[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
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                                 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.

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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.
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    \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.
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    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.

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                           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.

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    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.

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

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    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.

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          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\.

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                   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.

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                           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.

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    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.

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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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