible.
        NCOA urges this subcommittee to provide stability and
    predictability to military personnel. Authorize pay increases at the
    ECI level for five years, or even two consecutive years. Authorize
    commissary funding for three years. Fund the deficit in the Reserve
    Income Protection Program. Establish a legislative review cycle that
    staggers program reviews over successive years thus hazarding only one
    or two benefits at a time. Give the military member an opportunity to
    respect and participate in change instead of living in constant dread
    and fear of loss.
        NCOA appreciates the opportunity to submit a number of enlisted
    views to this subcommittee. The Association looks forward to addressing
    further details regarding the issues discussed and any other issues
    with you and the subcommittee staff.
        Thank You.
                                     ______

    Prepared Statement of Joe L. Mauderly, Senior Scientist and Director of
           External Affairs, Lovelace Respiratory Research Institute
        It is proposed that the Department of Defense take advantage of the
    unique capabilities offered by the Lovelace Respiratory Research
    Institute to meet its research needs in the areas of: (1) health risks
    from exposure to airborne toxic agents; (2) health risks from combined
    exposures to multiple toxic agents; and (3) provision of vaccines
    against strategic biological agents.
                  the lovelace respiratory research institute
        The Lovelace Respiratory Research Institute (LRRI) is a private
    research institute in Albuquerque, New Mexico dedicated to the
    mitigation and cure of respiratory disease through research aimed at
    understanding causes and biological mechanisms, detecting and
    eliminating exposures to causal agents, and developing improved
    prevention and treatment strategies. With its diverse research
    capabilities, its close working relationships with universities,
    federal laboratories, and industry, LRRI is among the nation's largest
    independent, non-profit biomedical research organizations, and the
    nation's only such organization wholly dedicated to research on
    respiratory health problems.
        LRRI is an international center of excellence for research on the
    biology of respiratory disease, inhalation toxicology and health risks
    associated with airborne agents, preclinical development of therapeutic
    agents, and clinical trials of new drugs and medical devices. Its staff
    work in 350,000 square feet of laboratory and clinical facilities with
    many unique features. Among its facilities is the Inhalation Toxicology
    Laboratory, a recently privatized former DOE laboratory LRRI has
    managed since its creation, and a unique national center for animal,
    cellular, and genetic research on inhalation hazards. This facility is
    remotely located on Kirtland AFB near Albuquerque, and provides an
    isolated environment for working with hazardous agents.
        LRRI's 50 scientists and 250 technicians and support staff conduct
    multidisciplinary, basic and applied, independent and collaborative
    research funded by grants, contracts, and philanthropy at approximately
    $23 million annually. Research at LRRI is supported approximately 60
    percent by federal agencies, 30 percent by industry and private
    sponsorship, and 10 percent from endowments. LRRI has extensive
    experience managing large, integrated, short- and long-term research
    projects for federal agencies. LRRI has conducted research for the
    Department of Defense (DOD), taking advantage of its unique
    capabilities to address important health risk issues of concern to the
    Department. With the now greater availability of its recently
    privatized Inhalation Toxicology Laboratory, LRRI looks forward to an
    expanded role in meeting DOD research needs.
              health risks from exposure to airborne toxic agents
        It is proposed that the Department of Defense participate in an
    interagency effort to establish and maintain a National Environmental
    Respiratory Center (NERC) for the purpose of coordinating research and
    information transfer concerning health risks from airborne
    contaminants.
    The Problem
        DOD faces numerous health protection challenges related to airborne
    agents inhaled by its personnel during military actions, training, and
    routine operations. DOD also faces environmental health challenges
    related to agents suspended in air at its installations. DOD shares
    with other agencies concerns for contaminants inhaled in the workplace
    and environment. Air contaminants in these environments and in the home
    are known to contribute to respiratory illness, but their health risks
    and the extent of their role in causing respiratory disease are often
    not clear. There is no national center for coordination of research and
    information in this field.
        DOD is repeatedly faced with estimating the health effects of air
    contaminants in the presence of large uncertainty. It is difficult to
    associate health effects with specific contaminant exposures. Most
    environmental air contaminants have multiple sources. Most contaminant
    exposures occur as mixtures, but we have little scientific or
    regulatory ability to deal with pollutant mixtures. It is often
    difficult to determine the range of human susceptibility to inhaled
    toxicants. There are often uncertainties regarding the relevance of
    laboratory results to human health risks, which is especially important
    when our only information is derived from studies of animals. There is
    presently too little emphasis on ensuring that responses observed in
    the laboratory are similar to those that occur in humans. There is
    presently no central, integrated source of information on these issues.
        DOD shares the above problems, but has neither the mandate nor the
    resources to resolve these issues alone. Current efforts are funded by
    DOD, numerous other agencies, industry, labor, health advocacy groups,
    and private foundations. The lack of coordination among these efforts
    prevents integration and synergism among the programs. Resolving these
    issues requires the interactive efforts of several scientific
    disciplines, health professionals, and policy makers. There is no
    national center coordination of this interagency and interdisciplinary
    effort. There is no national center for collecting and disseminating
    information on the health impacts of airborne contaminants. There is
    also no interagency user facility with the specialized facilities,
    equipment, core support, and professional collaboration required for
    many types of investigations to study the complex airborne materials
    and health responses of concern.
    The Proposed National Environmental Respiratory Center (NERC)
        LRRI proposes to establish a national center to meet the above
    needs. The NERC will be located at LRRI's Inhalation Toxicology
    Laboratory on Kirtland AFB in Albuquerque, NM. This facility and its
    capabilities were developed at taxpayer expense and is now leased by
    LRRI. This 270,000 square foot, world-class facility contains $50
    million in government-owned equipment, and has unmatched potential as
    the proposed Center. The facility is well-equipped and staffed for
    intramural and collaborative research on all types of airborne
    materials by reproducing pollutant atmospheres, conducting inhalation
    exposures of animals, determining the dosimetry of inhaled materials,
    evaluating health effects ranging from subtle genetic and biochemical
    changes to clinical expression of disease, and coordinating access to
    information. This facility has conducted research for DOD, and has
    served as a training site for DOD nuclear safety training courses held
    at Kirtland AFB.
        The interests and expertise of LRRI are well-matched to the
    proposed activities of the Center. LRRI has contributed heavily to the
    present understanding of the respiratory health impacts of airborne
    pollutants. LRRI has contributed heavily to the research cited as
    scientific basis for worker protection standards and air quality
    regulations. The group is well-known for its efforts to understand
    airborne materials, link basic cellular and tissue responses to the
    development of disease, validate the human relevance of laboratory
    findings, and coordinate complex interdisciplinary studies. The
    ``virtual'' center LRRI envisions will also encompass nearby
    institutions and an expanding group of collaborating investigators
    nationwide. Academic affiliation with the University of New Mexico,
    primarily through its Health Sciences Center will extend research and
    training capabilities. Other local technological and collaborative
    resources include Sandia and Los Alamos National Laboratories, and DOD
    research and training facilities on Kirtland AFB.
    Proposed DOD Participation in the Center
        LRRI seeks authorization and subsequent appropriations through EPA
    as the lead agency for funding the Center, with complementary
    interagency sponsorship through grants and contracts from DOD and other
    agencies targeting research meeting individual agency mandates and
    strategic goals.
        An initial appropriation of $2 million per year for 5 years,
    beginning in fiscal year 1998, will establish the Center and its core
    information, educational, and administrative functions. This amount
    will provide for critical computing and communication infrastructure,
    and limited facility renovations and equipment acquisitions. Support
    for intramural and extramural research is sought from the lead agency
    (EPA), DOD, and other agencies. The goal is to develop research support
    principally through sponsored programs, and to use the core Center
    support principally to provide coordinating and information services
    and sponsor limited collaborative research.
        Support is sought from DOD through funding of related, independent
    research programs having special relevance to the Department's mission,
    and through such participatory support of the Center's core functions
    as established on an interagency basis. The Department's participation
    in interagency planning, research coordination, and information
    transfer activities of the Center is also sought.
            health risks from combined exposures to multiple agents
        It is proposed that the Department of Defense participate in an
    interagency program of research on health risks from combined
    inhalation exposures to multiple toxic agents.
    The Combined Exposures Problem
        The Department is faced with understanding and mitigating health
    risks to its personnel and the public from DOD operations. The DOD
    workplace involves inhalation exposures to aircraft and other engine
    emissions, solvents and other chemicals, smoke and obscurants,
    machining, polishing, and stripping aerosols, and other gases, vapors,
    dusts, and fibers. Traditional toxicology and risk assessment deal with
    single agents.
        Most exposures occur as combined exposures to multiple agents,
    rather than to single hazardous species. Individuals receive exposures
    to multiple hazardous agents at different times. Many individuals have
    lifestyle risk factors for disease, such as tobacco and alcohol use.
    There is also concern for public inhalation exposures to hazardous
    agents as a result of DOD activities. It may be presumed that to the
    extent that such exposures have occurred, they have also occurred as
    exposures to mixtures, exposures in sequence with contact with other
    hazardous agents, and exposures of individual with other risk factors.
        Researchers, regulators, industry, and health professionals are
    aware of the importance of combined exposures, but have limited ability
    to address them. We know that multiple agents can cause common effects,
    such as inflammation, asthma attacks, or cancer. Lacking other
    information, it is assumed that the effects of multiple agents are
    additive, but we know that this is often not true. We know that some
    agents amplify the effects of others, but have little ability to
    predict the magnitude of amplification or to understand the
    amplification processes. We can presume that exposure to a mixture of
    hazardous agents, each within its acceptable limit, can present an
    unacceptable aggregate health risk, but do not know how to predict or
    control the aggregate risk. We continually face the possibility that an
    agent encountered in combination with others might be wrongly assigned
    sole responsibility for an adverse health effect that, in fact,
    resulted from a mixture or an unrecognized copollutant or cofactor that
    varied in concert with the accused agent.
        There has been very little research or standard-setting based on
    the influence of combinations of exposures on health risks. The design,
    conduct, and interpretation of studies of the health outcomes of
    combined exposures are potentially as complex as the possible range of
    combinations of agents and individuals. Most research involves
    stretching investigative technologies to their limit of interpretation
    for even single agents; thus, there are few attempts to extend efforts
    to mixed exposures. As a result, we have poor ability to assess risk,
    set limits, or assign causality in the face of combined exposures. This
    creates two key problems: (1) protective standards may not be adequate
    in the face of combined exposures; and (2) agencies, the courts, and
    the public have little ability to apportion causality among exposures
    occurring within and outside of the workplace, from different sources,
    or including exposures of personal choice.
    LRRI Combined Exposures Program
        Since 1986, LRRI has conducted a combined exposures program for the
    Department of Energy (DOE) to resolve health risk issues of importance
    to that agency. This program has been funded at approximately $2
    million/year, which has provided for the conduct of selected animal
    studies comparing the long-term health risks, primarily cancer, of
    exposure to two agents to the additive risks of exposure to each agent
    alone. This is the only program in the world addressing health risks
    from multiple inhalation exposures.
        The program has focused largely on cancer, and has conducted
    carcinogenicity studies of rodents exposed together or in sequence to
    two agents. The principal product has been knowledge of the influence
    of the combination on long-term risk. Ancillary studies have been
    conducted as needed to gain knowledge or develop techniques necessary
    to conduct or interpret the core cancer studies. Because the research
    is complex and requires considerable time and funding, only a few
    carefully selected combinations of exposures have been evaluated. The
    program also fosters the development of cellular and molecular
    investigative tools which may eventually replace long-term rodent
    studies.
        Five core studies are complete or are near completion. These five
    studies have produced a number of key findings with implications for
    worker and public protection: (1) cigarette smoking markedly increases
    the lung cancer risk from inhaled radionuclides; (2) external
    irradiation does not increase the lung cancer risk from inhaled
    radionuclides; (3) a common class of chemical carcinogen (nitrosamine)
    taken up by a non-inhalation route does not increase the lung cancer
    risk from inhaled radionuclides; (4) inhaled beryllium metal particles
    are highly carcinogenic in the rat, and increase the lung cancer risk
    from inhaled radionuclides; and (5) inhaling the common solvent, carbon
    tetrachloride, causes liver damage which alters the radiation dose to
    liver and bone from translocation of inhaled radioactive particles, and
    thus liver and bone cancer risk, but does not affect the radiation dose
    to lung or kidney.
        This program has produced several other scientific and technical
    advancements, such as the establishment, for the first time, of a
    rodent model of cigarette smoking which clearly demonstrates a dose-
    related increase in lung cancer. This advancement provides a new
    research tool for understanding the many interactions thought to occur
    between smoking and health effects of other agents of importance to
    DOD.
    Proposed DOD Participation in LRRI Combined Exposures Program
        LRRI proposes that DOD participate in an interagency research
    program which would expand to include DOD combined exposure health risk
    issues. The DOE-funded program has addressed exposures which overlap to
    an extent with DOD issues; however, without participation by DOD, the
    program will not target DOD needs. The $2 million/year DOE funding is
    projected to decrease, and joint funding from DOD would ensure that:
    (1) this unique program will continue; and (2) DOD-specific exposure
    issues will be addressed. Interagency support is also sought from
    several other agencies with concerns for combined exposures.
                  vaccines against strategic biological agents
        It is proposed that the Department of Defense take advantage of the
    capabilities of the Lovelace Respiratory Research Institute for
    preclinical studies leading to FDA approval of vaccines against
    biological agents of strategic concern.
        DOD is now developing a program for approval of vaccines to avoid
    repeating its recent Gulf War experience of facing deployment of
    vaccines that were not approved by the FDA. Through its Inhalation
    Toxicology Laboratory in the newly privatized, federally-owned facility
    on Kirtland AFB, LRRI has excellent capabilities for conducting animal
    studies of the safety and efficacy of vaccines developed for protecting
    DOD personnel, and potentially the public, from biological agents of
    strategic concern.
        LRRI's Inhalation Toxicology Laboratory is uniquely positioned to
    help meet DOD needs. It has extensive animal management facilities
    meeting the requirements of vaccine and drug approval studies. LRRI has
    quality assurance capabilities meeting FDA requirements and has
    experience with preclinical studies leading to FDA approval. LRRI has
    exceptional capabilities for challenging animals by inhalation to
    hazardous agents. Importantly, the facility is located on DOD property
    within a DOD security area, is situated remotely from populations in
    dwellings or commercial properties, and contains laboratories for
    working with hazardous agents. LRRI has managed the facility during its
    30 years of research with highly hazardous materials, and has never had
    a significant environmental release or worker exposure. Finally, under
    LRRI management, this laboratory has already been the site of training
    exercises in preparation for meeting the requirements of international
    inspection treaties targeting potential chemical and biological warfare
    activities.
        LRRI offers its capabilities to meet DOD strategic vaccine
    development and approval needs, and looks forward to making important
    contributions to the national defense in this way.
                                     ______

      Prepared Statement of Lynne P. Brown, Associate Vice President for
      Government and Community Relations on behalf of New York University
               Center for Cognition, Learning, Emotion and Memory
        Research into cognition, learning, emotion, and memory can help
    educators, physicians, and other health care givers, policymakers, and
    the general public by enhancing our understanding of normal brain
    development as well as the many disabilities, disorders, and diseases
    that erode our ability to learn and think, to remember, and to emote
    appropriately.
        New York University is seeking $10.5 million over five years to
    establish at its Washington Square campus a Center for Cognition,
    Learning, Emotion and Memory. The program will draw on existing
    research strengths in the fields of neural science, biology and
    chemistry, psychology, computer science, and linguistics to push the
    frontiers of our understanding of how the brain functions, and how we
    learn.
        Such exploration into the fundamental neurobiological mechanisms of
    the nervous system has broad implications for human behavior and
    decision making as well as direct applicability to early childhood
    development, language acquisition, teaching methods, computer science
    and technology development for education, the diagnosis and treatment
    of mental and memory disorders, and specialized training for stressful
    occupation.
    Cognition, Learning, Emotion and Memory Studies at NYU (CLEM)
        New York University is poised to become a premier center for
    biological studies of the acquisition, storage, processing and
    retrieval of information in the nervous system.
        To be housed at NYU's Washington Square Campus within the Center
    for Neural Science, the new Center will capitalize on the university's
    expertise in a wide range of related fields that encompass our computer
    scientists who use MRI imaging for research into normal and
    pathological mental processes in humans, our vision scientists who are
    exploring the input of vision to learning and memory, our physical
    scientists producing magnetic measurements of brain function with a
    focus on the decay of memories, our linguists studying the relation of
    language and the mind, and our psychiatrists conducting clinical
    studies of patients with nervous system disorders.
        The New York University Program in Cognition, Learning, Emotion and
    Memory (CLEM) focuses on research and training in the fundamental
    neurobiological mechanisms that underlie learning and memory--the
    acquisition and storage of information in the nervous system. Current
    studies by the faculty at NYU are determining why fear can facilitate
    memory; how memory can be enhanced; what conditions facilitate long-
    term and short-term memory; and where in the brain all these memories
    and processed and stored. The research capacity of this Center
    capitalizes on our expertise in physiology, neuroanatomy, and
    behavioral studies, and builds on active studies that range from the
    mental coding and representation of memory to the molecular foundations
    of the neural processes underlying emotional memories. Our faculty uses
    electrophysiological and neuroanatomical techniques to study the
    organization of memory in the medial temporal lobe. Together these
    researchers bring substantial strength in psychological testing,
    computational sophistication, advanced tissues staining and electrical
    probes, and humane animal conditioning. These core faculty are well
    recognized by their peers and have a solid track record of sustained
    research funding from federal agencies and private foundations: total
    costs awarded and committed for their research for full project periods
    from all sources presently total $7 million. Additional faculty are
    being recruited in areas of specialization that include: the cellular
    and molecular mechanisms operative in neural systems that make
    emotional memory possible, neurophysiological studies of memory in non-
    human primates, computational modeling of memory, and
    neuropsychological and imaging research on normal and pathological
    human memory.
        Colleagues in the Biology Department are doing related work in the
    molecular basis of development and learning. Given the important input
    of vision to learning and memory, the Center has strong links with the
    many vision scientists based in the Psychology Department who work on
    directly related topics that include form, color, and depth perception,
    memory and psycholinguistics. Colleagues in behavioral science study
    learning and motivation, memory and aging. Physical scientists explore
    the magnetic measurement of brain function, with a focus on the decay
    of memories. CLEM also shares research interests with colleagues in the
    Linguistics Department, who study the relation of language and the
    mind.
        Research linkages extend to computational vision studies, now
    centered in NYU's Sloan Program in Theoretical Neurobiology. The Sloan
    Program works closely with computer scientists at our Courant Institute
    on Mathematical Science, with colleagues at the Medical Center in
    Psychiatry, who use MRI imaging for research into normal and
    pathological mental processes in humans, and in Neurobiology, who are
    conducting clinical studies of patients with nervous disorders,
    especially memory disorders.
        What is unique and exciting about the establishment of such a
    comprehensive center at NYU is the opportunity to tap into and
    coordinate this rich multidisciplinary array of talent to conduct
    pioneering research into how the brain works. In this, the ``Decade of
    the Brain,'' NYU is strategically positioned to be a leader.
    Early Childhood and Education
        Research into the learning process as it relates to attention and
    retention clearly holds important implications for early childhood
    development. Although most of a person's brain development is completed
    by birth, the first few years of life are critically important in
    spurring intellectual development. For example, research has already
    shown that in their early years, children need human stimulation, such
    as playing and talking, to develop the ability to learn.
        The scientific findings on brain development generated by
    researchers at NYU point clearly to windows of learning opportunity--
    that open and close--with important implications for when children best
    learn and when they best learn what. Understanding how and when and
    under what conditions learning proceeds can lead to practical
    applications for parents, care givers and educators.
        With more immigrant children in schools, language development is
    another crucial area of study. If a child's brain were more receptive
    to acquiring sounds during the first few months of life, and language
    in the first few years of life, then students may learn a second
    language more quickly if taught in the lower grades instead of waiting
    for high school.
        In the midst of a national debate on education reform, thousands of
    education innovations are being considered without the advantage of a
    fundamental understanding of the learning process. CLEM researchers,
    coupled with educational psychologists, can contribute to a better
    understanding of how parents can stimulate their children's cognitive
    growth, how children learn at different stages and use different
    styles, how educators can accommodate those styles, and how educational
    technology can be harnessed to increase retention and memory.
        At NYU, these efforts will be enhanced by our scholars and research
    conducted in our School of Education and our New York State-supported
    Center for Advanced Technology.
        The research being conducted at NYU into underlying neurobiological
    mechanisms of learning and emotion can lead to advances in a range of
    areas including: visual development and how motor behavior is connected
    to vision; diagnosis and treatment of emotional and memory disorders;
    strategies for dealing with cognitive impairment.
    Computer Science and Technology Development
        As we refine our knowledge of how the brain acquires, processes,
    retains and retrieves information and images, we will also be able to
    improve the design, development and utilization of computer science and
    technology. As we reach a better understanding of how children learn,
    we can more effectively harness computer technology in the service of
    education, including the development of simulated learning models.
        At NYU, this effort is enhanced by the presence of our New York
    State-supported Center for Digital Multimedia, Publishing and
    Education, which brings together educators, laboratory scientists and
    software designers who explore how interactive multimedia technologies
    enhance learning and develop prototype teaching models.
    Specialized Training
        Research into how cognition and emotion interact can have
    applicability to other diverse areas of interest including retraining
    of adult workers, job performance and specialized training for high
    risk or stressful jobs such as military service and emergency rescue
    work.
        Accordingly, we believe that the work of this Center is an
    appropriate focus for the Department of Defense. The relevance of this
    research of the Department of Defense includes the following:
      --Understanding how the brain functions and how we learn is crucial
            to educating and training a diverse range of individuals for a
            diverse range of skills--one of the primary tasks of the Armed
            Services. The more we know about how people acquire and process
            information--the better training programs can be designed and
            targeted for specific groups of trainees and for specific
            skills.
      --The research being conducted at NYU also holds promise for
            advancement in simulated training and other technically-driven
            training methods.
      --A major component of the work being done at New York University is
            through a Vision Research Center, where researchers are
            exploring how the brain proceeds and how motor behavior is
            connected to visual perception. This is an area of great
            relevance in the training of troops and other Department of
            Defense personnel to operate highly sophisticated equipment,
            machinery and weapons.
      --The work at NYU with its emphasis on emotional memory can also be
            applied to developing proper training for stressful situations
            or for high risk assignments.
      --Finally, there is a therapeutic dimension to this research. In
            understanding maladaptive responses, and emotional disorders,
            researchers are better able to understand and treat phobias,
            panic attacks, and post-traumatic stress disorders.
                                     ______

    Prepared Statement of Judith Gustinis, Director, Rochester Institute of
             Technology Center for Integrated Manufacturing Studies
        Thank you, Mr. Chairman, for allowing the Rochester Institute of
    Technology (RIT), Rochester, New York, to testify today regarding the
    Defense Subcommittee's consideration of the fiscal year 1998 Department
    of Defense (DOD) budget.
    A National Center for Remanufacturing
        Mr. Chairman, my name is Judith Gustinis, Director of the Rochester
    Institute of Technology's newly created Center for Integrated
    Manufacturing Studies or CIMS. I would like to bring to the attention
    of the Subcommittee a proposal to establish within CIMS a national
    center for excellence in an emerging and important area of
    manufacturing research--remanufacturing. We strongly believe that the
    establishment of a National Center for Remanufacturing at RIT will
    address many problems facing the U.S. manufacturing sector today and
    tomorrow and, at the same time address several important research
    missions of the Department of Defense ManTech Program. For these
    reasons we submit that this initiative should be supported with funding
    in the fiscal year 1998 DOD ManTech budget.
        Mr. Chairman, RIT's designation as a national center for excellence
    in remanufacturing research will enable the institution to use its
    already considerable manufacturing research resources and capabilities
    to make much needed strides in Remanufacturing. This will greatly
    benefit U.S. manufacturers--many of which are DOD suppliers--by making
    them more competitive and efficient by training industry engineers to
    design products in a fashion that dramatically reduces raw material
    costs, energy consumption, overall unit costs and the amount of
    industrial and end product waste. It will also directly benefit the
    Department of Defense which, itself is the world's leading
    remanufacturer of military equipment and component systems.
    The Process of Remanufacturing
        The process of Remanufacturing takes our Nation's current product
    and material recycling efforts a giant step further. Currently, our
    Nation is taking great pains to recycle materials that many products
    are made of. This is, of course, a very important exercise in resource
    conservation. However, the original cost of engineering and
    manufacturing embedded in a product is lost when a product is melted
    down or otherwise recycled and its materials recovered. The concept of
    Remanufacturing needs to be introduced to design and manufacturing
    engineers. They need to know how to design products so that they can be
    recovered at the end of their useful life, disassembled, and their
    durable component parts cleaned, reworked, inspected and reassembled
    with some new parts to make a Remanufactured Product which meets the
    exact specifications of a totally new product. The Remanufactured
    Product is restored to ``like new'' conditions, thereby saving
    considerable costs in materials, energy, labor and engineering.
    Likewise, tons of waste material that would otherwise be sent into the
    waste stream will be used productively again in a Remanufactured
    Product.
    Remanufacturing Success Story--Kodak's Single Use Camera
        Mr. Chairman, one of the most successful examples of
    Remanufacturing is the Kodak ``Single Use'' camera. Kodak has developed
    a system whereby the single use camera is designed not to be discarded
    after use by the consumer. The camera is returned to a neighborhood
    photofinisher who takes the film out of the camera and develops it. The
    photofinisher then ships the camera body back to Kodak which puts it
    through the Remanufacturing process.
        Under this process, the cameras are disassembled and separated into
    parts which can be reused, parts which can be Remanufactured, and parts
    which can only be recycled for the materials in them. Virtually all
    parts of each camera returned to Kodak is recycled or reused in a
    Remanufactured camera. In fact, each new Single Use camera made by
    Kodak contains recycled material and Remanufactured parts.
        Last year, over 63 percent of Kodak's Single Use cameras in the
    U.S. were returned to the manufacturer. More than 14 million pounds of
    waste was diverted from landfills which equals more than 100 million
    Fun Saver Cameras recycled. This illustration is an example of the
    tremendous economic potential of remanufacturing. If we assist other
    manufacturers to integrate Remanufacturing processes into their design
    there will be a significant savings in energy, materials, labor and
    other costs including environmental liabilities. For example, on
    average a Remanufactured product consumes one-sixth of the energy that
    is required to manufacture a new product.
    Department of Defense and Remanufacturing
        Mr. Chairman, in light of steadily declining defense budgets, your
    Committee, the Congress and the Department of Defense have struggled
    mightily to maintain force readiness and a robust military system R&D
    and acquisition program--both of which are critical to our national
    security. There is no question that a central part of this effort has
    been to ensure the ``affordability'' of new weapons systems.
    Affordability needs span all military system development, production
    and sustainment functions, including the support of aging weapons
    systems.
        A key element of the Department's effort to ensure affordability
    has been the dramatically increased use of ``remanufacturing'' of
    military systems at the end of their useful life or when new technology
    needs to be inserted. The cost-savings associated with remanufacturing
    of old systems compared to acquisition of new systems are enormous.
        The Department of Defense and the private sector defense industry
    may indeed be the largest group of remanufacturers in the world. In
    order to maintain force readiness, the military services are constantly
    rebuilding and overhauling systems, parts, assemblies and
    subassemblies. These activities include the remanufacture of various
    systems which have reached the end of their useful life, need new
    technology insertion or are not planned to be replaced through
    procurement of new systems.
        Significant examples of DOD remanufacturing efforts are as follows,
    divided by service:
        Army--Bradley fighting vehicle.--Approximately 1,602 existing
    Bradley A-2's will be remanufactured into A-3's.
        Army--medium tactical vehicle.--This 5-ton truck will reach the end
    of its service life in fiscal year 1999. The Army will remanufacture
    8,080 of these vehicles through fiscal year 2004.
        Marine Corps--AV-8B aircraft.--76 AV-8B's will reach the end of
    their service lives. All 76 will be remanufactured beginning in fiscal
    year 1999.
        Navy--HH-60H and SH-60CV helicopters.--Remanufacture of these
    helicopters is ongoing.
        Air Force--B-52 bomber.--This 1950's vintage aircraft has been
    remanufactured several times to extend its life cycle.
        Another example of DOD remanufacturing efforts involves the Detroit
    Diesel Corporation which recently won an award from the U.S. Army Tank
    Automotive and Armaments Command for the remanufacture of 463 engines
    for the Marine Corps fleet of Light Armored Vehicles. As part of the
    remanufacturing process, Detroit Diesel will replace older technology
    parts with a package of components which will extend the life of the
    engine and reduce life cycle costs. The engines will be completely
    refurbished using new and refurbished parts and will carry a warranty
    equivalent to a new engine.
        The nature of military procurement, the high cost of military
    equipment, and the problems associated with maintaining an inventory of
    unique spare parts, have made remanufacturing an attractive and
    important part of the DOD's effort to preserve the technical
    superiority of the military services. As a result of its stake in both
    manufacturing and remanufacturing, the Army has entered into a
    cooperative research and development agreement with the big three
    automobile manufacturers to create the National Automotive Center as
    the U.S. Tank and Automotive Command. The Army is also currently in
    discussions with NASA, and its three university centers of excellence
    for rotorcraft technology and the rotorcraft industry to establish a
    similar center for rotorcraft technology. RIT's National Center for
    Remanufacturing will fill a vacuum in DOD's remanufacturing and applied
    technology program.
        Remanufacturing is also important in DOD's environmental strategy
    which focuses on cleanup, compliance, conservation, pollution
    prevention and technology. Of these objectives, DOD considers pollution
    prevention to be ``perhaps the most important pillar in its
    environmental program.'' DOD believes it needs to consider
    environmental costs and benefits as early in the design process as
    possible, including reexamining assumptions about the life-cycle of
    parts, products and raw materials. This action can be taken at the
    remanufacturing stage of many military systems.
        DOD's commitment to and dependence upon remanufacturing has created
    an internal need for engineers trained in the science of
    remanufacturing. The need to identify and or recruit military engineers
    trained in remanufacturing is no longer the only education and training
    challenge the Department faces. Changes in Federal acquisition policy
    now require that at least 40 percent of the military remanufacturing
    effort be shifted from in-house personnel to outside vendors. Air Force
    personnel have expressed private and public concern that they have been
    unable to identify outside vendors with the experience in
    remanufacturing needed to ensure the continued reliability of their
    equipment. The National Center for Remanufacturing at RIT will
    collaborate with the Department of Defense to develop new technologies
    and processes, train and qualify vendors and develop effective
    solutions to these problems.
        The DOD's extremely successful ManTech program was created to help
    the military services and the U.S. manufacturing sector improve its
    manufacturing capabilities and the affordability and life-cycle
    sustainability of military systems. This program is a collaborative
    effort among the Department and the various services, private sector
    defense manufacturers and academia. As you well know, ManTech's
    research programs focus on (1) Manufacturing and Engineering Systems;
    (2) Processing and Fabrication; and (3) Advanced Industrial Practices.
    Under Manufacturing and Engineering Systems, ManTech research focuses
    on developing techniques to model and improve manufacturing
    enterprises. Under Advanced Industrial Practices, ManTech research
    focuses on the implementation of world-class best practices to create
    major improvements in cost, cycle time and quality in manufacturing.
    Under Processing and Fabrication, ManTech research involves
    improvements to manufacturing processes on the shop floor with an
    emphasis on process maturation in the areas of composites, electronics,
    and metals.
        Mr. Chairman, these are significant manufacturing research
    programs, but they currently do not now have a significant focus on the
    theory and process of remanufacturing. In light of the substantial
    amount of remanufacturing now being carried out by DOD and defense
    contractors with much more expected in the future, we believe that it
    is in the strong interest of DOD to create a new ManTech Center of
    Excellence in remanufacturing. Because remanufacturing also cuts across
    all three major thrusts of ManTech's programs, the Center for
    Excellence in Remanufacturing would be in a position to provide support
    to all ManTech programs.
        RIT's proposal to establish a center for excellence in
    remanufacturing at our Center for Integrated Manufacturing Studies
    would be an important addition to the ManTech program. The National
    Center for Remanufacturing would be a partnership among RIT's Center
    for Integrated Manufacturing Studies, DOD, private sector manufacturers
    and the Remanufacturing Industries Council, a national association of
    remanufacturing companies.
        We are proposing a 5-year plan of collaborative research with DOD
    and industry with the goal of modernizing and developing the
    remanufacturing capabilities of the DOD and the U.S. manufacturing base
    in order to meet the military system acquisition needs of the military
    services and sustain defense systems throughout their life-cycles.
    National Center for Remanufacturing Funding Request for Fiscal Year
            1998
        The Rochester Institute of Technology is requesting DOD ManTech
    support of $4,000,000 in fiscal year 1998 for start up activities for
    the National Center for Remanufacturing. These funds would be used in
    the manner described in Attachment A. $1,978,909 would be used for one-
    time costs to purchase major equipment items for the National Center
    for Remanufacturing. It is anticipated that the ongoing program costs
    of the Center will be approximately $2,800,000 per year. RIT, through
    income derived from the conduct of projects for industry, New York
    State, and other funding sources will provide $800,000 to $900,000 of
    support annually for the National Center. RIT will seek $2,000,000 per
    year for 4 additional years for program costs from the federal
    government.
    National Center for Remanufacturing Research Plan
        RIT is proposing a 5-year plan for the National Center for
    Remanufacturing which will focus on the following six goals:
      --The National Center for Remanufacturing will become after 5 years a
            self-sustaining national resource for applied research which
            will provide technical solutions to real-life problems for
            manufacturers and remanufacturers, with a particular focus on
            manufacturing companies which are defense industry suppliers.
      --The National Center will continually enhance the body of knowledge
            and research in remanufacturing processes and develop advanced
            technology transfer techniques for and with industry, the DOD
            and relevant federal government agencies. The result in 5 years
            will be improved design and manufacturing processes and the
            development of curriculum to educate engineers and
            manufacturers regarding the utilization of technology in
            remanufacturing products and processes. In short, the National
            Center will strive to train engineers to design and manufacture
            products that can be remanufactured to save energy costs and
            reduce waste to protect the environment.
      --The National Center, along with RIT's multidisciplinary Center for
            Integrated Manufacturing Studies, will sponsor high quality
            technical projects to solve the real time industry needs while
            expanding opportunities for professional development. Areas
            which may be pursued by the National Center are:
            demanufacturing practices; development of test methodologies to
            determine usable life; design for the environment for both
            product and package; signature analysis; life cycle costing;
            failure mode analysis; and, cleaning technologies.
      --The National Center will over 5 years develop advanced uses of the
            CIMS test bays to allow industry, faculty and students to
            develop skills in all areas related to environmentally
            conscious design, design for reuse and Remanufacturing.
      --The National Center will integrate RIT's cooperative educational
            program--one of the leading co-op programs in the country--with
            Remanufacturing, enabling students to immediately assist
            companies to incorporate design for reuse and remanufacturing
            practices and technologies into their manufacturing processes.
      --The National Center will over 5 years concentrate on meeting the
            manufacturing technology research mission of the Department of
            Defense ManTech program.
        Attachment B is a fully detailed prospectus on the National Center
    which is attached for the information of the Subcommittee.
    RIT is the Right Choice for a Remanufacturing Initiative
        Mr. Chairman, we at RIT believe the answer is to create a national
    center for excellence in remanufacturing at RIT's Center for Integrated
    Manufacturing Studies and support this center with Department of
    Defense funding. Such a national center is needed to raise the
    visibility of this emerging area of manufacturing and to provide a
    place for industry, academia and government agencies such as DOD to
    come together to research and apply current and new Remanufacturing
    processes to real manufacturing situations. RIT's just completed
    157,000 square foot manufacturing laboratory--the Center for Integrated
    Manufacturing Studies--is the logical home for a national
    Remanufacturing effort. This facility, which is one-of-a-kind in the
    Nation, has five large flexible research bays, expressly designed to
    have the capability to provide industry an academic researchers with
    the ability to conduct full-scale testing of Remanufacturing processes
    using state-of-the-art equipment.
        RIT is also the appropriate place to locate a national center for
    excellence in Remanufacturing because of the University's long and
    distinguished history of service to large, medium and small
    manufacturers through applied manufacturing research. In addition to
    these strong capabilities in Industrial Manufacturing and Mechanical
    Engineering, Packaging Science, Economics and Business, RIT has, in
    recent years, brought to bear on manufacturing problems pragmatic
    solutions to meeting the technological and work force needs in
    industries related to microelectronics engineering, imaging
    technologies and software engineering. RIT's Center for Integrated
    Manufacturing Studies also brings to the National Center for
    Remanufacturing support labs in: simulation; packaging; printing;
    reverse engineering; design for manufacturing and assembly; computer
    aided design and manufacturing; and, ergonomics. CIMS also has state-
    of-the-art capabilities in technology transfer and distance learning.
        Through projects and case studies, the remanufacturing team has
    proven its ability to deliver concrete solutions for the
    remanufacturing industry. The group has conducted research in areas of
    life-cycle analysis, automotive remanufacture, disassembly, design for
    remanufacturing and other design considerations since 1991. Past and
    present projects include case hardness depth determination of CV joints
    and the feasibility and economics of remanufacturing anti-lock braking
    systems sponsored by the Automotive Parts Rebuilders Association; an
    assessment of remanufacturing technology and comparative energy
    analysis contrasting remanufacturing and new build operations sponsored
    by the Department of Energy; and also cleaning process evaluation,
    design for remanufacturing, and ergonomic evaluation of a
    remanufacturing process sponsored by Eastman Kodak. The three-fold
    purpose of the remanufacturing team is to provide practical solutions
    for problems concerning the remanufacturability of products, aid OEM's
    in design of redesign of products for remanufacture and recycle, and
    prepared small and medium-size businesses to more efficiently
    remanufacture and recycle products.
        RIT has already established a remanufacturing database system for
    the Nation. The database compiles articles, books, technology updates
    and case studies in remanufacturing and associated fields. It will
    serve as a base for sharing findings with industry nationally and
    assisting individual companies in keeping abreast of advances in
    Remanufacturing, government programs and regulations. RIT has also set
    up an Internet site for Remanufacturing research.
    Support for Creation of a National Center
        There is widespread support for the creation of the National Center
    for Remanufacturing at RIT among large, medium and small manufacturing
    companies. Moreover, RIT's Remanufacturing program is affiliated with
    the Automotive Parts Rebuilders Association (APRA), the Remanufacturing
    Industries Council International (RICI) and other industry
    organizations.
    Conclusion
        In conclusion, Mr. Chairman, we hope that the Congress will look
    favorably upon our request to help fund the establishment of a center
    for excellence in remanufacturing as a modest investment in a research
    area which will yield virtually immediate results for the private
    sector and the Department of Defense.
        It should be noted that although concepts for reuse of products and
    Remanufacturing are relatively new, the practice of Remanufacturing has
    existed in the U.S. for many years. Current data indicates that there
    are 75,000 manufacturing firms currently using some form of
    Remanufacturing with $53 billion in revenue.
        A National Center for Remanufacturing focused on expanding the
    knowledge base on Remanufacturing will help current remanufacturers and
    many more manufacturing companies increase their competitive posture,
    manufacture higher quality goods, use less energy and natural
    resources, generate less waste to harm the environment and save and,
    perhaps, create jobs in what has been a declining U.S. industry sector.
    It will also help ensure that the Department of Defense meets its
    system acquisition affordability and life cycle sustainability goals.
        Thank you for this opportunity, Mr. Chairman, for RIT to make its
    case for Department of Defense funding support.

    Attachment A.--National Center for Remanufacturing, Rochester Institute
    of Technology Fiscal Year 1998 Budget

    Total start-up/program operating costs:e of funds]
        Staff.....................................................$1,198,000
        Benefits..................................................   311,480
        Project Travel............................................    90,000
        Project Materials and Supplies............................    95,263
        Facility Operations.......................................    73,386
        Equipment Installations (one time costs)..................    31,081
        Equipment (one-time costs)................................ 2,048,229
        Equipment Maintenance.....................................   217,719
        Indirect Costs............................................   798,704
                        --------------------------------------------------------------
                        ____________________________________________________

          Total................................................... 4,863,862
                        ==============================================================
                        ____________________________________________________
    Federal funding request:
        Staff..................................................... 1,048,610
        Benefits..................................................   272,639
        Project Travel............................................    25,000
        Project Material and Supplies.............................    20,000
        Equipment Installations...................................    31,081
        Equipment................................................. 1,978,969
        Equipment Maintenance.....................................    50,400
        Indirect Costs............................................   573,301
                        --------------------------------------------------------------
                        ____________________________________________________

          Total................................................... 4,000,000
                        ==============================================================
                        ____________________________________________________
    RIT/other funding sources:
        Staff.....................................................   149,390
        Benefits..................................................    38,841
        Project Travel............................................    65,000
        Project Materials and Supplies............................    75,263
        Facility Operations.......................................    73,386
        Equipment.................................................    69,260
        Equipment Maintenance.....................................   167,319
        Indirect Costs............................................   225,403
                        --------------------------------------------------------------
                        ____________________________________________________

          Total...................................................   863,862

                             conclusion of hearings

        Senator Stevens. If there is nothing further, the
    subcommittee will stand in recess.
        [Whereupon, at 10:18 a.m., Wednesday, June 4, the hearings
    were concluded, and the subcommittee was recessed, to reconvene
    subject to the call of the Chair.]

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page
    Alexander, Maj. Gen. Richard C., Adjutant General, State of Ohio,
      Ohio National Guard, Department of Defense.....................   441
        Prepared statement...........................................   444

    Baca, Lt. Gen. Edward D., U.S. Army, Chief, National Guard
      Bureau, Department of Defense..................................
      389, 392.......................................................
        Prepared statement...........................................   394
        Question submitted to........................................   435
    Bennett, Hon. Robert F., U.S. Senator from Utah:
        Prepared statement...........................................   468
        Questions submitted by.......................................
          505, 528...................................................
    Bond, Hon. Christopher S., U.S. Senator from Missouri:
        Prepared statements..........................................
          216, 326...................................................
        Questions submitted by.......................................
          64, 372, 382...............................................
    Brock, Jack L., Jr., Director, Defense Information Management
      Systems, National Security and International Affairs Division,
      General Accounting Office......................................
      467, 490.......................................................
    Brown, Lynne P., associate vice president for Government and
      community relations on behalf of New York University Center for
      Cognition, Learning, Emotion and Memory, prepared statement....   849
    Bumpers, Hon. Dale, U.S. Senator from Arkansas, questions
      submitted by...................................................
      689, 702.......................................................
    Bye, Dr. Raymond E., Jr., associate vice president for research,
      Florida State University, prepared statement...................   836

    Cabral, Robert J., supervisor, San Joaquin County, chairman of
      the board, San Joaquin Valley Unified Air Pollution Control
      District on behalf of the California Industry and Government
      Coalition on PM-10/PM-2.5, prepared statement..................   839
    Calkins, Charles L., national executive secretary, Fleet Reserve
      Association....................................................   742
        Prepared statement...........................................   743
    Carey, Rear Adm. James J., U.S. Naval Reserve (retired), national
      president, Naval Reserve Association, prepared statement.......   804
    Clark, Les, vice president, Independent Oil Producers'
      Association on behalf of the California Industry and Government
      Coalition on PM-10/PM-2.5, prepared statement..................   839
    Cline, Master Sergeant Michael P., (retired), executive director,
      Enlisted Association of the National Guard.....................   795
        Prepared statement...........................................   796
    Cochran, Hon. Thad, U.S. Senator from Mississippi, questions
      submitted by...................................................
      58, 465........................................................
    Cohen, Bill, Secretary of Defense, Department of Defense, letter
      from...........................................................   299
    Coleman, Hon. Rodney A., Assistant Secretary of the Air Force
      (Manpower, Reserve Affairs, Installations, and Environment),
      Environmental Program, Department of Defense...................   574
        Prepared statement...........................................   576
        Questions submitted to.......................................   604
    Cunha, Manuel, Jr., president, NISEI Farmers League on behalf of
      the California Industry and Government Coalition on PM-10/PM-
      2.5, prepared statement........................................   839

    Dalton, Hon. John H., Secretary of the Navy, Office of the
      Secretary, Department of the Navy, Department of Defense.......   215
        Prepared statement...........................................   221
        Questions submitted to.......................................   301
    Denman, Julia, Assistant Director, Defense Management Issues,
      National Security and International Affairs Division, General
      Accounting Office..............................................
      467, 492.......................................................
    Domenici, Hon. Pete V., U.S. Senator from New Mexico, questions
      submitted by...................................................
      60, 176, 306, 318, 371, 379, 436, 439, 686, 699................
    Dorgan, Hon. Byron, U.S. Senator from North Dakota:
        Prepared statements..........................................
          1, 160.....................................................
        Questions submitted by.......................................
          69, 183, 313...............................................
    Duggan, Dennis M., assistant director, National Security-Foreign
      Relations Division, the American Legion........................   735
        Prepared statement...........................................   736

    Fogleman, Ronald R., Chief of Staff, Department of the Air Force,
      Department of Defense..........................................   607
        Prepared statement...........................................   614
        Questions submitted to.......................................   696
    Foil, Martin B., Jr., chairman of the board, Brain Injury
      Association, Inc...............................................   728
        Prepared statement...........................................   729

    Godley, Capt. John, legislative director, Naval Reserve
      Association....................................................   802
    Gregg, Hon. Judd, U.S. Senator from New Hampshire, question
      submitted by...................................................   439
    Guckenheimer, John, Ph.D., professor of mathematics and mechanics
      at Cornell University and president of the Society for
      Industrial and Applied Mathematics, Joint Policy Board for
      Mathematics....................................................   756
        Prepared statement...........................................   757
    Gustinis, Judith, director, Rochester Institute of Technology
      Center for Integrated Manufacturing Studies, prepared statement   852

    Hait, Dr. William, director of Cancer Institute of New Jersey,
      University of Medicine and Dentistry of New Jersey.............   780
    Hamre, John J., Ph.D., Under Secretary of Defense, Comptroller,
      Department of Defense..........................................     1
        Letter from..................................................    52
    Harkin, Hon. Tom, U.S. Senator from Iowa, questions submitted by.  374,
                                               384, 596, 602, 605, 690, 702
    Harnage, Bobby, national secretary-treasurer, American Federation
      of Government Employees, AFL-CIO...............................   759
        Prepared statement...........................................   761
    Hickey, Sydney T., associate director, Government relations, the
      National Military Family Association...........................   710
        Prepared statement...........................................   712
    Hinton, Henry L., Jr., Assistant Comptroller General, National
      Security and International Affairs Division, General Accounting
      Office.........................................................   467
        Prepared statement...........................................   470
    Hollings, Hon. Ernest F., U.S. Senator from South Carolina,
      questions submitted by.........................................
      372, 383.......................................................
    Howell, William C., Ph.D., American Psychological Association....   705
        Prepared statement...........................................   707

    Inouye, Hon. Daniel K., U.S. Senator from Hawaii, questions
      submitted by...................................................
      64, 304, 310, 321, 594, 599, 604...............................

    James, Brig. Gen. Daniel C., III, Adjutant General, State of
      Texas, Texas National Guard, Department of Defense.............   454
        Biographical sketch..........................................   459
        Prepared statement...........................................   456
    Johnson, Adm. Jay L., USN, Chief of Naval Operations, Office of
      the Secretary, Department of the Navy, Department of Defense...   215
        Questions submitted to.......................................   305
    Johnson, David, Ph.D., executive director, Federation of
      Behavioral, Psychological and Cognitive Sciences...............   749
        Prepared statement...........................................   750
    Jollivette, Cyrus M., vice president for governmental relations,
      University of Miami, prepared statement........................   834

    Karas, Stefan E., M.D., department chief, Department of
      Ophthalmology, Straub Clinic and Hospital, Honolulu, HI, on
      behalf of the Joslin Diabetes Center, prepared statement.......   816
    Kenny, Michael P., executive officer, California Air Resources
      Board on behalf of the California Industry and Government
      Coalition on PM-10/PM-2.5, prepared statement..................   839
    Krulak, Gen. C.C., USMC, Commandant of the Marine Corps, Office
      of the Secretary, Department of the Navy, Department of Defense   215
        Questions submitted to.......................................   317

    Leahy, Hon. Patrick J., U.S. Senator from Vermont, questions
      submitted by...................................................
      322, 373, 435, 438, 602, 605...................................
    Lestenkof, Maj. Gen. Jake, Adjutant General, State of Alaska,
      Alaska National Guard, Department of Defense...................   451
        Prepared statement...........................................   452
    Lokovic, James E., chief master sergeant, USAF (retired), Air
      Force Sergeants Association....................................   764
        Prepared statement...........................................   765
    Lord, Comdr. Mike, USN (retired), Commissioned Officers
      Association of the U.S. Public Health Service, Inc., co-chair,
      Health Care Committee, the Military Coalition..................   786
        Prepared statement...........................................   787
    Lyles, Lt. Gen. Lester L., USAF, Director, Ballistic Missile
      Defense Organization, Department of Defense....................   137
        Biographical sketch..........................................   156
        Prepared statement...........................................   143

    Mauderly, Joe L., senior scientist and director of external
      affairs, Lovelace Respiratory Research Institute, prepared
      statement......................................................   846
    Maves, Michael D., M.D., MBA, executive vice president, American
      Academy of Otolaryngology--Head and Neck Surgery...............   725
        Prepared statement...........................................   726
    McConnell, Hon. Mitch, U.S. Senator from Kentucky, questions
      submitted by...................................................
      303, 382, 599..................................................
    Molloy, Russ, Esq., director of Government relations, University
      of Medicine and Dentistry of New Jersey........................   780
        Prepared statement...........................................   781
    Mundy, Greg, M.D., president, American Society for Bone and
      Mineral Research, professor of bone and mineral metabolism,
      Health Science Center at San Antonio, University of Texas,
      prepared statement.............................................   814

    National Association of Energy Service Companies, prepared
      statement......................................................   832
    Navas, Maj. Gen. William, Jr., Director, Army National Guard,
      National Guard Bureau, Department of Defense...................
      389, 402.......................................................
        Prepared statement...........................................   402
        Questions submitted to.......................................   436

    Olanoff, Chief Master Sergeant Mark H., USAF (retired),
      legislative director, Retired Enlisted Association.............   810
        Prepared statement...........................................   811
    Ouellette, Sergeant Major Michael F., USA (ret.), director of
      legislative affairs, Non Commissioned Officers Association of
      the United States of America, prepared statement...............   842

    Partridge, Col. Charles C., U.S. Army (retired), National
      Association for Uniformed Services, prepared statement.........   825
    Pilling, Vice Adm. Donald L., Deputy Chief of Naval Operations,
      U.S. Navy, depot operations, Department of Defense.............   509
        Prepared statement...........................................   513
        Questions submitted to.......................................   533
    Pirie, Hon. Robert B., Jr., Assistant Secretary of the Navy
      (Installations and Environment), Environmental Program,
      Department of Defense..........................................   556
        Prepared statement...........................................   557
        Questions submitted to.......................................   599
    Prueher, Adm. Joseph W., U.S. Navy, Commander in Chief, U.S.
      Pacific Command, Department of Defense.........................   187
        Prepared statement...........................................   190

    Quickel, Kenneth E., Jr., M.D., president, Joslin Diabetes
      Center, Boston, MA, on behalf of the Joslin Diabetes Center,
      prepared statement.............................................   816

    Raymond, Sandra C., executive director, National Osteoporosis
      Foundation on behalf of the National Coalition of Osteoporosis
      and Related Bone Diseases, prepared statement..................   814
    Rees, Maj. Gen. Raymond F., Adjutant General, State of Oregon,
      Oregon National Guard, Department of Defense...................   447
        Prepared statement...........................................   449
        Question submitted to........................................   465
    Reese-Coulbourne, Jane, executive vice president, National Breast
      Cancer Coalition, for Frances M. Visco, Esq., president........   753
    Reheis, Catherine H., managing coordinator, Western States
      Petroleum Association on behalf of the California Industry and
      Government Coalition on PM-10/PM-2.5, prepared statement.......   839
    Reimer, Dennis J., General, Chief of Staff of the Army,
      Department of the Army, Department of Defense..................   325
        Prepared statement...........................................   337
        Questions submitted to.......................................   374

    Sandler, Maj. Gen. Roger W., AUS (retired), Reserve Officers
      Association of the United States...............................   769
        Prepared statement...........................................   771
    Savoie, Dr. E. Joseph, commissioner of higher education, State of
      Louisiana, prepared statement..................................   840
    Shalikashvili, Gen. John M., Chairman, Joint Chiefs of Staff,
      Department of Defense..........................................    73
        Prepared statement...........................................    98
    Shelby, Hon. Richard C., U.S. Senator from Alabama:
        Prepared statements..........................................
          160, 432...................................................
        Questions submitted by.......................................
          179, 505, 527, 532, 533....................................
    Shepperd, Maj. Gen. Donald W., Director, Air National Guard,
      National Guard Bureau, Department of Defense...................
      389, 410.......................................................
        Prepared statement...........................................   410
        Questions submitted to.......................................   439
    Smith, Edith G., citizen advocate for disabled military retirees,
      prepared statement.............................................   818
    Specter, Hon. Arlen, U.S. Senator from Pennsylvania, questions
      submitted by...................................................
      317, 685.......................................................
    Stevens, Hon. Ted, U.S. Senator from Alaska, questions submitted
      by.............................................................   53,
                                          301, 305, 317, 371, 374, 685, 696

    Torsch, Comdr. Virginia, MSC, USNR, the Retired Officers
      Association, co-chair, Health Care Committee, the Military
      Coalition......................................................   786

    Van Alstyne, John, General, U.S. Army, Comptroller, Department of
      De- fense......................................................     1
    Viccellio, Gen. Henry, Jr., Commander, U.S. Air Force Materiel
      Command, depot operations, Department of Defense...............   509
        Prepared statement...........................................   510
        Questions submitted to.......................................   527
    Visco, Frances M., Esq., president, National Breast Cancer
      Coalition, prepared statement..................................   754

    Walker, Hon. Robert M., Assistant Secretary of the Army
      (Installations, Logistics, and Environment), Environmental
      Program, Department of Defense.................................   535
        Prepared statement...........................................   539
        Questions submitted to.......................................   594
    West, Togo D., Jr., Secretary of the Army, Department of the
      Army, Department of Defense....................................   325
        Prepared statement...........................................   329
        Questions submitted to.......................................   371
    Widnall, Sheila E., Ph.D., Secretary of the Air Force, Department
      of the Air Force, Department of Defense........................   607
        Prepared statement...........................................   614
        Questions submitted to.......................................   685
    Wiener, Jerry M., M.D., past president of the American
      Psychiatric Association and American Academy of Child and
      Adolescent Psychiatry and chairman of the Department of
      Psychiatry and Behavioral Science at George Washington
      University.....................................................   720
        Prepared statement...........................................   721
    Wilson, Gen. Johnnie E., Commanding General, U.S. Army Materiel
      Command, depot operations, Department of Defense...............   509
        Prepared statement...........................................   511
        Questions submitted to.......................................   532

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE
                               Adjutant Generals

                                                                       Page
    Additional committee question....................................   465
    Deployed units, high retention in................................   459
    Equal readiness standards........................................   455
    National Guard:
        Economic benefits of the.....................................   444
        Modernization................................................   463
        Today and in the future......................................   441
    Operational areas funding........................................   451
    OPTEMPO funding..................................................   448
    Partnership program..............................................   462
    Readiness funding................................................   442
    Real property and logistical support.............................   464
    Reductions, ability to manage....................................   461
    Simulators, innovative uses of...................................   462

                     Ballistic Missile Defense Organization

    ABM Treaty provisions............................................   163
    Additional committee questions...................................   176
    Arrow program....................................................   164
        Capabilities.................................................   166
        Intercept....................................................   157
    Ballistic missile defense........................................
      176, 179, 183..................................................
    Countermeasures..................................................   171
    Cruise missile threat............................................   167
    Israeli boost-phase intercept system.............................   174
    Minuteman booster................................................   170
    National missile defense.........................................   140
        Acquisition strategy.........................................   161
        Lead system integrator.......................................   171
        Program risk.................................................   163
    Pacific Missile Range facility...................................   165
    Patriot..........................................................   166
    Procurement funding..............................................   173
    Risk reduction...................................................   169
    Simulation program...............................................   167
    Support technology...............................................   141
    System testing...................................................   158
    Systems, use of other............................................   170
    Test determinations..............................................   173
    Test program.....................................................   168
    Test range availability..........................................   174
    THAAD:
        Procurement..................................................   159
        Test investigation...........................................   142
    Theater missile defense..........................................   138
    Three plus three test costs......................................   175

                                  Comptroller

    Additional committee questions...................................    53
    Appropriated funds, release of...................................    39
    Army National Guard O&M/MilPers accounts.........................    64
    B-52:
        Funding, fiscal year 1998....................................    69
        Re-engining study............................................    70
    Ballistic Missile Defense Program................................
      18, 60.........................................................
        Procurement funds............................................    55
    BMDO technology budget...........................................    43
    Bosnia:
        Civil works in...............................................    33
        Costs........................................................    32
            Lessons learned..........................................    20
        Possible future supplementals for............................    42
    Budget:
        Comparisons..................................................     6
        Resolution, comparison to....................................     8
    Budgeting for major regional conflicts...........................    26
    Cost estimates, accuracy of......................................    24
    Cost of maintaining older systems................................    31
    Countries, cooperation of........................................    29
    Current defense strategy and force structure.....................    35
    Defense appropriations, congressional control over...............    33
    Defense budget:
        Overview of..................................................     2
        Topline......................................................    69
    Defense efforts, international comparability of..................    31
    Defense spending:
        In context...................................................    49
        Trends.......................................................    66
    Depot maintenance, greater privatization of......................    41
    DOD:
        Budget, highlights of fiscal year 1998.......................     9
        Infrastructure, excess.......................................    36
        Weapons, average ages of.....................................    16
    F-22:
        Affording the................................................    47
        Cost estimates and justification.............................    45
        Sales abroad and other sources of savings....................    47
    Family housing...................................................    62
    Force structure..................................................    64
        And personnel................................................    10
    Health care:
        Costs........................................................    65
            Budget amendment for.....................................    51
        Economizing..................................................    65
    Host nation support..............................................    27
    Infrastructure:
        Costs........................................................    68
        Savings......................................................    68
    Logistics Civilian Augmentation Program [LOGCAP].................    57
    Military medical care............................................    42
    Modernization:
        Funding......................................................    14
        Program, highlights of.......................................    17
    National Guard and Reserve O&M/procurement funding...............    58
    National missile defense.........................................    54
    Operational expenditures, controlling............................    24
    Operations costs, fiscal year 1997...............................    20
    Operations, tempo of.............................................    23
    Peacekeeping, funding for........................................    22
    Procurement......................................................    58
    ``Quadrennial Defense Review''...................................
      19, 65.........................................................
        Funding projections and the..................................    44
        Guidance, following..........................................    45
    Quality of life..................................................    13
    R&D expenditures.................................................    29
    Readiness........................................................    12
    Rescission and supplemental, fiscal year 1997....................     4
    Rescissions......................................................    59
        Proposed.....................................................    35
    Saudi Arabia:
        Personnel levels.............................................    37
        United States costs and troops for...........................    37
    Shipbuilding.....................................................    59
    Submarine programs...............................................    67
    Supplemental appropriations, timely passage of...................    22
    Supplemental contingency costs...................................    66
    Tactical aircraft................................................    54
    TRICARE..........................................................    62
    Unit rotation....................................................    58
    University research..............................................    37

                          Department of the Air Force

    Additional committee questions...................................   685
    Adultery:
        Air Force investigations of..................................   690
        Charges......................................................   672
            Rank of personnel........................................   672
    Air and space superiority........................................   612
    Air Force:
        And Joint Vision 2010........................................   620
        Pay and benefits.............................................   688
        People.......................................................
          613, 629...................................................
        Personnel, quality of life for...............................   695
        Research Laboratory/impact to Phillips Lab...................   686
    Air National F-15 force upgrade..................................   657
    Air traffic controller training..................................   682
    Airborne laser [ABL].............................................   700
    Aircraft manufacture.............................................   683
    B-2:
        Bomber program...............................................   694
        Cost per flying hour.........................................   689
        Deployment requirement.......................................   689
        Maintenance..................................................   702
    B-52 reengining proposal.........................................   665
    Base closure.....................................................   666
    BRAC, future.....................................................   681
    Business practices, revolution in................................
      613, 627, 633..................................................
    C-17 basing......................................................   647
    Capability shaping...............................................   668
    Civil Air Patrol.................................................   695
    Columbus Air Force Base pilot training facilities................   680
    Deployments, stress for..........................................   701
    EF-111...........................................................   701
        Replacement with the EA-6B...................................   700
    F-22:
        Air Force publications.......................................   694
        Construction.................................................   683
        Cost estimates...............................................   662
        First flight and development status..........................
          685, 696...................................................
        Justifications for aircraft..................................   702
        Performance..................................................
          685, 696...................................................
        Production costs.............................................   645
            Decreases................................................   664
        Program......................................................   644
            Costs....................................................   694
            Restructuring............................................   690
        Publications.................................................
          661, 679...................................................
        Radar cross section..........................................
          689, 702...................................................
        Tier 1 and 2 initiatives.....................................   689
    Food stamps......................................................   688
    Force conversion.................................................   646
    Force protection.................................................   632
    Gerald Champion Memorial Hospital [GCMH].........................   699
    German Air Force, USAF training for the..........................   687
    Global engagement................................................   631
    ``Global Engagement'' brochure...................................   678
    Inventory management.............................................   703
    Investigation report evaluation..................................   655
    Joint air-to-surface standoff missile:
        Requirements.................................................
          658, 697...................................................
        SLAM-ER......................................................   697
    Khobar Towers....................................................   654
    Kirtland AFB, importance of......................................   687
    Manpower reductions..............................................   700
    McClellan/Tobyhanna, status of MOA...............................   685
    Midrange cruise missile programs.................................   658
    Missile defense plan.............................................   665
    NMD Minuteman option.............................................
      698, 699.......................................................
        Flight tests.................................................   699
    Public/private competition.......................................   670
    Quality forces...................................................   632
    Recruiting update................................................   648
    Reengining cost versus capability................................   698
    Restructuring and downsizing.....................................   643
    Retention........................................................   649
    Shared hospital facilities.......................................   660
    Tobyhanna, transfer of funds to..................................   686
    Uniform Code of Military Justice:
        Enforcement..................................................   677
        Violations...................................................   675
    Worldwide operations.............................................
      611, 615.......................................................

                             Department of the Army

    Additional committee questions...................................   371
    Advanced warfighting experiment..................................   367
    Aircraft fleet upgrade...........................................   386
        Administrative...............................................   386
    Allowances, insufficient.........................................   355
    Antisatellite weapons............................................   374
    Army:
        A full spectrum force for today and tomorrow.................   341
        Changing.....................................................   329
        Generals, increase in the number of..........................   385
        Globally engaged and cost effective..........................   339
        Inventory practices of the...................................   378
        Missions: Engaged worldwide..................................   330
        Priorities--readiness, modernization, and quality of life....   330
        War fighting experiment......................................   380
        Western Regional Civilian Personnel Center...................   371
        World's best.................................................   345
    Base realignment and closures....................................   333
    Bosnia...........................................................   360
        Contingency costs............................................
          371, 387...................................................
        Supplemental.................................................   345
    Brigade alignment................................................   348
    Budget issues....................................................   378
    Changing to meet the challenges of the future....................   340
    Comanche.........................................................   369
        Helicopter...................................................   379
        Program......................................................
          379, 380...................................................
    Deployment tempo.................................................   370
    Drawdown update..................................................   339
    Efficiencies.....................................................   334
    Family violence..................................................   375
    Food stamps......................................................   377
    Force:
        Mobility.....................................................   350
        Size.........................................................   351
        Structure reduction..........................................   369
        XXI Brigade at NTC...........................................   383
    Fort Chafee, training at.........................................   363
    General officers, number of......................................   356
    Guaranteed active duty commissioning.............................   372
    Headquarters reductions..........................................   383
    High energy laser system test facility...........................   374
    Housing, inadequate..............................................   384
    Huey Helicopter Reengining Program...............................   380
    Hunter Unmanned Aerial Vehicle Program...........................   381
    Inventories, excess..............................................   357
    Inventory management.............................................   358
    Landmines........................................................   360
    Logistical equipment.............................................   382
    M-1 upgrades.....................................................   362
        Cost effectiveness of........................................   362
    Medium extended air defense system...............................   368
    Military construction............................................   333
    Missile defense, funding for.....................................   359
    Modernization....................................................   332
        Priorities...................................................   352
        The key to our future success................................   342
    Multiple launch rocket system....................................   365
    National Guard and Reserve.......................................   333
    National missile defense.........................................   371
        Issue........................................................   381
    Objective crew served weapon.....................................   373
    Pay:
        Inadequate...................................................   384
        Increase.....................................................   354
    Priorities and challenges........................................   337
    Quality of life..................................................
      332, 351, 353..................................................
    Readiness........................................................   330
    Recruiting.......................................................   347
    Reengineering efforts............................................   344
    Reserve component:
        Funding......................................................   361
        Resourcing...................................................   366
    Reserve mobilization income insurance............................   383
    Rock Island Arsenal..............................................   386
    Sexual harassment, policy on.....................................   349
    Strategic imbalance--requirements and resources..................   344
    Stress from deployments..........................................   375
    Supplemental funding.............................................
      373, 382.......................................................
    Theater high altitude area defense...............................   364
    Theater missile defense issues...................................   387
    Troop morale.....................................................   372
    Underfunding and the quadrennial defense review..................   378
    Urban warfare doctrine and training, status of...................   382

                             Department of the Navy

                            Office of the Secretary

    Acquisition......................................................   317
    Additional committee questions...................................   301
    Advanced amphibious assault vehicle..............................   219
    Aerial refueling.................................................   314
    Aircraft:
        Building.....................................................   296
        Replacement..................................................   292
    Antiterrorism activity...........................................   273
    Army tactical missile system [ATACM].............................   295
    AV-8B Harriers...................................................   277
    Aviation.........................................................   323
    Avionics, room for growth........................................   316
    Bosnia operations................................................
      318, 319.......................................................
    Budget issues....................................................
      306, 318.......................................................
    Carrier:
        Basing.......................................................   311
        Recovery period..............................................   315
    CH-53E...........................................................   284
    CH-60............................................................   286
    Combat performance...............................................   314
    Commandant's warfighting laboratory..............................   323
    Department of the Navy 1997 posture statement....................   221
    Depot maintenance funds..........................................   274
    EA-6B Prowler replacement to EF-111..............................   310
    EF-111 versus EA-6B Prowler......................................   293
    Efficiency.......................................................   245
    Equipment, initial issue.........................................   322
    F/A-18E/F........................................................
      275, 281.......................................................
    Family of medium tactical vehicles [FMTV]........................   283
    Fuel tanks, use of 480-gallon external...........................   313
    Health care......................................................   271
    Hunter/Jaeger aviation...........................................
      309, 320.......................................................
    Industrial base..................................................   272
    Joint Strike fighter.............................................   281
    KC-130 aircraft..................................................   290
    Landing gear upgrades............................................   316
    Mobile offshore base [MOB].......................................   286
    Modernization demands............................................
      304, 321.......................................................
    Naval expeditionary forces.......................................   223
    Navy-Marine Corps team...........................................   222
    Operational primacy..............................................   227
    Pacific Missile Range facility [PMRF]:
        Navy missile defense testing at the..........................
          304, 311, 313..............................................
    People...........................................................   220
    Procurement authority, multiyear.................................   267
    Programs.........................................................   249
    Quadrennial defense review.......................................
      217, 318.......................................................
    Quality of life..................................................   290
        Issues.......................................................
          307, 318, 319..............................................
    Readiness........................................................   239
    Recruiting:
        And retention................................................
          310, 321...................................................
        Goals........................................................   269
    Sexual harassment................................................   270
    Ship depot maintenance...........................................
      305, 311.......................................................
    Shipbuilding.....................................................   287
    SLAM-ER Program..................................................   278
    Smart ship systems...............................................   284
    Staffing.........................................................   278
    Super Hornet Strike fighter......................................   219
    T-45.............................................................   289
    Technology.......................................................   242
    TRICARE..........................................................   283
    Trident retrofitting.............................................   295
    Upper tier program...............................................   289
    V-22.............................................................
      268, 279, 317..................................................
        Osprey.......................................................
          304, 322...................................................

                                Depot Operations

    A-76 competitions................................................
      527, 532, 533..................................................
    Additional committee questions...................................   526
    Background--BRAC decisions.......................................   511
    Capacity:
        Current excess...............................................   529
        Excess.......................................................   528
    Competition:
        Savings......................................................   531
        Structure, current...........................................   531
    Core:
        Maintenance..................................................   532
        Weapons platforms............................................
          527, 533...................................................
        Workload.....................................................
          530, 532...................................................
    Depots:
        Consolidation of.............................................   521
        Efficiencies and initiatives.................................   514
        Impact of decreased force structure on.......................   514
        Maintenance command structure................................
          527, 532, 533..............................................
        Maintenance system inefficiencies............................   529
        Partnering...................................................   516
        Workload consolidation.......................................   528
    Excess capacity..................................................   515
    GAO findings.....................................................   524
    Infrastructure reduction.........................................   528
    Job projection...................................................   529
    Logistics, lean..................................................   518
    Louisville privatization.........................................   523
    Nuclear shipyard capacity........................................   519
    Ordnance centers.................................................   518
    Partnering.......................................................   523
    Private companies, co-location of................................   530
    Private/public competition.......................................   530
    Privatization....................................................   520
        Cost/negative sides of.......................................   529
    Production breaks................................................   524
    Public/private competition.......................................   530
    Readiness issue..................................................   526
    60/40 rule.......................................................   525
    Source selection.................................................   522
    Strategy.........................................................   512
    Teaming requirements/opportunities...............................   531
    Workers, age of..................................................
      528, 533, 534..................................................
    Working capital fund issues......................................   515
    Workload and performance, current................................   514
    Workloads, moving................................................   530

                             Environmental Program

    Additional committee questions...................................   594
    Air emission credits.............................................
      600, 604.......................................................
    Air Force:
        Award-winning program........................................   592
        Cooperation with regulators..................................   586
        ESOH.........................................................   576
        Partnership programs.........................................   575
        Prevention programs..........................................   589
        Program saved money..........................................   591
        Risk assessment..............................................   588
        Work with the regulators.....................................   585
    Ammunition plants................................................
      597, 603, 606..................................................
    Army:
        Budget request, fiscal year 1998.............................   540
        Environmental commitment.....................................   539
        Environmental program, overview of the.......................   543
    Base closure cleanup costs.......................................   575
    Base realignment and closure.....................................   579
    BRAC Environmental Program.......................................   572
    Challenge, meeting the...........................................   577
    Cleanup..........................................................
      560, 578.......................................................
    Compliance.......................................................
      546, 563, 580, 584.............................................
    Conservation.....................................................
      548, 570, 578..................................................
    DERA budget......................................................
      597, 603, 605..................................................
    Environment......................................................   578
    Environmental:
        Budget overview, fiscal year 1998/99.........................   558
        Cleanup......................................................   537
        Management Committee.........................................   589
        Program in support of military readiness.....................   557
        Restoration accounts.........................................   585
    Kaho'olawe cleanup...............................................   601
    Legacy funding...................................................
      596, 601, 604..................................................
    Legislative proposal, fiscal year 1998...........................   574
    Military munitions rule/range rule...............................
      595, 600.......................................................
    Mission essential support........................................   539
    Occupational safety and health...................................   581
    Partnering.......................................................
      538, 561, 595..................................................
        Agreements/contracts.........................................
          601, 604...................................................
    Pollution prevention.............................................
      544, 567, 581, 588, 598, 603, 606..............................
        New technologies.............................................
          594, 599...................................................
    Program management and organizations.............................   541
    Restoration (cleanup)............................................   551
    Restoration advisory boards......................................
      596, 602, 605..................................................
    Superfund sites..................................................   605
    Technology.......................................................   571
    Unexploded ordnance..............................................
      596, 602, 605..................................................

                             Joint Chiefs of Staff

    ABM talks........................................................   126
    Additional committee questions...................................   133
    Atlantic Command.................................................    93
    Ballistic missile defense........................................   122
    Ballistic missile threat.........................................   120
    Bosnia...........................................................
      78, 111........................................................
    Budgeting control................................................   113
    Central Command..................................................    86
    Chemical, biological, nuclear threat.............................   118
    Counterterrorism.................................................    96
    European Command.................................................    75
    F-22 expense.....................................................   123
    Global overview..................................................    74
    Humanitarian/peacekeeping missions...............................   131
    Korean reunification.............................................   115
    Member requirements, new.........................................   134
    Missile defenses.................................................   130
    Modernization--equipping the force for the 21st century..........   106
    Naval procurement................................................   124
    Northeast Asia...................................................   114
    Nuclear weapons testing..........................................   128
    Nunn-Lugar.......................................................   120
    Operations.......................................................    98
    Overseas deployments.............................................   110
    Pacific Command..................................................    90
    ``Quadrennial Defense Review''...................................
      109, 125.......................................................
    Quality people--the key to success...............................   102
    Readiness........................................................   104
    Russia...........................................................    77
    Russian:
        Military.....................................................   111
        Naval forces.................................................   123
    Southern Command.................................................    95
    Southwest Asia operations........................................   134
    Terrorism........................................................   116
    U.S. direct enlargement costs....................................   134

                             National Guard Bureau

    Additional committee questions...................................   435
    Air Force tiered readiness.......................................   422
    Air National Guard:
        Cost of units................................................   419
        Integration..................................................   424
    America:
        Adding value to..............................................   393
        A militia-based nation.......................................
          394, 417...................................................
    Antiterrorism training...........................................   428
    Army equipment from Europe, repair of............................   428
    Army National Guard resources....................................   422
    Base support program.............................................   430
    Biloxi/Gulfport airport..........................................   424
    Budget...........................................................   403
        Issues.......................................................   436
    Camp Shelby, training at.........................................   425
    Community activities.............................................   414
    Counterdrug operations and programs..............................   398
    Distance learning:
        Initiatives..................................................   419
        Sharing the technology of....................................   426
    Diversity program................................................   415
    Dual-role force..................................................   393
        With three mission areas.....................................   396
    Enhanced brigades................................................   422
    Equipment improvements...........................................   411
    Flight simulators, alternatives to...............................   420
    Force structure..................................................   403
    Fort Chaffee, AR.................................................   429
    Fort State.......................................................   408
    Full-time support................................................   418
    Future:
        Poised to dominate the.......................................   400
        Preparing for the............................................   415
    Guard/Reserve missions...........................................
      437, 439.......................................................
    Improving today..................................................   410
    Infrastructure and facilities, leveraging........................   408
    Logistics and maintenance........................................   409
    Missions, new....................................................   410
    National Guard:
        People and values............................................   396
        Vision.......................................................   394
            Force of the future......................................   395
    New Mexico issues................................................
      438, 439.......................................................
    Organizational improvements......................................   413
    Posturing for tomorrow--A force in transition....................   399
    ``Quadrennial Defense Review''...................................   430
    Quality force....................................................   415
    Radar warning receivers..........................................   439
    Readiness........................................................   406
    Real world contingencies (OPTEMPO)...............................   413
    Recruiting.......................................................   405
    Reserve component automation system..............................   426
    Restructure/modernization........................................   404
    Safety...........................................................   406
    Space............................................................   415
    State partnership program........................................   431
    Technology.......................................................   415
    Telecommunications link to rural America.........................   425
    Tiered resourcing................................................
      420, 433.......................................................
    Total force......................................................   416
    UH-60 Blackhawk helicopters......................................   434

                              U.S. Pacific Command

    Alaska and exercises Northern Edge...............................   210
    Asia-Pacific environment.........................................   191
    Balancing resources for our strategy: Programs and initiatives...   196
    Burdensharing....................................................   212
    China............................................................   205
    CODEL visit to Northeast Asia....................................   213
    Executive summary................................................   191
    Forward presence and regional stability..........................   202
    How cooperative engagement is working: An assessment.............   194
    Korean Peninsula.................................................   204
    Missile defense..................................................   211
    North Korea......................................................
      206, 208.......................................................
    Pacific Command strategy.........................................   189
    Peace, crisis, and war, cooperative engagement in................   192
    Quality of life..................................................   207
    Russia, engagement with..........................................   201
    Strategy, resources to support the...............................   190
    United States carrier homeporting in Japan.......................   211
    United States interests in the Pacific...........................   210

                           GENERAL ACCOUNTING OFFICE

              National Security and International Affairs Division

    Additional committee questions...................................   505
    Depots:
        Inefficiencies...............................................   496
        Maintenance operations, challenges facing DOD in improving
          the cost-effectiveness of..................................   471
        Potential impact on readiness from closing...................   497
    Military costs and readiness, issues regarding...................   501
    60/40 workload mix...............................................   499
    Support structure to sustain conflict, viability of..............   495
    Working capital fund:
        Cash management..............................................   473
            And operations issues....................................   470
        Operations...................................................   476

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